Resources Research

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Posts Tagged ‘Ahmedabad

Food inflation crippled India’s households in 2010

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Vegetables, fruits and cereals market in in the city of Surat, Gujarat state, IndiaThe price of a basket of staple foods has become crippling in rural and urban India. The government’s response is to favour agri-commodity markets, greater retail investment and more technology inputs. For food grower and consumer alike, the need for genuine farm swaraj has never been greater.

The retail prices of staple foods rose steadily through 2010, far exceeding in real terms what the Government of India and the financial system call “headline inflation”, and exceeding also the rate of the rise in food inflation as calculated for the country. These calculations ignore the effective inflation and its increase as experienced by the rural and urban household, and they ignore also the considerable regional variations in India of a typical monthly food basket.

Vegetables, fruits and cereals market in in the city of Surat, Gujarat state, IndiaMoreover, from a household perspective an increase in the prices of food staples is not seen as an annual phenomenon, to be compared with some point 12 months in the past. It is intimately linked to employment (whether informal or seasonal), net income, and the pressures on the food budget from competing demands of medical treatment, education and expenses on fuel and energy.

When real net income remains unchanged for over a year or longer, the household suffers a contraction in the budget available for the food basket, and this contraction – often experienced by rural cultivator families and agricultural labour – is only very inadequately reflected by the national rate of increase in food inflation.

An indicator of the impact on households is provided by the price monitoring cell of the Department Of Consumer Affairs, Ministry Of Consumer Affairs, Food and Public Distribution. This cell records the retail and wholesale prices of essential commodities in 37 cities and towns in India. Data over a 36-month period (2008 January to 2010 December) for the prices of cereals, pulses, sugar, tea, milk and onions reveals the impact of the steady rise in the Indian household’s food basket.

In 33 cities and towns for which there are regular price entries, the price per kilo of the “fair average” quality of rice has risen by an average of 42% over the calendar period 2008 January to 2010 December. In 12 of these urban centres the increase has been over 50% (Vijayawada, Thiruvananthapuram, Hyderabad, Bengaluru, Patna, Cuttack, Bhubaneshwar, Indore, Bhopal, Shimla, Karnal and Hisar).

The average price rise over the same period for a kilo of tur dal, for 32 cities for which there is regular price data, is 46%. In 11 of these urban centres the increase in the price of tur dal has been over 50% (Puducherry, Bengaluru, Patna, Agartala, Nagpur, Mumbai, Indore, Ahmedabad, Shimla, Jammu and New Delhi). Where wheat is concerned, from among the 27 cities and towns for which there are regular price entries over three years, in 10 the per kilo price rise is 30% and more.

Vegetables, fruits and cereals market in in the city of Surat, Gujarat state, IndiaIf in search of a comforting cup of tea over which to rue the effect of the steady price rise, this too will cost a great deal more than it did three years ago. For 25 urban centres with regular price data, the average increase over the same period of 100 grams of loose tea leaf is 38% and in 11 of these cities and towns the increase is between 40% and 100%.

The sugar with which to sweeten that cup of tea has become prohibitively expensive over the January 2008 to December 2010 period. For the 32 cities and towns for which there is regular price data, the average price increase for a kilo of sugar is 102%, the range of increase being between 76% and 125%.

This increase for sugar – relatively homogenous for the price reporting centres – exhibits the countrywide nature of the price rise of the commodity. Nor is there a household economy case for substituting sugar for gur, or jaggery. For the 17 towns and cities reporting data for gur prices over the same 36-month period, the increase in price over the period has been an average 118% with 11 of these centres recording an increase of over 100%.

Vegetables, fruits and cereals market in in the city of Surat, Gujarat state, IndiaAdding a third element of higher cost to the humble cup of tea is the price of milk. For the 25 towns and cities which recorded increases in the per litre price of milk over the 36-month period (one city recorded a drop) the average rise is 37%. In seven cities a litre of milk costs at least 50% more in December 2010 than what it did in January 2008 – Ahmedabad, Bhopal, Indore, Jaipur, Jodhpur, Patna and Hyderabad.

In conspicuous contrast are the rates of increase in price of cooking media – groundnut oil, mustard oil and vanaspati. Over the January 2008 to December 2010 period the 37 urban centres recorded average price increases of 10%, 9% and 10% respectively for groundnut oil, mustard oil and vanaspati.

