By P. Sudhir
In September this year, average price rise hit a nine-month high of 5.5 per cent. More significantly, prices of food items crossed 9.2 per cent. A majority of Indians spend nearly half of their income on food. So, food inflation hurts the most. Among food items, vegetables in particular saw a staggering price rise with year-on-year price increases of 42.4 per cent for tomatoes, 66.2 per cent for onions, and 65.3 per cent for potatoes. These three are the most consumed vegetables, across the country. While the government and its apologist economists trotted out the usual excuses of weather disruptions, the fact remains that every year, prices of some vegetables undergo an unbearable spike that has the effect of transferring crores of rupees from already strained family budgets to the coffers of big traders and wholesalers.
Several other items of consumption too are seeing exorbitant price rise. One of them is cooking oils, which is partly attributable to the rise in crude palm oil prices by over 45 per cent in the past three months. Crude palm oil is used not only for processed food items but also for items like soaps and cosmetics. This burden too has been passed on to the hapless consumers by companies.
In a shameless display of its allegiance to profits of big companies, the government raised the ceiling on prices of some essential drugs by a shocking 50 per cent, using the Drug (Price Control) Order. This affects drugs used for treatment of asthma, TB, thalassemia, and key antibiotics for treating bacterial infections. The argument given was that if prices are not increased, the pharma companies will find it unprofitable to make these drugs!
Meanwhile the indirect tax burden on the people through extortionate duties imposed by the government on petroleum products continues unbridled. Despite a fall of 18 per cent in international crude oil prices since April this year, the Modi government has maintained petrol and diesel retail prices at the same level. In 2022-23, total revenue gained by the central government from various taxes, cesses, royalties, duties on petroleum products was a jaw dropping Rs3.5 lakh crore. Since the Modi government came to power in 2014, it has so far raked in a jaw-droppingRs26.74 lakh crore from taxing petroleum products alone. This unconscionable burden has a multiplier effect on prices because transport costs go up, affecting essential items like food grain and vegetables.
There is much attention paid to the RBI’s efforts to control inflation but it appears to be hogwash. One recent analysis by economists showed that in the 101 months since May 2016, CPI inflation exceeded RBI’s 4 per cent inflation target 72 per cent of the time, and it surpassed the upper threshold of 6 per cent in 28 per cent of the cases. This obsession to ‘control’ inflation on the part of RBI is motivated more by corporate well-being rather than people’s interests as it is linked to bank lending rates and other monetary policy shenanigans.
The complete shambles of government policy with regard to price rise control – despite repeated promises to do so – is actually an inevitable result of the complete neglect of any coherent steps on its part. Apart from dropping such egregious schemes as using petroleum products taxation to raise resources, the government should have strengthened and expanded the public distribution system to act as a counter-weight to price gouging in the open market. It should stringently implement existing laws to rein in hoarders and black marketeers, especially of essential vegetables (like onions) and food grains (like pulses). On a larger canvas, it should encourage and expedite public sector production of essential drugs, stop privatisation of education and health services which have seen steep rise in costs. It also needs to move towards self-reliance in production of various essential food items including cooking oils and pulses. Just jumlas and bombastic electioneering is not going to rein in prices – more action is needed. (IPA S
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