The India story

Finance Minister Chidambaram’s job is full of thorns. He is credited with once presenting a ‘dream budget’. Accolades there have been, but now one sees creases increasing on his forehead. The main reason: inflation is inching up. First the Congress President, now even the country’s President has expressed dismay at rising prices of essentials. [Image source]

Chidambaram cannot be blamed for not trying. He knows if the country has to maintain a growth path, which it is doing now, inflation has to increase. It’s because growth of economy creates commensurately more demand for goods, pushing up prices. If he makes money dearer thereby restricting its supply, which the RBI has been doing for awhile, he runs the risk of making production of goods and services costlier.

Which in turn may discourage businesses to cut down their borrowings that may put a brake on India’s growth story. The Left, committed as they now are in fast economic development (watch the huge investments planned in Bengal), cites the example of China that apparently has a low stable inflation rate in spite of mammoth investments.

While these promise to become hair-splitting issues for the economists, especially in view of forthcoming budget and the nosedive of stock-market indices this week, let us turn to what life actually is on the ground and what the future is likely to be.

Today afternoon, in a Star Ananda news item, we’re told that while potato costs Rs.6 a kg in open market and onion Rs.20, they’re available at Rs.4.50 and Rs.13 a kg respectively at Pantaloon Group’s Big Bazaar outlets. Similar is the story for other vegetables as well.

Big Bazaar spokesman says that since they buy perishables in huge quantity directly from the farmers (that are then repacked in their central storehouse and delivered to 6 Kolkata outlets), they get supplies at a far less cost, and so they are able to offer them at prices lower than prevailing rates in local markets.

This then is going to be the rule rather than exception in days to come as more retail giants appear on the scene. We’ll see intense competition among them. And with lucrative add-ons like assured quality, home delivery, multiple freebies, and so on, who knows our neighborhood vegetable sellers may soon become ‘endangered species’ in not-so-distant future.


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