ALTHOUGH opinion polls are notoriously unreliable as far as elections are concerned, one of the issues all opinion polls always tend to agree upon is economic problems. Recently, a big media house released its annual ‘mood of the nation’ survey results.

While political questions like who will win, or who is the best were endlessly belaboured in media, not much attention went to other key results. About 44 per cent of surveyed people highlighted economic issues as the most important for them with price rise and unemployment identified as the biggest areas where the Modi government had failed. Sixty-four per cent of people said their income has gone down since the pandemic struck;  67 per cent said that it is difficult to manage current expenses due to price rise while another 23 per cent said prices have gone up but they are able to manage.

Even the Modi-supportive media was forced to admit that these are alarm bells for the Modi government. Issues like Ram Mandir and Article 370 were mentioned by only about 15 per cent of people as being of importance. Clearly, economic distress – indeed, the struggle for survival - is weighing upon people’s minds, and they are dissatisfied with the Modi government for its inability to handle it.

PRICES OF ESSENTIALS ZOOMING UP

Let us take a look at average prices of some essential food items, as reported by the government’s ministry of statistics itself [See table below] Price increases over the past year are shown:

For the working people, pulses had already become a luxury. They were largely dependent on vegetables to go with the cereals they consume. As shown, vegetable prices have shown a jaw-dropping rise over the past year (January to December 2021).  Even more catastrophic has been the price rise in cooking oils with mustard oil, one of the most widely used oils, increasing by 34 per cent and prices of a bunch of refined oils (safflower, sunflower, soyabean, etc.) jumping up by 19 per cent. This price rise actually occurred in the first half of the year itself. Since Indian families are completely dependent on oil for making most food items, this was a body blow to their meagre budgets. Some other food items too rose significantly, like masur dal (14 per cent), chicken (11 per cent), salt and sugar (seven per cent each) and tea leaves (eight per cent).

UNEMPLOYMENT, PANDEMIC AND SLOWING ECONOMY

Remember that this price rise is happening at a time when unemployment itself is like an ever-present pandemic. It has ranged between seven to nine per cent for the past two years, spiking up to an unimaginable 24 per cent during the first lockdown in 2020. Families that were already under immense pressure from healthcare-related spending caused by the devastation of the Covid-19 pandemic have had to become dependent on charity or debt just in order to survive.  According to the World Bank, about 10 crore people were pushed into poverty worldwide in 2021 directly because of the pandemic and its repercussions. Of these half – that is, five crore – were in India.  Wages were stagnating or in most cases, sinking.

The price rise has hit families in this context. It is all the more strange because all indicators show that people just don’t have sufficient buying power to buy what they need. They stopped buying non-essential goods, they cut down on spending on children’s education, transport, leisure and entertainment, even many food items, like milk, eggs etc. All this should have kept the prices low since demand itself was flagging. But contrary to this facile logic of economists, inflation has been increasing steadily, pushing lakhs of families into poverty.

What is causing this price rise? And can’t the government do something about it? Let us look for answers to these questions.

HIGH TAXES ON PETROL & DIESEL

The Modi government has, through a deliberate policy, caused much of this price rise in essential food items, especially perishable commodities. This policy is that of extracting huge taxes from petrol and diesel, and also cooking gas.

In the past year, the cost of a standard cooking gas cylinder for domestic use has shot up by nearly 30 per cent - that is, from Rs 710 in January 2021 to Rs 910 in January 2022. Coupled with the price increases in various essentials described earlier, this means that either a family ends up paying about 30-40 per cent more each month, or it simply cuts down on spending. To add to the woes, the Modi government has stopped subsidising cooking gas claiming that prices had now fallen. So, the grand scheme of empowering women by providing cheap cooking fuel too has burnt itself out under the Modi regime. In rural areas, and in the lowest echelons of urban society, this means that a vast number of people would have shifted back to wood and biomass burning, or use of other traditional fuels like cattle-dung cakes.

Petrol and diesel prices have been stable for the past few weeks, probably in view of the upcoming elections. But before that, the government had used price increases in these two essential commodities to extract huge sums from the people, as a kind of indirect tax. That’s because these fuels are widely used in transportation and any increase in their prices directly cascades down to diverse commodities, especially perishables like vegetables and fruits, milk, eggs, meat, etc. The sustained high retail prices of these items is thus a direct result of the government's greed in raking in money through their extractive taxation.

According to the ‘petroleum planning and analysis cell’ of the ministry of petroleum and natural gas, the central government received about Rs 4.2 lakh crore worth of taxes from petroleum products, out of which nearly Rs 3.73 lakh crore (89 per cent of total) was from excise duty alone. Although the Modi government had marginally reduced petrol and diesel prices on December 2, 2021, and November 4, 2021, respectively, the enormous burden of tax deliberately extracted from the people before that has fuelled the unmitigated price rise throughout.

GOVERNMENT REFUSES TO ADDRESS PRICE RISE

There is another aspect of the Modi government’s policy that is contributing to price rise: it is the free rein given to private traders and the “market” in general, and the refusal to intervene in controlling prices. Despite the devastation of the economy by the pandemic (and its callous handling through ill-conceived lockdowns etc), the government has only distributed a limited quantity of additional food grain to millions of poor families who had no (or reduced) income for months together. Not only was the additional amount (five kg per person per month) highly inadequate but the whole programme left out an estimated 10 crore persons by using the 2011 census as the base year for determining population.

What was needed was to universalise the food grain assistance, increase the quantities and include several other items in it like salt, cooking oil, pulses etc. In addition, direct financial assistance should also have been provided. But, the blinkers of its neoliberal thinking – which absolutely forbids any increases in government’s spending on people’s welfare – prevented the Modi government from helping out the citizens in times of the direst need.  Had it provided subsidised essential items to all the needy families in the country, not only would it have brought relief to them but reined in profiteering through high prices too.

But then, this is what inflation is all about – it transfers precious resources from the poor to the rich. The process is disguised and hidden, with the governments and its apologist supporters justifying or explaining it away by claiming that prices are rising globally, or, that demand-supply adjustments are taking place, or natural calamities have disrupted supplies or some such argument. However, the fact remains that it is possible to keep prices under check by firm government policy. There has to be the willingness to do so – which our country’s central government sadly lacks.