January 19, 2020

Achhe Din? Prices on Fire, Jobs in Freezer

Subodh Varma

ECONOMIC distress continues to rise as people are now squeezed by mounting prices, especially of food items, amidst raging unemployment and stagnating wages.

Latest data on prices released by the government confirms what people have been feeling for months: prices of daily use items, such as vegetables, eggs, meat and fish, pulses etc are on fire. This is not only destroying family budgets but taking a deadly toll on nutritional needs.
As a shocking report from Bundelkhand region in Uttar Pradesh narrates, people are surviving on chillies, salt and rotis, supplemented by some tender chana (chickpea) leaves. Remember, this is winter when vegetables and fruits are abundant, and food prices should be easing.
The distress is heightened by raging unemployment that has gone unchecked and unaddressed by the government for months now. People with no or very little income will find this ongoing spell of sky-rocketing food prices unbearable.
According to the Consumer Price Index data for December 2019, the price increase over one year was a staggering 60.5 per cent for vegetables, 15.4 per cent for pulses, 5.8 per cent for spices thus leaving only cereals as the least affected items for a typical Indian meal.
Eggs were up by 8.8 per cent. For non-vegetarians, there is similar pain – meat and fish zoomed up by 9.6 per cent. There is no escape, and for many at the bottom rung, survival itself will become an issue.

General retail price inflation, which included prices of all consumer items used by families, too, has risen to 7.35 per cent in December, a level not seen before during five and a half years of Modi rule. But the killer is food prices which have shot up way beyond the general rate. (See chart below)

One year ago, in January 2019, food inflation was running in negative territory and the general inflation was a mere 1.97 per cent.

Meanwhile, the unemployment rate has been around 7 per cent or more for the past 12 months, and was reported at 7.6 per cent in December, by Centre for Monitoring Indian Economy. It continued at that level on January 13, 2020.

This is by far the worst sustained level of high joblessness India has seen for a long time. According to CMIE data, about 7.3 crore people are estimated to be totally unemployed, which could be the largest army of unemployed in India, and the world.
This has a lethal effect on not just lives of families but is preventing any escape from the current slowdown, too, because it constricts buying power of people and thus suppresses demand. As a result, output suffers and investment flags.
Unfortunately, for India, the ruling government is blithely indifferent to this inevitable logic and is pursuing the opposite path of trying to boost investment by giving large concessions to corporates and selling off public sector units to them, expecting a revival of ‘animal spirits’. This is never going to happen because concessions are just being used to maintain profit margins by the corporates. Reports indicate that there is hardly any investment in new capacities or assets.
The Narendra Modi government, which promised “achhe din” (good days) and one crore jobs every year in 2014, is currently more involved in implementing its parent, Rashtriya Swayamsevak Sangh’s or RSS agenda of building a Hindu Rashtra. The Modi government has not said a word about rising prices, and joblessness too is buried under dodgy statistics. As a result, the country is going through an unprecedented turmoil over communal citizenship laws in the midst of an economic crisis.