The Great Indian Loot

It is open loot through the free pricing mechanism. As the wages in India shrink; one pays more and buys less. Little is left in the pockets of an average wage-earner but the profits of companies in the fast moving consumer goods (FMCG), milk, housing, pharmaceutical and other areas rise phenomenally.

Significantly, the lack of a social mechanism to check the process of fixing prices is playing havoc with the economy and plight of the poor consumers.

While the companies are thriving by raising prices of every product as a new batch enters the market. The FMCG companies like Hindustan Unilever (HUL), Colgate and Indian Tobacco Company (ITC) have raked in a mean profit of 82.04 per cent during the past five years. Others like the Tata group are not much behind. Housing companies have more than tripled their prices and have profits of over 60 to 80 per cent.

Undeniably, the loser is the consumer and of course the government, as in most cases it is paid taxes at the base lowest prices. Alongside, wage increases have either been in the range of three per cent or remained stagnant. Importantly, free market does not mean free loot of the consumers. The myth spread by Manmohanics that nobody should interfere with the price-fixing mechanism of the producer is playing havoc. Wherein, the cost and prices have little relationship.

As it stands inflation indices give an erroneous picture. The recent ‘slump’ in wholesale and consumer indices does not indicate a fall in prices. The indices indicate that after run away inflation of over 44 to 46 per cent since 2009-10, the rate of increase has slowed over the already prevailing high prices. Not one commodity has become cheaper. Rather food items, vegetables – potato, tomato, onion included, all other packed goods and items of everyday use have become costlier.

Even milk prices determined by milk cooperatives like Mother Dairy and Amul have increased prices from Rs 12 to Rs 48 a litre though benefits to dairy farmers have not matched this.

Notably, the Narendra Modi Government which succeeded an inefficient and ineffective UPA regime will have to do a lot to give succour to the people. This is needed to be done not only for economic reasons but also for social and political purposes given that high prices weaken the economy and the currency as also the social fabric which leads to severe law and order issues.

Another aspect often not talked about, is it robs the Government, the largest consumer, of sizeable revenues. This is the surmise of a paper produced by the Lok Sabha secretariat in September 2013.

It avers, “The rising prices adversely affect the economic conditions of fixed-income groups, particularly wage earners. When prices are high, the value of money is low and vice versa. There is always a lag between price rise and money-wage adjustment. Poor people in the unorganised sector are hit the worst because their income is not linked with the price index. However, business firms gain during price rise because the money value of goods in their stock rises continually. Inflation also encourages hoarding of essential commodities, leading to speculation and generation of black money”.

In short, it is defeating the objectives of the NDA Government.

Pertinently, the companies have devised novel ways to increase prices. Undoubtedly, prices are being raised annually in this manner topped by the weight or volume being reduced. Interestingly, the rise in prices, however, comes at a time when commodity prices are softening, adds the report. “In the last few months, the prices of key inputs palm oil and copra fell 30 and 20 per cent respectively.” Further, all these companies have penetrated different political Parties to sabotage policy-making. They had forced the UPA government to dismantle the Monopolies and Restrictive Trade Practices Commission (MRTPC) and create a lame-duck Competition Commission.

There is no gainsaying, the NDA Government has to take a call on these widespread malpractices. Society too has a role in checking the weird behaviour of any of these companies. Given that corporate sovereignty is not utilised when it comes to deliver social responsibilities, instead it is used only for exploiting society.