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HindustanTimes Fri,25 Jul 2014

Inflation effect: 'Living' only on special occasions, 'surviving' on a daily basis

Gaurav Choudhury, Hindustan Times   July 21, 2013
First Published: 01:04 IST(21/7/2013) | Last Updated: 20:46 IST(21/7/2013)

As prices continue to soar, now compounded by the weakening rupee, families are finding themselves forced to tighten their belts. Some are growing their own vegetables. Others are eating chutney or chillies instead. Still others are cancelling vacations abroad or opting for a smaller car. A look at how families across urban India are coping.

Every Saturday, Meenu Kaushal drives 8 km to buy her fruits and vegetables. The school teacher and Delhi resident heads to Ghazipur once a week with a friend to stock up at a wholesale market on the eastern fringes of the Capital.

It’s quite a distance, but the prices there are about 25% less than at her neighbourhood vegetable stall.

“Overall, we are buying less fruit, less biscuits and spending less on movies at multiplexes. We are cutting expenses where we can,” says Kaushal, 38, who lives with her husband, a civil engineer, and their six-year-old child, and first began driving to the Ghazipur market for produce seven months ago.

The rise in prices is bringing more tears to the common man’s eyes than the costly onions or high petrol prices would suggest.

Almost all everyday products and services — from food to footwear, movie tickets to medicines, restaurant meals to deodorants and lipsticks — have become dearer, hitting family budgets hard. As inflation rises, the same amount of money now fetches fewer goods.

With loans becoming more expensive too, consumers have also put off plans to buy homes and cars.

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That sinking feeling

Now, the sharp slide in the rupee is likely to knock up prices of almost everything along the value chain from farm to fork, effectively negating gains from a potentially bountiful summer harvest, which would have otherwise tempered food inflation.

“On the basis of our regression model, we estimate that a sustained 10% rupee depreciation adds roughly 1 percentage point to headline wholesale price inflation,” banking major Credit Suisse said in a recent research report.

India imports about 75% of its crude oil requirements, and higher prices of the commodity usually reflect in higher retail fuel costs. As the cost of ferrying goods, including food items, goes up, overall prices will also rise.

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It’s not just soaring fuel costs that will push food prices up. A weak rupee will raise prices for most manufactured and imported goods. This will again affect families’ monthly grocery budgets, since India is a net importer of items such as pulses and edible oil.

Eating out could then get even costlier, as restaurant owners raise rates to cover the rising cost of processed food and cooking fuel.

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Not just food

A depreciating rupee has also made studying and travelling abroad more expensive.

“A couple of my batchmates have dropped out because they couldn’t meet the increased expenses, but I don’t want to leave the course midway,” says 20-year-old Anuj K, a Delhi boy enrolled in a four-year business administration course in the US.

Companies that borrowed dollars from overseas banks will be the worst hit as repaying loans will become costlier. Imported raw material such as copper, aluminum and machinery will become more costly, squeezing profit margins.

The price of services has steadily risen over the past few months too, as the cost of utilities such as telephone connections and electricity have surged.

Thus a visit to a beauty parlour is more expensive now than, say, a year ago, as is pumping iron in a gym or a visit to a multiplex.

Spend on television sets, refrigerators and cars remains muted, squeezed by high prices and low income growth. The fact that automobile sales contracted by 9% in June — the eighth successive month of decline — supports the view that the erosion in purchasing power, on account of persistently high inflation and interest rates, is denting discretionary spending.

At 9.86% in June, consumer price index-based inflation — a more realistic index because it measures shop-end prices — had inched up from 9.31% in the previous month, on costlier vegetables and food items, and experts reckon that interest rates will remain high.

“As long as consumer inflation remains close to double-digits and the balance of payment remains at risk, we expect the RBI to remain on hold [on interest rates],” says Sonal Varma, economist at broking and research firm Nomura.

With an election year coming up, an untamed inflation monster could have electoral implications too.

* Mumbai

I grow my own coriander, curry leaves and chillies: Vanita Shenoy
Middle-income: The Shenoys

Vanita Shenoy has no terrace, garden or backyard. But the box grille outside her window sports freshly-painted pots, droplets on young leaves and mud-soiled gloves. It’s been like this ever since she transformed it into a ‘kitchen garden’ two months ago.

The 62-year-old corporate trainer, now has 12 pots (“rectangular, not circular, because these occupy less space”) here, in which she has planted chillies, coriander, curry leaves, fenugreek (methi), lemongrass and basil.

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“I’m saving about Rs. 300 a month on the first three alone,” she says.

