Price panic 2007 | india | Hindustan Times
Today in New Delhi, India
Nov 18, 2017-Saturday
-°C
New Delhi
  • Humidity
    -
  • Wind
    -

Price panic 2007

The onion is called the most political of Indian crops. Its soaring price has impelled the rise and fall of governments in 1980, 1989, and 1998. The doubling of onion prices since last year is justifiably making the establishment teary-eyed once again, writes Renuka Bisht.

india Updated: Feb 20, 2007 12:18 IST

The onion is called the most political of Indian crops. Its soaring price has impelled the rise and fall of governments in 1980, 1989, and 1998. Even the now infamous India Shining campaign received its share of drubbing from the fluctuation in the fortunes of this ubiquitous vegetable. The doubling of onion prices since last year is justifiably making the establishment teary-eyed once again.

The onion scenario vividly encapsulates the complex, wide-ranging and worrying impact of the inflation of primary articles such as milk, moong and mustard oil. Already, according to the 2006 State of Food Security in the World report, India has the largest number of undernourished people in the world. How a continuing rise in food prices would worsen the living conditions of such a vulnerable population is anybody’s guess. The only certainty is that it will make for a rather ugly picture.

Last adjusted in 2005, official poverty lines for rural and urban India stand at respectively 368 and 557 rupees per person per month. The best that the people in this income range could hope to obtain even back then were 650 grams of foodgrains everyday.

To quote the good book out of context, man does not live by bread alone. Man, woman and their children also need access to education, healthcare, clothing, shelter, and sanitation to survive and perhaps prosper. But officious celebrations of an all-time low incidence of poverty do not factor in any “need” other than food. Mohan Guruswamy and Ronald Joseph Abraham of the Centre for Policy Alternatives have argued that when a more inclusive measure of poverty is used, as many as 68-84 per cent of Indians would qualify as poor.

As far as the official statistics are concerned, 22 per cent of the rural population has a monthly per capita expenditure (MPCE) below Rs 300. The urbanites’ 87 per cent higher MPCE does not merit complacency either. The life story below spotlights an urban family substantively “richer” than its “average” counterpart, and shows how inflation is endangering everything from food security to education prospects even for this segment.

How do we reconcile these statistics with much celebrated growths in manufacturing, industry, national income, foreign reserves and GDP or with the projection that the Indian economy will be about 60 per cent the size of the US economy by 2020? One answer is supplied by the marked increase in inequalities.

According to a Hindustan Times-CNN-IBN survey conducted by the Centre for the Study of Developing Societies, an overwhelming 62 per cent of Indians believe that the post-1991 policies have “only benefited the rich”. As Praful Bidwai has exclaimed, even half the rich think the same!

India’s northbound consumption expenditure is being fuelled by a middle class dynamically growing at 12.2 per cent and a salaried class that has reportedly received the highest pay hikes in the world this year. It would, however, be both self-deceptive and foolhardy to imagine that this growth can be healthily sustained unless its benefits spread across the country’s population.

In any case, while it endangers the poor early on, sustained inflation ultimately gets to everyone. Since last year, the price of chicken has shot up by 30 per cent and apartment prices have jumped nearly 60 per cent in the fashionable neighbourhoods of South Mumbai. Only the elite residing in the remotest of platinum and ivory towers can trump this inflationary spectacle.

To those who argue that the current inflation in India is uncontrollably pulled up by global factors, European Central Bank’s Matteo Ciccarelli and Benoit Mojon offer a salutary rejoinder. They find that OECD countries strongly pledged to price stability are able to better mitigate global inflation. In our context, the need for such a commitment cannot be overstated. The following stories address specific measures that can offset price instability in India.

Email Renuka Bisht: renuka.bisht@hindustantimes.com