Inflation- Some Lateral Dimensions

I don’t know why MPs in parliament are playing a friendly match on inflation. At the end they all will vote in favour of the resolution expressing concern over price rise. And they have played this game a number of times just to show the concern without taking any effective steps to curb inflation that affects the poorest the maximum.

Even with the average annual incomes having doubled to an estimated $1,664, the inflation has only worsened the quality of life for more than 70% of the population.

Over the years since I started working for a salary after my IIT with a dream of wonderful life style, I have experienced that. I hear nowadays, the salaries are pretty high, but I am sure the salaried persons must be facing the same agony.

As the price increases, a house wife or whosoever manages the budget of the house gets into only one exercise of cutting down on the quality of the commodity to switch over to that of lower prices or of reducing unit consumption. For example, one shifts over to coarser grains such as rice of lower unit price or reduces the amount of milk in tea or add some more water in it. These are areas that are under one’s control. But what happens if the price of the services get escalated that normally happens and that too without any notice? That is the lateral dimension of inflation. With the first report in media, the service provider increases his charges. The other day, Yamuna called someone from the nearby chemist shop to measure her blood pressure. Unfortunately, she is in trouble these days because of the age and it is very difficult for her to walk. After the young man did his work, I asked the amount I must pay. She said, ‘Please give Rs 10-20’. The young man intervened, ‘What can that money buy these days? Sir my charge is now Rs 50’. I gave Rs 40. Here at least I could give a little less. But I was totally amazed when we visited our general physician, when the lady at the counter asked me to pay Rs 400 instead of Rs 300 as consultation charges. When I expressed my surprise, she pointed her finger towards a computer-printed notice about the change. I didn’t dare to negotiate. We are to go there twice a month. Still, without telling the consultant the reason, we have started visiting him after 30 days instead of every 15 days.
Inflation shocks turn into a self-reinforcing price spiral. As reported, ‘the fee of most of the surgeries has doubled in the past five years.’ The experts attribute it to better and safer healthcare facilities. But where from one creates the resource to afford the care?

The worst thing of inflated price is that once increased, it never returns to the base value. The reduction if at all is just minimal. How do you control the price rise of service functions? How do you reduce the prices that once have been raised?

That makes me believe a report of the Asian Development Bank that said, ‘half-a-million Indians were pushed below poverty line because of the food inflation in the past three years’.

And the parliamentarians hardly bother. Most of them don’t shop themselves with the money they get as salary or allowance. Someone else or some agencies do that.

Unfortunately, today too, they didn’t come conclusively to some steps to curb inflation and a time frame for it. Why do they enact the drama in parliament? Perhaps it is only for the vote bank.

I will agree with the content of a very good and rare article from Jaswant Singh: One reason that Indian prices are rising is that infrastructure growth remains sluggish. Progress on roads, railways, and power projects – all of which could prevent food from perishing prematurely, and energy and commodities from being unnecessarily wasted – is essential to stabilizing prices.”

The government must ensure the supply side and remove the controls such as one that don’t allow free movement of agriculture produce from one state to the other.

Inflation above 3% is not acceptable for a poor India. Unfortunately, we are not seeing it coming.

This entry was posted in economy. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s