Amid rising vegetables prices, Vanita got the idea of an indoor vegetable garden after visiting her uncle’s farmhouse in Karjat.

“I started with some easy-to-grow plants. Seeing them flourish despite my trial-and-error methods gave me the confidence to experiment with a few more,” she says.

Vanita and her husband Sudhakar, 64, operations head at a legal process outsourcing company, are cutting expenses in other areas too. For instance, they now recycle leftovers.

“I use leftover curries in the next day’s poha, and I makes pakodas with leftover rice,” says Vanita.

Their daughter Shriya, 23, a student, is also taking a leaf out of their book. “Instead of spending R500 on a movie and dinner, I invite my friends over and we watch DVDs and snack on home-made treats,” she says. “We actually love it, because there are no curfews and we can watch as many movies as we want.”

— Deeksha Gautam


We buy milk only on special occasions: Seema Sahni
Lower-income: The Sahnis

Seema Sahni, 25, a homemaker and mother of three, uses her kerosene stove only once a day now.

“Until four months ago, we used to make hot meals twice a day, and some tea in the evenings,” says the wife of a tomato vendor. “Now, kerosene is so expensive. Everything has become so expensive.”

So, the family cooks once a day, and eats the same food, cold, at night.

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Milk has become a luxury too.

“We can only afford it on special occasions,” says Seema. “Until a few months ago, I used to buy a litre a day. Now, we buy milk only on special occasions, like festivals and fasts. The children have learnt to do without it.”

Her two school-going children, aged eight and six, have also stopped taking the bus to school. Instead, they walk the 5 km each way, with Seema carrying their bags.

“As long as they are studying, I am happy,” she says. “They should have a better future than ours.”


We are investing more wisely: Dhwani Kapadia
Upper-middle-income: The Kapadias

Dhwani Kapadia, 6, was disappointed when she asked for a Barbie doll set last month and got an apologetic but resolute ‘not now’ from her father in response.

“I hated to refuse my little girl something, but even a toy worth Rs. 1,800 is an expenditure that needs thought now,” says her father, Kamal, 38.

Kamal and his wife, Manali, 37, both chartered accountants, are cutting back as prices rise. Instead of annual sojourns in Europe, the couple and their two children — Dhwani and Kalash, 11 — are planning family vacations closer home, within Asia or in the Middle East.

For their last vacation, in February, they headed to Goa.

“Our focus is to try to save more than before. Instead of fixed deposits, we invest in tax-free government bonds where we can get higher returns,” says Kamal. “How else will we secure our kids’ future?”

As for the doll set, Kamal finally bought it, but at a significant discount. “I knew the toy store had a sale coming up. Coupled with our store membership and credit-card points, I got 20% off in all,” he says. “Dhwani had to wait for a month, but she understands that money is not unlimited.”

* Delhi

I switched from my posh gym to a less costly one: Madhur Sindhi
Middle-income: The Sindhis

For Madhur Sindhi, 32, a chartered accountant with a multinational company, inflation has meant cutting down on daily expenses, weekend outings and even his fitness-training regimen. Three months ago, Madhur terminated his Rs. 40,000 annual membership at a trendy local health centre and spa, signing up at a more ordinary gym for Rs. 18,000 a year.

Madhur also had his heart set on a touchscreen smartphone. “I had even decided which model,” he says. “But now I have settled for a basic smartphone instead. I realised I couldn’t afford to spend more than Rs. 10,000 on a single device, given my other rising expenses.”

Madhur lives in a joint family home, with his parents and his elder brother’s family. “We are now thankful for this setup because it makes it easier to share expenses,” says his father, Suresh, 69, a retired engineer.

These rising expenses have also affected the philanthropic activities of the Sindhi family. “Every year, we would donate a certain sum to a school for the blind and foundation for senior citizens,” says Suresh. “This year, we have had to pick between the two and donate to just one of them.”

— Furquan Siddiqui


We have put off our plan to buy an office space: Neeraj Gupta
Upper-middle-income: The Guptas

Artist Neeraj Gupta, his architect wife Preeti and their two children, aged 17 and 11, are all nature enthusiasts. So the family had planned a wildlife safari trip to Kenya this year.

“But what with the rising price of the dollar, coupled with inflation, we decided to go on a domestic trip instead,” says Neeraj. The family chose Ranakpur, a temple town in Rajasthan.

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“On the bright side, this gave us a chance to explore our country,” says Neeraj. “We went on a safari, explored a ruined palace, all for a fraction of our original budget.”

Rising prices have made the Guptas rethink other expenses too. The family now goes shopping only during sales. Their son, Harsh, who has been asking for a new PlayStation, has been told to wait.

