Super-flation

Scene at the Market

The effervescence of the mangoes got my olfactory senses into a trance and pulled me towards the fruit vendor. The mangoes were assorted neatly depending on the shades of yellow and green and their sizes. I wanted the one’s that were fluorescent and medium sized.

“Bhaiya, Aam kitne me de rahe ho”, I asked the shop keeper in my not so fluent hindi.

“char sau, ek dozen”

“char sau”, I asked in agape. I tucked the basket in my arms and walked away without a second glance. Now my neurons were in a trance. I can never convince myself of buying a mango for 30 bucks.

From that day onwards I satiate my taste buds with an adulterated mango juice that costs just six rupees. The only mangoes that I had eaten so far this season are the one’s my college friend Kumar had got from his town. He bought them from a local fruit vendor. And as the story goes some of those mangoes from his town are exported to places like Pune for 200 bucks and they are sold here for 300 - 400 rupees.

I remember studying market segmentation in my college courses. Most products target people belonging to a particular age groups or demography or financial status. I never really remember placing mangoes in any of those groups. They are supposed to belong to all the groups. But today, they no longer belong to my group.

Fossil Fuels

Petrol was never cheap. At least in my life time. I grew, India’s GDP grew, but the growth of petrol rates surpassed us. The issue of petrol can change governments but the issue is always seen as an issue with no solution. There are good times and then there are bad times too.

“Man, why this rush?”, I asked a stranger at the petrol pump. There were more than a hundred waiting in line for petrol.

“Kal, se petrol ka dham, bad rahi hai”

Ya, I had read it in the morning paper. The rates of petrol were increasing by five rupees and diesel by three rupees the next day.

“How many litres are you planning to pour into that bike”, I asked him curiously.

“Five”

‘Five liters. That going to save him just 25 rupees for waiting patiently for 30 minutes. What will he get for 25 rupees. He can’t even buy a mango.’

The raise in the prices of Natural gas and petrol has created a lot of hubbub. Inflation touched a decade high of 8.2%. The opposition sympathized for the people. They blamed the UPA. Dr. Manmohan Singh empathized for his children urging the states to bare the pain instead. Now what’s the solution to contain the sky rocketing prices. Sadly, neither the opposition nor the UPA have one. While the opposition is busying blaming the congress government for getting the country into this situation, Manmohan Singh is having premonitions that the future is going to better.

Blaming the UPA government completely is being a little harsh towards them. The government on its part has tried all the principles of macro economics in the last six months to curb inflation. It had increased the CRR (Cash Reserve Ratio) and lending rates (though Dr. Chidambaram had increased the tax bracket getting people to spend more, it is a long forgotten issue). But, when the issue is food shortage and global crisis in fossil fuel limiting the money flow hardly works. We eat food to live and all the engines we made drink petrol to run. Food was always a basic need and we made petrol too into a basic necessity.

Possible Solution

India needs to start developing alternate technologies. More R and D into Solar power, vegetable oil fuels ( I wrote an article on that) would certainly help by decreasing our dependency on the Gulf. And for the food shortage, I had a wacko thought of having layered farming (I have no clue how to implement that). But certainly more funding towards research is required in agriculture and in irrigation. And the government should urge people to grow vegetable crops in the backyard or balconies.

We are too scared to invest in Research for two reasons. Indians have a tendency towards short term gains. If we invest in something, we want results and profit’s to show up the next day. We were never known to accept failure with pride. Most researches are always long shot targets and they succeed rarely. This is one reason why we buy white papers from other countries. And the second reason is a derivative of the first one. For the government to stand it should show people what it had done in it ruling period of 4-5 years. And since research involves lot of money and time, it certainly does not fortify the position of the government. I hope some day we overcome these fears, be a little less greedy and invest in R and D.

Note (19th June):

1. I am not completely against the rise in prices. Indeed the prices we pay for rice, wheat and other basic commodities is quite low. I haven't got a problem in paying a rupee or two extra per kg of the commodity (Read 'Farmers deserve a better deal' an article by Chidambaram). The problem is that though commodities are sold at rupees x per kg by the farmers, the consumers end up paying 5 fold (5x) because of the multiple distributors .

2. The increase in petrol and food prices has accounted for 8.75% inflation. But the most shocking event for me is that the auto charges have been raised to Rs.8 per km from Rs.6 per km in Pune. Thats 33% increase. The soothing factor is that I am shifting to Vizag in a week's time.