The lows and blows of rising prices

Common man has never had it so bad. Terms like global recession and inflation have unwittingly become a part of his vocabulary as he tries to understand the spiralling costs of living coupled with decreasing income.

The steady increase in prices of all commodities is the last straw in times when just about everything one has to buy gives a hard pinch. First it was the vegetables, then fruits and now, lentils and pulses. Let us not forget that we are already paying more for transport, medical facilities, education and rent in addition to cess on services and VAT for every commodity.

Understandably, the hardest hit have been the middle and lower classes, who in the times of recession have had to combat with job losses in the family. A sizeable percentage of this middle class is the pensioned and non-pensioned senior citizens whose retirement plans have gone awry.

Sreenivas Murthy, a 69-year-old retired public sector employee describes how he has struggled to make ends meet in the recent times. “When I retired, I had this lump sum settlement and I invested it. We are now living on the interest and therefore our expenditure is modest. Now, our calculations for the monthly grocery itself has shot up so much. Vegetables, fruits or pulses, everything has become expensive. Moreover, my wife and I have to incur medical expenses on a monthly basis. I do not want to ask my children for financial assistance. But it is becoming harder by the day to manage expenses.”

There is an overwhelming temptation to compare life to 25 years ago, when it was simpler for the middle class.

Murthy says that it took major re-adjustment of family budgets, when the middle class could no longer obtain their commodities through the public distribution system, as the rates in the open market were twice the price in the ration shops. But even then, a family of four could comfortably be fed on an expense of Rs 3,000. But now, it easily reaches Rs 8,000 including beverages.

Looming large over the aged populations is the sky-high medical expense. There is no dearth of lifestyle diseases that require careful monitoring. The expenses incurred for one hospital stint lasting a week for someone without insurance, can set them back a long way.

Repercussions
Director of Institute of Social and Economic Change (ISEC), R S Deshpande describes how the present situation has an impact in three ways. “Firstly, there is a significant loss of welfare as the reduced consumption of essential commodities, decreases the level of nutrition. Secondly, saving habits are affected as the money meant for savings will now be used up to maintain the present. Thirdly, there will be a glut of consumer goods in the market, which might lead to a collapse.”

Professor of Economics at Bangalore University R G Desai said that the parity cannot be achieved as long as the government calculates inflation based on the wholesale price index as opposed to the consumer price index.

“When prices are based on the wholesale price index that is based on production, rather than the consumer price index, calculated on the basis of consumption, then it clearly shows that these indices are meant for the policy makers and not for the welfare of the common man. The wholesale price index is hardly indicative of the requirement of the general population as the list holds items not used commonly,” he says.

There is dissatisfaction among those who are willing to  buy their groceries with inflated bills. Savita, a BPO employee says that the tur dal she bought at the increased prices was adulterated and mixed with other lentils. “I am now cooking meat more regularly compared to earlier times,” she said.

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