“We have cut down on family outings too,” says Neeraj. “No more fancy five-star dinners for us. These days, we usually end up at India Habitat Centre where I am a member and the prices are low.”

And Preeti, who was looking to buy an office space, has been forced to put off that plan.

“Property prices are just too high,” she says.

— Zofeen Maqsood


My wife will have to work now: Santosh Kumar Mishra
Lower-income: The Mishras

Santosh Kumar Mishra, 37, sells newspapers and magazines on a pavement near Connaught Place. “My monthly income of Rs. 9,000 is no longer enough to support my wife and three children,” he says. “So my wife, who never wanted to work outside the house, will now have to pitch in too.”

Santosh’s plan is to set up a roadside food stall where his wife Manju, 35, can sell snacks.

“It’s not what we wanted, but it’s the only way I see us handling the rising cost of living,” he says. For now, Santosh is saving every penny he can so that he can launch the food stall in December. “We have to try to make life a little better,” he says.

— Srishti Jha

 
* Kolkata

We shop less. Still, monthly savings are down by 70%: Avishek Das
Middle-income: The Das family

Whether it’s shopping, eating out, partying or petrol, the Das family has had to cut back.

Avishek Das, 32, a senior manager in a multinational bank, no longer drives to work — or orders lunch from his favourite eateries.

For six months, he has been taking public transport, and carrying a home-cooked tiffin with him. His wife Swati, 31, a restaurateur, says they have also cut down on purchases of branded clothes — unless there is a sale on — and they no longer watch movies in multiplexes.

With expenses mounting for their two-year-old son, Ishan, they are now saving less too — putting away only about a third of what they were a year ago. “We are now looking to invest in property, because we are worried about the future,” says Avishek.

— Orin Basu


We will have to find a third job to support ourselves: Ashok Mondal
Lower-income: The Mondals

Living  in the slums of Debinagar on the outskirts of Kolkata, Ashok Mondal, 51, pulls a rickshaw and his wife Minu, 42, works as a domestic help. Of the couple’s three daughters, two are now married, but the youngest, Tanushree, has recently dropped out of school.

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The couple’s meagre income, once just about sufficient, is no longer enough. So the Mondals now plan to set up a snack shop to supplement their earnings.

“My husband’s health is gradually failing because of his strenuous line of work, but we are worried,” says Minu.

“We know that we will have to work harder to support ourselves as the prices rise. If we don’t, how will we now even afford the expenses of our youngest daughter’s wedding?”

For now, the family has cut down on vegetables and pulses, opting instead for panta bhat (fermented rice).

“Hopefully, selling snacks and puffed rice will enable us to support ourselves and start saving for Tanushree’s wedding,” says Minu.

— Orin Basu

 
I’m learning from the Net how to recycle leftovers: Rasila Mehta
Upper-middle-income: The Mehtas

Homemaker Rasila Mehta, 66, now regularly recycles leftover food, where she would once throw it away.

The relatively wealthy family — Rasila’s two married sons have run the family electricals business since her husband’s death — has been otherwise largely unaffected by the rising prices.

They still drive their two cars and live in a spacious bungalow.

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But cooking for an eight-member family — Rasila, her two sons, their wives and Rasila’s three younger children — has become increasingly taxing given the steep rise in the prices of vegetables.

“The trick to recycling food is improvising in the kitchen,” she adds. “I use recipes and tips gleaned from the Internet.”

For example, leftover rice is mixed with flour, oil, curd, salt, chilli powder and ginger-garlic to make a dough for parathas, to be had with curd and pickle.

Leftover vegetables especially are carefully recycled. “Overall, this part of our budget has become the most troublesome,” says Rasila. “Even six months ago, our monthly vegetable bill was about Rs. 3,000. Now, if we were to eat the same food, it would be more than double. So we have been forced to adapt.”

— Pooja Mehta

 
* Bangalore

I operate my bank accounts online, to save on fuel: Sampath K
Middle-income: The Sampaths

Rising prices have hit Sampath K, 28, particularly hard since he runs a stock market franchise and is also seeing his income fluctuate.

Where he once rode his bike for work and errands, he now conducts his many financial transactions online, to cut down on fuel expenses.

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He and his wife, Kishori, 26, a radio compere, and their year-old son, would also regularly travel to their hometown of Mangalore for weekend breaks.

“We used to go by bus. Now we go by train because it’s cheaper,” says Sampath. “Plus, we can book train tickets online, instead of spending fuel money travelling to the bus depot twice.”

