On 27 November, Mint ran an infographic on its front page, reporting that the annual food price inflation had touched an 11-year high at 15.58% for the week ended 14 November; and, the next peak was 18.18% recorded on 12 December 1998. Two weeks later (11 December) Mint yet again reported on its front page that even this peak had been scaled with the annual increase in food prices at 19.05% for the week ended 28 November.
Commodity-wise, for staples, the annual inflation was 42% (10% at the same time in 2008) for pulses, 102% (decline of 10%) for potatoes, 23% (6%) for onions, 13% (14%) for fruits and 31% (21%) for vegetables. Anecdotally, too—for quite some time, in fact—whenever I went out to make a household purchase, this uncomfortable statistical truth was played out.
Ever since Mint first front-paged it, I was also connecting it to the fact that while this food inflation has been burning a hole in everybody’s household budget, the poor more so, it was not translating into some kind of collective fury. The middle class, which is the first to articulate this sentiment, often with devastating consequences for political parties, is strangely quiet.
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Coincidentally, a day before food inflation accelerated to a new 11-year high last week, I posed this dilemma (as a possible column idea) to some of the best economists and at Mint’s morning news meeting. It came up in the context of the fact that a government-appointed committee had reported an under-counting of the rural poor—and pegged it at 42% instead of 29% as assumed earlier—and we were proposing to run the findings on Mint’s front page.
Since inflation, particularly that in food prices, hurts everyone, it is only natural that they would articulate their concerns and politicians would reflect them publicly. Nobody had answers to explain this contradiction. In fact, one of the economists quipped that maybe “you journalists” can offer a clue. I am sorry to say that we are as much in the dark and have only plausible explanations to offer.
In fact, during the 15th general election, one of my colleagues, who did an extended field level tour of the political campaign, came back and disputed the theory that double-digit food inflation would be a critical factor that would hurt the ruling Congress-led United Progressive Alliance (UPA) at the polls. Most of us dismissed it as impossible.
At the back of our minds was the spurt in the price of onions, a staple in general for Indians and the poor in particular, in 1998 that led to the defeat of the Bharatiya Janata Party (BJP) in the assembly elections in Delhi—something from which it has not recovered ever since, ensuring an uninterrupted reign for the Congress. So, how could food inflation not hurt the incumbent?
Surprisingly, it didn’t.
Since 16 May, when the Congress renewed its tenure at the Centre for another five years, food inflation has only accelerated. As this trend has been around for nearly two years, drought, a shortfall in crop production, etc., may not provide clues. The endurance may be explained by the fact that the unprecedented cash transfers in the last four years, through poverty alleviation schemes such as the National Rural Employment Guarantee Scheme, no matter how flawed, may be reinforcing the purchasing power of the poor. It is an established fact that the poor report a very high marginal propensity to consume food with every unit increase in disposable income. So increase in demand without commensurate rise in supplies may be fuelling food inflation. Which begs an aside Capital Calculus raised previously: Are we as a nation willing to pay the cost of alleviating poverty?
But what is with the lack of a public outcry? The fact that politicians, especially the BJP and the Left, are not exploiting the issue only reiterates the point that it is not an emotive issue with the masses. A cynical response could be that people are reconciled to bad times.
A more plausible suggestion: Changing aspirations?
In the previous three decades, roti and kapda were the rallying issues—particularly when there was hardly any economic growth.
Now, with the abandoning of exogenous constraints and the economy growing almost fivefold in a decade, popular aspirations have increased; not only are there more means of livelihood, many consumer goods, such as cellphones, are now affordable enough to be owned collectively, if not individually. The aspirations lexicon, especially for the middle class, has consequently expanded and some hardship is in order in the short run.
But all this rests on the premise that the aspirations will be realized, sooner if not later. Which we know is bound to be belied. What then? To an extent, the Congress rode back to power stoking these dreams. Just hope the Congress is as adept in dealing with the disappointment. Alternatively, India may be ripe for an unprecedented social upheaval. A sobering thought seven years away from what will be the centenary of the Bolshevik Revolution that gave the world communism as a ruling ideology.
Anil Padmanabhan is a deputy managing editor of Mint and writes every week on the intersection of politics and economics. Comments are welcome at email@example.com