September 16, 2012:
Are inflation and irritation seen among people correlated?
This question has been lingering in my mind for quite some time and I have been analysing the cause for change in the behaviour among people and being arrogant. When one interacts with the small retailers such as vegetable and flower vendors, auto and taxi drivers, and all categories of people in the society particularly who belong to lower-income group and some service providers, it can be observed that the gentle behaviour and general courtesies they generally extend, have of late been missing and they get easily irritated and get provoked apparently without any convincing reasons.
The other day, when I engaged a taxi in Kochi to cover a distance of seven km under some compelling conditions, the demand of the driver was Rs 250 and that too as if he was obliging me as a special case. The minimum fare for taxis where meters are not installed, is Rs 250 and above. This service also comes not with a smile but with arrogance and irritation.
Similarly, auto drivers demand fare without bothering to adhere to the Government fixed rates (except perhaps in major cities such as Mumbai, Delhi etc.) and when one interacts with them, the often quoted reason is that the price levels have become unbearable and they find it extremely difficult even to survive, leave alone providing education to their children, medical assistance to self and family members.
Agitated mindset
They indeed have better knowledge of practical economics and they have a valid reason to be agitated in their thoughts and behaviour. They speak with conviction that practising honesty will not lead them anywhere in these days of spiralling inflation. Ethics and values have no meaning unless life is made somewhat comfortable is the message one can intelligently infer.
All round inflation is the irritant factor and the anger is naturally on the Government which they express very explicitly. It may not be out of context to quote here the observation made by PEW Research Center, in its recently released report on Global Aptitude Project that the Indian public’s confidence in their country’s direction and future economic growth has declined significantly compared with just a year back. It further states that among major economies, Indian pessimism stands out. Just 38 per cent of Indians are satisfied with the way things are going in the country.
The cost of essential items (like milk which costs anything between Rs 25 and 40 a litre, provisions such as rice costing between Rs 25 and 55, dal above Rs 100 a kg and oils above Rs 125 a litre, vegetables above Rs 40 a kg on an average, fruits are ruled out for many), has been on the increase year after year, and the ordinary people who include people below poverty line, lower and middle class people have no choice but to put up with the miseries of life.
Rise in costs
The all-round increase in costs because of service taxes for almost all items at 12 per cent, frequent increases in fuel prices, rise in expenditures on education, medical, transport and other items have made the people restless and this is visible in their expressions, behaviour and interactions among the people.
Is it good for the society and the economy? This is what the RBI and the Government should ponder over when they initiate policies on various fronts particularly inflation control, economic growth, fiscal deficit, and taxes. How long the Govt can explain and get away with the reasons for high inflation and cover up their inability to contain it at tolerable level?
No Affordability
Affordability of the people to avail of various services in the society without indulging in corruption has been the daunting question, the authorities should deeply and seriously consider before coming out with any policies.
Education, and owning housing are beyond the means of many who earn even Rs 10,000 a month is a reality and the Govt cannot ignore this any longer if they have a little concern for the masses.
The reasons for this bad state of affairs are not far to seek. The taxation policies pursued so far and now in vogue have widened the gap between the rich and the poor, encouraged formation of black money, increased corruption and made life miserable and unaffordable for common man.
Authorities have to bear in mind the fact that inflation disturbs family peace and harmony in the society. Happiness in life though not fully derived out of money, has been at heavy stake thanks to ever increasing inflation without corresponding increase in income.
Credit facilities have added to the miseries of people, is also to be reckoned while assessing the affordability of people to save and spend. Frustration and desperation remain with people basically for economic reasons caused by inflation.
The fiscal and monetary policies have to be well co-ordinated taking into consideration the demand and supply position of essential commodities, the average earnings of vast majority of people, the constraints involved in the production, procurement, storage, transportation and distribution of commodities etc.
Inflation should also factor in the cost of various services such as education, medical, insurance and others and the authorities have to be practical in understanding and arriving at policy decisions. Fiscal deficit, current account deficit, slow down in the growth of the economy, increase in international prices of commodities etc. can be valid reasons for inflation, but the ordinary people who are unfortunately in majority have no means or wherewithal to come to the rescue of the Govt in these matters as they have no earnings to take care of their own essential needs leave alone to augment the resources of the Govt.
Gap widens
Inflation squeezes them beyond imagination of the authorities is a fact to be kept in mind while deciding each and every policy. The RBI has its own limitations to provide employment and earnings of the masses and it is for the Govt to fine tune its policies to work effectively with the monetary policy.
Interest rate alone is not the cause for poor growth is an established fact and the Govt has to seriously consider other policies understanding the difficulties encountered by the masses and their mood in an irritatingly inflationary condition in the economy.
The ultimate result of persistent high level of inflation is widening the gap between the Govt and the people and the latter has no option but to blame the former for all their suffering. If inflation is brought under control, the mood of the people will definitely change for the better and the Govt and other stake holders in the economy will be the major beneficiaries. The confidence lost in the economy can be easily regained.
(The author is a Consultant in Mumbai. Views are personal).
(This article appeared in Business Line dated 17/09/12)
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