Monday, August 8, 2022

Price and politics

Rise in price Rise in prices of almost all items in the market has provided the ammunition for the opposition to aim at the government for creating the current market crisis. However, the government at the Centre has managed to place the opposition in suspended animation on the demand for a house debate. The prices of almost all commodities are showing a steady rise across cities and states and this has sent alarm bells in various states. In metro cities the prices of consumable items such as tomato or onions have shot up beyond the tolerance limits. People in general understand what is inflation and what is expected of the reflection in the market. However, when market prices do not only reflect the economic situation. Prices of all essential commodities from rice to tomatoes have shot up. A kg of rice that used to be sold for Rs.30 in metro cities recently has shot up to Rs.35. Also the price a kg of tomato, which was available for Rs 30 till last month, has now touched Rs 45. In far flung areas the price of a kg of onion sold at Rs.45 has shot off to Rs.60 and more. The government at the Centre has not taken enough steps to check price rise which has been reflected in the inflation which recorded at around 7.01 %. Food inflation is back on the national political agenda. In August, food inflation rose to 18 per cent, the highest in nearly three years. It is no more a unilateral onslaught of onion price rise on the political class. All food items now compete with onion in being unaffordable. Given that an average household in India spends nearly 50 per cent of its earning on food—the poor spend more than 60 per cent—price rise will precipitate a crisis. Going by the survey findings, the impacts will be severe in India. The poor will face double whammy: one, they will be forced to spend much more on food by diverting funds for other pur-poses and two, their health will further deteriorate. India’s poverty level may increase sharply and the country may not achieve results in its fight against infant and child mortality and malnutrition. The urban poor have been the worst affected by inflation since the start of the Covid-19 pandemic last year. Over the coming year, however, even the urban rich might feel the heat of high prices. Also the weakening rupee against the dollar is also going to widen trade deficits. On the other hand, GST has been like a golden goose for the government when it collected around Rs.1.5 lakh crore in July last. The gross goods and service tax (GST) revenue collected in the month of July stood at Rs 1,48,995 crore, which is the second highest ever since the introduction of GST and up 28% year-on-year, the Finance Ministry. Monthly GST revenues have been more than Rs 1.4 lakh crore for five straight months. The growth in GST revenue till July 2022 over the same period last year is 35%. The government should have no excuse nor problem, to discuss the cause of price rise. This cannot be left at the mercy of the politics since it affects every household in India.

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