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Rising Food Prices Harm India’s Poor, Middle Class

  • Aru Pande

Major trade unions in India have called a nationwide strike beginning Wednesday to protest increased fuel costs, inflation and what they say are the government’s failed economic policies. Retail inflation, which hit nearly 11 percent in January, is affecting the country’s poor and middle class.

It’s 5 p.m. and customers are crowding this vegetable market in the northern Indian city of Lucknow.

Annamma Rajput listens closely to the vendors and then haggles to bring prices down. She focuses on the onion - an Indian staple used in nearly every dish - whose price has jumped dramatically in recent months.

“Onion was 10 rupees, 15 rupees a kg [kilogram], now it is 20, 40 something like that. It’s very expensive for the common people,” said Rajput.

And for the school coordinator, spending more on produce, means having less to spend on other household goods.

"It is so expensive. What will we do for our other things also? We have got children, we have to bring them up - vegetables are not the basic thing for the children, isn’t it?” she asked.

India’s consumer price inflation rose to 10.79 percent in January and government figures show the price of vegetables increased by 26 percent compared to December of last year.

At the Lucknow market, retired geology department director S.F. Farooqui said the government’s recent increase in fuel prices is partly to blame.

“As far as vegetables are concerned, it is the impact of only oil. When oil goes up, that means the transportation cost increases,” said Farooqui.

But economists such as D.H. Pai Panandikar say the main reasons for stubbornly high food inflation are neither the high cost of transport, nor - as in the case of the onion - last year’s drought in parts of the country. He said it's a simple issue of supply and demand.

“With the improvement in incomes, people are shifting their consumption patterns from food grains to fruits, vegetables, meat, milk and so on,” said Panandikar.

Panandikar said the government can take certain steps, though, to increase supply and ease prices.

“For instance, the government can give loans at cheaper rates of interest for dairies so they can develop really fast, one thing they can do. The second thing is to give vegetable growers or fruit growers better seeds with high productivity,” said Panandikar.

Meantime, analysts say food inflation not only is hurting people’s wallets; it has a broader effect on the economy.

More money spent on food means less to spend on clothes and other goods. And low consumer demand is causing India’s industrial production to continue shrinking, contributing to a gross domestic product that is expected to drop to 5 percent for the fiscal year ending in March - the lowest GDP in a decade.