Rising Prices: Food and Vegetables Beyond Aam Admi Reach

The initial euphoria generated by the new Reserve Bank of India Governor Raghuram Rajan has evaporated in less than a month. Though falling rupee has been checked and there has been appreciation of Indian rupee against the US dollar from Rs. 68 to Rs. 62 a dollar, the common man has no respite from the spiraling prices of essential commodities particularly food items, vegetables and fruits. The WPI (Wholesale Price Index) is at 6.10 % where as vegetable prices are up by 78% and onion is selling at Rs.70-80 a kilogram. The monetary policy remains choppy and Raghuram’s task ahead is to ensure stability in exchange rate and contain inflation.

Lucky are those who manage two square meals a day for the prices have hit the roof. For majority of people with small income, surviving is a challenge. The UPA Government and the Congress Party still swears that it has  done and is doing a lot for the ‘aam admi’. From the ground reports it appears that the government policies are directed to benefit only a handful of corporate and business houses who are in the good books of the ruling clique.

The immediate reason of rising prices of food articles, vegetables and fruits are attributed to increase in transportation cost. The diesel prices have increased and there is growing demand to further effect a hike of Rs. 10/- a litre for diesel to bring down the losses of public sector oil companies along with giving opportunity to private players in the oil sector to make more money.

In India, more than 70 % of goods transportation is carried by road. Perishable commodities like fruits and vegetables are transported by trucks. Due to poor maintenance of the highways more fuel is burnt than required. Besides, the truck drivers have to pay fixed amount to multiple inter-state check posts and to the police before they reach destination to deliver the consignment. The transport companies charge this bribe money from the customers.

The Dedicated Freight Corridors of the Indian Railways that was first announced some twenty years ago is yet to take off. There have been few earth works on the tracks that would run across the country from East to North and from North to West. The budget estimate has increased in thousands of crores of rupees and the government has no enough funds to speed up the project that might save some fuel and bring down the transportation costs of not only food and vegetables but also of raw materials for the industry.

After Golden Quadrilateral Project launched by Atal Behari Vajpayee Government, the UPA rulers have not been able to speed up and complete the unfinished works of the project since 2004 let alone add any significant length of National Highways. The Delhi-Jaipur Road is still incomplete and there have been protests over toll charges since the stretch is still under construction.

 As I have already pointed it out in my earlier comments on the government fiscal policy, it goes without saying that the economic situation is likely to worsen in the coming days. The government is totally directionless. It is drifting in the sea of confusion like a ship without radar.

~R. K. Sinha