PROBLEM OF RISING PRICES
The problem of rising prices is the greatest economic problem of India today. The constant rise in prices is cutting the throats of millions today because millions of people find it hard to earn one square meal a day. Millions in India today sleep without food at night and wake up hungry in the morning to do their day’s work. But all their day’s work does not promise them sufficient to eat and drink.
No doubt it is a baffling problem throughout the world, still a developing country like India can only ill-afford it. It has and will further make poor poorer and rich richer and consequently will bring untold miseries to men of common means. Prices have become double in the last five years and many common things are beyond the reach of the common people. Even pluses have become a luxury and only the rich can afford them. Meat also sells at a fabulous price. More and more things are going beyond the pockets of the common people.
There are various factors that contribute to this rise in prices. Some are natural factors like unfavourable weather conditions which affect the food production and lead to the shortage of commoditiesin the market. With more money chasing less goods the prices take to the wings. Compounding this natural problem are other man-made problems like hoarding which contributes to the escalation of prices and the reasons are not far to seek. There is a craze for getting rich as quickly as possible. The industrialists, the manufacturers and the middlemen seek the highest profits and have no soft corner for the poor consumer and the purchaser. Big industrial concerns have become like economic empires and dictate their own terms to the common people. Some twenty families of Tatas, Birlas, Dalmias, Ambanis, Singhanias and others hold the country at ransom. They have tons of black money and they are running parallel government. Smugglers, industrialists and the black marketers are the real masters of our land. They hold police and judges as their slaves.
Apart from the natural and man-made factors that add to the price rise, the government is also at fault. It is increasing taxes on raw materials and finished products, thereby pushing prices to astronomical heights. It has been resorting to a deficit financing and printing currency notes by the tons. It has increased prices and the common man is paying for his needs through the noise. In the recent times the official rate of inflation has been hovering around 7 to 8 per cent.
To keep the prices of essential commodities within reasonable limits, the Indian government had constituted the cabinet committee on prices and special committee of secretaries on monitoring prices. These bodies monitor the prices and supplies of essential commodities regularly. Apart from these the Department of Consumer Affairs monitors the price of 12 essential commodities e.g. wheat, rice, oil (groundnut as well as mustard), vanaspati, sugar, arhar, gram, salt, tea, potatoes and onions on a daily and weekly basis.
Though the government’s steps to check rise in prices i.e. inflation are laudable these measures will have a positive impact on the prices only if they are coupled with a massive drive against hoarders, black marketers and anti-social elements.
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Top 10 reasons why vegetable and pulses prices keep soaring in India
October 16, 2015
by Rumani Saikia Phukan
The rising prices of vegetables and pulses have been a serious concern in Indian homes in recent years. If you think that it is only onions whose price is increasing, you are highly mistaken. The price of pulses like Arhar Dal has reached a maximum of Rs. 120 per Kg just recently. The sky-rocketing prices of vegetables and pulses have made an average middle class family think twice before buying or consuming them. Prices of these staples are soaring all across the nation. The big question is why is there constant food inflation?
Why the prices of pulses and vegetables are increasing at a continuous pace in India? It is not due to a poor harvest or a bad monsoon. Plus the country’s backbone is agriculture. There are various factors involved in the rising prices of these products:
1. Increase in the demand for protein-enriched food and green vegetables: The lesser-known Bennet’s law gives an important explanation for rising food prices. According to this law, when income rises or people become wealthier, they change their dietary habits, shifting their tastes from simple starchy plant-dominated diets to variety of food items, including a range of vegetables, fruit, protein rich food and dairy products. However, the supply of these vegetables and pulses is not adequate in comparison to their demand. Hence, the price rises.
2. Global inflation: Experts say that rise in essential food items in India is primarily because of the increasing commodity prices abroad, increase in fuel prices and fertilizers, which in turn affect the local produce by increasing input costs.
3. Less space for cultivation: With an increase in population, there is also an increase in the demand for vegetables and pulses. Increase in population has also led to increased urbanisation. Manufacturing, energy and service industries are all competing for land, water and human resources. With less availability of land, the prices for agricultural land are rising, leading to increased costs of agriculture produce.
4. Less production of pulses: Despite high wholesale pulse prices in recent years, farmers of India are not very keen on taking up cultivation of pulses due to high fluctuations in production and prices. There is no effective government price support mechanism. Farmers are keen on cash crops cultivation like cotton and maize because of better returns and lower risk. This was published in a research study by the National Council of Applied Economic Research. In the same study, it was also mentioned that production of pulses has recorded less than 1% yearly growth during the last 40 years, which is less than half of the growth rate in Indian population. As a result, per capita production and availability of pulses has witnessed sharp decline in India. This invariably leads to a rise in the price of pulses.
5. Improper management and distribution: An important question that arises is whether the agricultural produce has been stored and distributed optimally or not? There is always a gap in the food sector regarding this. Whenever, a report on climate change is published or a prediction of a flood or drought, there are instances of occurrence of supply shocks. Because of the short sightedness, the prices go up significantly. Deliberate spoilage of food due to inadequate storage and distribution reduces supply, thereby increasing the price.
6. Hoarding: The concept of keeping stock of food products like onions, potatoes, rice, pulses etc. even when the season is over and reselling at higher prices when there is demand is known as hoarding. In India, hoarding of essential commodities is very common and goods are sold at double the prices for increased profits.
7. Increased cost of transportation: With increase in fuel prices, the transportation charges also increase, leading to a rise in prices of all commodities, and vegetables and pulses are no exception.
8. Increased cost of production: One major cause of increase in the prices of vegetables and pulses is the rise in the prices of the raw materials required in the production starting from seeds, to fertilisers, pesticides, and labour costs. As a result, the cost of the end product also increases.
9. Many mediators: In India’s trading community, the end product reaches the consumer after passing through various mediators or middlemen. Each mediator tries to get profits by increasing the original cost and the end price becomes very high than the actual price. So, it is very common in India that we, as consumers, pay a high price and at the same time the farmers do not get a deserving price for the same food product.
10. Supply chain mismanagement: There has been mismanagement in the supply chain of vegetables and pulses from the farmers to the consumers. According to reports, the difference in wholesale and retail prices is anywhere between 40% and 60% and this margin is more within cities where there are the wholesale markets. Some of the major issues related to supply chain mismanagement in India are lack of rural infrastructure, inadequate and ill-equipped mandis, lack of proper handling and no direct marketing by “farmers to consumers.”
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