The Price Is Not Right

Rising prices in India have always been the ‘run to’ issue for any political group.It favors everyone except the government. This of course leaving aside the average Indian who has to spend more.Now that it’s Food Prices which are going through the roof, the usual round of chatter has begun. Opposition parties accusing the incumbent government of lackluster action, ineffectiveness and the usual lingo that anyone in India is used to especially when it’s a battle between political parties. None of the rhetoric in any case means squat if prices do not come down. We’ve been harping on rising prices for over a year now, I sincerely hope that this is not the case a year later as well.

On paper India has the most suited political answer to the economic tangle of rising prices. A liberal economist as the Prime Minister. Another economist in P.Chidambaram who heads the Home Ministry but is still an instrumental cabinet member regularly consulted on financial matters. Pranab Mukherjee, the Finance Minister, an experienced strategist often used to the pulse of the nation and including his current term a two time finance minister.

A Monetary Policy wielded very stringently by the RBI and the Planning Commission headed by MS Ahluwalia, he’s also had experience in this department earlier.

In spite of the impressive resume prices are rising ….everyday and the white collars in the finance and food ministries look totally hapless.

The food market is a cruel place - agreed. Managing prices is about balancing supply and demand. The fact that this government took the foot of the pedal after the monsoon improved a bit last year is seriously hurting them, more so the everyday Indian.

Paying 50 rupees for a kilogram of sugar is downright ridiculous and unlike other commodities which build up their rates over time, in case of food items the rise is instant because the food market is highly perceptive. You might pay 20 rupees for a kilo of onions today but a week later can pay double. The rise is that fast and the market as usual spares none.

Because of the backlash the government has done what it usually does in a situation like this -- to push the import button. India has done this many times before; we stack bags and bags of rice, wheat, sugar, etc in godowns .We hope that the problem then disappears because the supply is matched.

Yeah well! So what? It’s true but what’s the point in saying it? Is the approach to controlling food prices always to:

a.)  Regulate the problem with short term cures, imports, subsidies. All done before but none which endure?

OR

b.)Focus on implementing the long term solution. An efficient irrigation system, less dependence on imports by becoming producers and empowering the farmer, making distribution efficient, cleaning up the supply chain.

Simple and basic solutions which will help the Indian yet not executed. Instead the Food Minister Sharad Pawar seems to be more content running the Board of Control for Cricket in India.

 I mean we’re paying more than 50 rupees for a kilo of sugar and around a hundred for a kilo Of Tuvar Dal. What are we going to be paying for the same items even two years from now?

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