Finally, the volatile allium cepa, or common red onion. In 29 cities and towns reporting regularly the per kilo prices of onion, the increase in price of the vegetable has been astonishingly steep. The average increase for 29 cities is 197.5% and in 14 the increase has been 200% and above – New Delhi, Shimla, Ahmedabad, Indore, Mumbai, Rajkot, Agartala, Aizawl, Bhubaneshwar, Cuttack, Kolkata, Chennai, Hyderabad and Vijaywada. In pale comparison is the otherwise worrying average increase of 39.5% for a kilo of potatoes – this is the 36-month average increase recorded by 27 urban centres.

India’s mobility merchants

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Urban demand for automobiles and a government intent on road-building to feed that demand, never mind the alternatives and energy implications, are the subject of my recent article in the Economic & Political Weekly. It builds on a post I wrote here in January 2010.

Hoarding cluster in Mumbai, Maharashtra, to launch a new car

Hoarding cluster in Mumbai, Maharashtra, to launch a new car

The all-round optimism for a decade of automobile manufacturing requires an assurance that the infrastructure-building commitment and investment will not slacken. That assurance comes from a comprehensive ‘Master Plan’ prepared for the Ministry of Road Transport and Highways which advocates a sprawling ‘Indian National Expressway Network’. The final project report of this master plan was released by the ministry in November 2009, only two months before the 10th Auto Expo.

This master plan contains the rationale for and routes to comprise a vast expressway network of 18,600 kilometres, to be built in three phases each concluding in 2012, 2017 and 2022, and which proposes to employ both public-private partnership and annuity modes of financing and project execution. Moreover, the master plan seeks the creation of a National Expressway Authority of India to oversee this gigantic task, which will have extensive and over-riding powers and amongst whose important functions will be the expediting of land acquisition for the many sections.

Finally, the master plan has called for “innovative and feasible measures to improve the financial viability (including ploughing back of profit generated from real estate development, commercial development of wastelands etc)” to finance the 60 different sections of the proposed expressways network.

These two developments – the underwriting by the Government of India, through the Ministry of Road Transport and Highways and associated ministries and departments; and the growth of the automobile market in India to which commitments have been made by industry – taken together have presented us worrying new evidence concerning the kind of development we will see in urban and urbanising India over the next decade. There are a host of related concerns:

Autorickshaws in Vadodara, Gujarat

Autorickshaws in Vadodara, Gujarat

(1) On transport and public transit alone, the automobile-centric practices and policies embodied in the 10th Auto Expo, the Automotive Mission Plan and the national expressways network master plan push alternative modes of transportation (including the high-potential bus rapid transit systems, such as is now being introduced in Ahmedabad) into the background.

(2) From both government and from industry there is very little recognition of the possible scenarios that can govern the availability of fuels (certainly of fossil fuels until 2022) needed to fulfil the 10th Auto Expo’s consumerist theme of ‘Mobility For All’. This fundamental linkage should have hit home, for amidst announcements of new models came the regular bulletin from the Ministry of Commerce which stated that India’s crude oil imports rose 6.1% in November 2009, climbing to 10.48 million metric tons from 9.88 million tons a year earlier.

(3) India is already the fourth largest aggregate emitter of greenhouse gases worldwide and the country needs to be far more creative and visionary about creating a low-carbon future for its citizens. Industry and individual citizens will increasingly be called upon to be responsible for their manufacturing and consuming patterns relating to emissions and resource use. However, neither in the practice nor in policies government the automobile industries sector and the roads and highways part of infrastructure is there discussion about emissions equity in the country.

(4) Despite the efforts being made to integrate urban planning and transportation alternatives under the Jawaharlal Nehru National Urban Renewal Mission, the pro-automobile policies pay negligible attention to the inelastic demand created for cars in India, which are kept at a high pitch by the automobile (and financing) industry through extensive advertising. There are no significant measures, whether regulatory or persuasive, to temper this demand. Moreover, the huge direct demand for land (for use as expressways, highways, widened roads, etc), and the indirect impacts of change in land use that will impact agriculture most of all are externalised costs that both rural and urban public are already bearing, and which appear in no real costs analysis of a pro-automobile mobility choice.

Read the full article in the February 27, 2010, issue of the Economic & Political Weekly. The EPW pdf is here too.