The whole world reeled under pandemic pressure, but people of India, especially the poor or middle class has been suffering from multiple problems of a pandemic. These problems are meekly discussed by individuals but not by political parties and by mainstream media in accordance with the magnitude of the problems and the population they are adversely affecting. As per PEW Research Centre, Washington DC, report on 18 March 2021 due to pandemic 75 million (750 lakhs) individuals joined below poverty line race and 320 lakh people lowered their status in the middle-income group. India has been affected the most. If we check at the global level more than 60 % adversely affected people are Indians. The population has been divided into five categories based upon their income level. Those earning less than $ 2 (Rs 150) per day are termed as poor, whereas those between $ 2 to $ 10 (Rs 150 to Rs 750) as a low-income group, $ 10 to $ 20 (Rs 1500 to Rs 3750) are in the upper-middle-income bracket and those earning $ 50 (Rs 3750) and above are in rich class. As per the United Nations report of 2019, out of the total population of India 28% (36.4 crores) people were below the poverty line and this has increased over a period of time.
The government, since the start of the pandemic, is assuring that once we come out of the pandemic everything (the economy) will improve but instead of recovering, the situation in 2021 is further deteriorating due to inflation and unemployment. The three things business, employment and inflation are interrelated. As per economic theory when a business reaches top-level, unemployment touches the lower end means maximum people having employment and pockets full of money, then there is inflation and that inflation is considered as good to some extent.
But today when we clearly observe the economics and ergonomics the situation is entirely different. The unemployment rate in India is at 14.1%, and if we collect data about the last three weeks of May the unemployment rate surges to 18% giving a clear indication that it will be further going up. The government seems to be in no mood to bring it down, as it does not have a road map as to how to tackle the menace. From January to April 2021 there is a job loss of 1 crore, which means the further rise of unemployed heads. Even those who are in jobs are facing salary cuts putting pressure on their earnings and spending.
Business is also in the doldrums and rich people are moving to other countries. In the last 7 years, almost 29 thousand rich have moved to other countries. It is a clear indication that conditions are not good in the country. So as per economics, inflation should have gone down but instead, it is increasing day by day. Today the inflation rate of India is at 7%, whereas government and Reserve Bank of India wants to keep it at 4% but were not able to and all measures taken failed miserably.
Let us look at the commodities that are contributing to inflation. The biggest jump in inflation is seen in necessities like food, medicines, LPG, oil (petrol and diesel). The individual can postpone the luxuries but cannot avoid eating food. During the current period, the food inflation is at 14.77% even though food production has recorded a new high. If we collect last seven years data the production of wheat and rice have increased by 38 million metric tonnes, in 2015 it was 190 million ton and jumped to 228 million metric ton in 2021. Similarly, the production of pulses increased from 23.03 million metrics to 24.42 million metric tons in 2021. Still leaving a gap between production and consumption, the requirement in India for pulses is about 26 million metric tons. In order to fulfil the requirement Govt of India imported pulses but still was not able to control prices. Talking about the mustard crop, its yield increased by almost 20%, on the contrary, the prices of mustard oil has almost doubled from Rs 100 to around Rs 200. Apples from Kashmir were brought from farms at prices of Rs 6 to Rs 25 depending upon quality. The same apples are sold in retail markets of India at prices of Rs 250 and above. It is not only about mustard oil or apples but the price of every eatable is rising at an exorbitant rate. In contrast, farmers are dumping their produce on roadsides, not able to fetch a price that covers their cost, take note of what happened to the tomato crop in Kolar, Karnataka. The farmers were paid a price of Rs 2 for 15 kg tomatoes, forcing them to throw their crops. The same thing was witnessed in Amritsar, Punjab. Actually, big corporates and merchants have full control of markets. The moment fresh crop comes into the market they buy it at their own price and after the season is over they sell stocked crops at their desired prices.
This all is happening when still agriculture laws and Essential Commodity Act 2020 are kept on hold by Supreme Court, giving it sense that internally they are being used. Taking a note one or two big corporates bought all mustard from different states at a price of Rs 5500 to Rs 6000 per quintal and now the price of the same mustard is at Rs 7000 per quintal, giving it a clear indication that now the farmers sold the crop and small merchants are also out of stock. Now the prices of mustard crop and mustard oil are at the mercy of corporates who purchased the crop. The same thing is for apples they are now stored in godowns of few big corporates which sell them as per their will and prices. Think about the fate of the common man, when the Essential Commodity Act 2020 will get a legal signal. The government has announced that 80 crore people will be given food grains free of cost till Diwali, but not realizing the factual situation that food grains need to be processed and the costs of processing oil, cooking gas, salt etc. are increasing day by day making it difficult for the common man to fill the belly.
The case of medicines is not different, prices of medicines have increased 25 to 50 % since the start of the pandemic making it difficult for middle and poor people to afford medicines.
The onus of the hike in prices of food and medicines lies on big corporates and merchants. But what about the prices of cooking gas, petrol and diesel. The centre and state governments are responsible for it. The prices of petrol and diesel are nearing Rs 100, out of which base price is only one third and almost equivalent amount as excise duty and central and state government VAT. In the 21st century having a vehicle is a necessity, to get a job. How can one imagine delivering pizza in 30 minutes on cycle? Similar is the situation for cooking gas (LPG) whose prices have doubled in the last 4 years from Rs 425 to Rs 850 per cylinder. Even the government has cleverly made way to shed off its responsibility of subsidy. Earlier it was said that prices are low we will further reduce it, but it went another way around. Now the subsidy money comes in account and is merely Rs 20 – 21, which is even difficult to check whether money has come or not.
Along with inflation, banks have also given the common man a jolt. Most middle class and old person’s keep their money in the banks, the reason being the money is safe, moreover, they get some extra income in form of interest. Now banks have reduced the fixed deposit rates to around 5% out of which 10% goes as tax. This means that interest earned comes to 4%. Taking an example, a person will get Rs 4000 as interest annually against a deposit of Rs one lakh, making a gap of 3% between the interest earned and inflation which is at 7%. This means that interest is less than inflation and Rs 100 will become 97 in a year when kept in the bank. The situation has arisen that people savings are eroding, even many are taking out their EPF money or taking loans to fulfil their daily needs.
It gives immense pain when we see our government just focus on building the brand image of the country at the international level, leaving the citizen to fend on their own. To lower inflation, should be the prime focus of the government otherwise it will be throwing its major population into abject poverty and hunger. It appears that the government has turned a blind eye to inflation due to its changed policies. The government is unable to control inflation as they have handed over their rights to corporates. No doubt our country is democratic and people are free to do business, but that does not mean few people using bank money to hoard essential commodities and make a quick buck labelling it as profit, government intervention is required immediately and should fix the minimum price of essential commodities and based on the cost of production and also fix the maximum retail price (MRP) depending upon the value addition.
Dr Amanpreet Singh Brar
9653790000