Inflation: Learn to live with it

Mother Dairy has started charging Rs 25 per litre of full cream milk from today. It was charging Rs 24 till yesterday. How much does it pay to the milk producers at the rural collection centers? As I understand the producers don’t get anything more than Rs 10-12 for a litre of milk.

Some aspects of inflation are difficult to understand for every one. The rise in the prices of rice and wheat or other grains after the harvest time is only because of hoarding, be it by the farmers, traders, mill owners or the government. One can very well understand with so small a holding, the farmers can’t hoard. Farmers are always under the pressure to sell the produce just after the harvest to clear all the credits from the moneylenders or shopkeepers. The farmers are not very much united too to press their issues with the traders or the government authorities. On the other hand, the traders, shopkeepers, and mill owners do hoard as they have resources and because of the cartel increase the prices when they wish to make money. It is only for the government to find a way out to control the tricks of profiteering if the appeal for unethical price hikes fails.

Just few days back, the traders were not lifting the potatoes in Agra. Farmers were ready to sell at any price. But today, even the outlets of Safal, a unit of Mother Dairy is selling potatoes at over Rs 10 per kg, when the mandi price is between Rs 3 to 8 per kg. How much should be the transportation and handling cost? How much must be the margins? Farmers or producers are neither responsible nor getting any share of the price being charged from the consumers.

The price rise of food items that are produced sufficiently in the country is certainly not due to the global price rise. Transportation cost, which can be claimed as increased because of the fuel price can’t be that high with any rational costing.

I don’t understand two other steps of the government- one related to increase of the export duty of Basmati rice and the second is the ban on production of ethanol from molasses. Is the government doing that to provide cheaper basmati rice to the rich men of the country? Can the production of ethanol cause shortage of sugar? Perhaps the policy gets distorted because of some other reasons.

And as I understand, the rise of the prices of steel and cement contribute quite a bit in increase in inflation rate. The government has failed miserably in facilitating the increase of the production capacity of both the items in the country. The country’s per capita consumption of both the items is extremely low. Many firms have committed setting up new steel plants with 193 MOUs with various states for planned capacity of around 243 million tones and total proposed investment of over Rs 5.14 lakh crore. But in last four years the companies have failed to start the work on the project because of the policies of the governments both state and central, and its red tapes and agitation of the locals. Posco, Tata, and Arcelor Mittal are still running around to get the project started. Is there no role of the government- the state and central? Can blaming each other for the hold ups satisfy them? In the same way, the cement industry has announced a massive expansion of 110 million tonnes and has even ordered the plants. Should not the government see the execution of the projects that would have avoided shortages and price rise?

However, the impact of the inflation on the monthly grocery budget is annoying with the prices of pulses, cooking oil, and even cooking gas shooting up. What is the use of mandi declaring the price of Arhar dal at Rs 34 a kg, if it is available at nothing less than Rs 50 at any outlet, be it organized retail or shop in the neighbour?

Why are the prices of cooking oil so high when Gujarat Co-operative Milk Marketing Federation, the country’s largest milk co-operative and brand owners of ‘Amul’ says, “Butter is an anti-inflationary product and inflation has no direct effect on its input costs.” And it is not planning to increase the price of butter. Why can’t others follow?

Unfortunately, there is hardly any interest in reducing or maintaining the prices through various cost cutting techniques, as the only motive of business today is to keep the profit at maximum.

Unfortunately, the price once increased never comes down significantly.

Inflation has become global phenomenon. Grumbling can only cause cardiac problem. We are to learn to live with it.Indian housewives know it best.

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