— Naveen Ammembala

 
I don’t fly to meetings any more: Surya Nataraj Sharma
Upper-middle-income: The Sharmas

Surya Nataraj Sharma, 38, runs a tour business and an auto tools export business and he loved riding to his offices in his large luxury car.

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Ten months ago, though, he drove his luxury car into his garage and wrapped it up for the time being.

“I get much better mileage on my smaller car, so I just had to switch,” he says. “The big car used to bring me prestige, but the smaller one can get the job done just as well.”

Nataraj’s wife Suneetha Deshapande, 30, a homemaker, is also cutting back. Rather than dropping their five-year-old daughter to school in the smaller car, she now uses a scooter that her husband recently bought her for that purpose.

Meanwhile, rising fuel prices are also eating into the profits of Surya’s tour company, which currently plies buses between Bangalore and Mumbai, Chennai and Hyderabad.

“I am cutting costs by slashing my own travel budget,” he says. “I used to fly to Mumbai, Delhi and Chennai regularly for meetings. Now, I conduct them over the telephone. The other day I went to Mumbai by my own bus instead of a business-class flight.”

 
We were forced to sell our second-hand fridge: Krishna Gowda
Lower-income: The Gowdas

Krishna and Suma Gowda used to run a medium-sized vegetable shop, paying Rs. 3,000 per month in rent for the space. But with rising prices and two college-going children to support, Krishna, 40, says they could no longer afford the rent, so they moved out seven months ago.

They now sell their vegetables in the space outside someone else’s shop.

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This helps them set aside some money, for the children’s education.

Forced to cut back on electricity usage too, the Gowdas recently sold their second-hand refrigerator. “Without a fridge, we cannot stock vegetables any more,” says Suma, 35. “We buy smaller quantities of vegetables and try to sell them on the same day.”

Leftover vegetables are eaten, which helps, since they can no longer afford fish as often as they used to. “We eat fish  only on Sundays now,” says Krishna. “We used to eat it three or four times a week.”

 
* Lucknow

I no longer use my car: Shyam Mohan
Middle-income: The Mohans

For about a year, shop owner Shyam Mohan, 55, has been walking the 2 km to his stationery store and back rather than use his car. If he must drive, he uses his scooter. “My car is only for emergencies now,” he says. “Petrol is just too expensive, what with all the other inflation we are fighting at the same time.”

Amid rising vegetable prices, the family budget received another knock when, on June 1, the Uttar Pradesh government hiked electricity charges by 40%, affecting the Mohans’ bills both at home and at their shop.

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“I used to pay Rs. 1,000 a month for electricity at my shop in October 2012. Today, I pay Rs. 1,600,” says Shyam. “The tariff for my home has risen from Rs. 3,000 in May to Rs. 4,200 in June. As a result, we have switched to CFL bulbs and we no longer use the AC.”

— Gulam Jeelani

 
We scrapped our US trip: Anil Singh
Upper-middle-income: The Singhs

Anil Singh, 63, a retired professor of Lucknow University, and his wife Rita, 61, a homemaker, were all set to tour the United States this month, a trip they had been planning since April.

Then the rupee began falling and they realised they would have to cut back on expenses during the trip. That was in May.

This month, as the rupee hit an all-time low of 61.21 against the dollar, the senior citizens called off their trip. “It just didn’t make sense at these rates,” says Anil.

The couple is now planning a visit to their daughter in Gangtok, Sikkim, instead. “We will stay with her there, which means we will only need to pay for our flights, and maybe a little shopping,” says Rita.

While travel has been their biggest concession to rising prices, it is by no means their only one. The retired couple has also cut down on weekly outings and dinners, turning them into monthly affairs instead. “Inflation has hit all of us,” says Anil. “All, that is, except the politicians and business tycoons.”

—Rajeev Mullick

 
We use chillies as a vegetable: Tej Bahadur
Lower-income: The Bahadurs

Daily wage earner Tej Bahadur, 46, no longer starts his day with a cup of tea.

“We cannot afford milk and parathas for breakfast,” he says. “We now have tea only in the evenings. And the day we cook dal, there is no vegetable, and when we cook a vegetable, usually potato, dal is off the menu.”

Chutney and chillies substitute for vegetables, adds Tej’s wife, Chayadevi, 42, a homemaker.

“Onion, tomatoes, milk and sugar have become like luxuries for the family.” To save on cooking gas, the family has also started using firewood and an earthen stove.

Their daughter Sushma, 13, a college student, has been hit hard too. “I can no longer afford the bus,” she says. “So I walk or cycle to all my classes.”

— Anupam Srivastava


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