“Transform India With Narendra Modi”
Price Rise and Inflation – Issues, Root Causes and Solutions
Background
In India, the biggest burden on a common man’s back right now is the ever increasing cost
of living. Although this has been a topic of debate every now and then, it is critical that the
Government takes concrete steps to control it. The 85,000+ strong “Transform India with
Narendra Modi” online community has come together to collectively identify the key issues,
root causes and solutions for curbing Price Rise and Inflation and the community expects
that the Government will work towards implementing these solutions.
Key Issues Identified:
1. Ever increasing cost of petrol/diesel
2. Expensive fruits/vegetables, food grains and milk.
3. Price of LPG having more than doubled over the last couple of years
4. Electricity rates have sky rocketed
5. Very high interest rates on loans as compared to other countries
6. Expensive medicines that keep getting costlier
7. Ever increasing cost of school education
Root Causes Identified:
1. Hoarding
2. Too many taxes are being imposed which makes the product to end customer expensive
3. Export of essential food products which results in price increase for domestic customers
4. Increase in production and operations cost
5. Electricity consumption has gone up
6. Resources are not utilized to the optimum level
7. Lack of cold storage facilities to store fruits and vegetables
8. Middle men in almost all supply chains
9. Setting up alternate sources of energy is expensive
10. Crude is imported in large quantity
11. The ‘market’ is allowed to decide the prices of many basic need items
12. Cultivable land is being eroded which means the supply is getting shorter
13. Costs of agricultural inputs has increased
14. No minimum fixed price on the farmers yield
15. Lot of wastage from farm production due to transport, handling, storage, etc.
16. No effective laws to prevent schools/colleges from increasing fees
Solutions Identified:
1. Develop and implement a strong anti-hoarding policy and law for essential food
products and commodities
2. Work with States to effectively implement and execute this policy law with strong
punishments for offenders
3. Exports of essential food products should be only allowed after ensuring enough
availability for domestic customers
4. The existence of the middle men and commission agents should be controlled
5. There should be government regulations on deciding the price of essential food
products and commodities
6. Classify petroleum products as goods of special importance with lower CST/VAT
applicable on petrol and diesel
7. The Public Distribution System should be revamped
8. Agricultural land must be given a ‘protected’ status and should not be allowed to be
used for anything else
9. Conversion of cultivable land for other purposes - commercial, residential and
industrial - should be prohibited
10. Adequate storage facilities should be developed in villages and near farms to reduce
spoilage in supply chains
11. Ensure trucks carrying food do not get stuck at state borders due to police
corruption/bureaucracy.
12. More expertise should be provided to the farmers to help them increase their yields
13. Reduce agriculture’s dependency on monsoon through development of new
alternate sources of water that are shared community resources.
14. Schemes like MGNREGA, Indira Awaas Yojna, Food security bill, Sarva Shiksha
Abhiyaan etc which are sources of rampant corruption and burden of exchequer
which are doing very little good to common people should be abolished
15. Interest rates on loans need to be brought down
16. There should be a law governing the yearly increment of school/college fees
17. The demand and supply gap should be narrowed by increasing supply and lowering
demand (where possible)
18. Export deficit needs to be brought down
19. Stop food grains trading on commodity exchanges
20. Alternative energy (Solar, Wind, etc) should be used on a larger scale
Price Rise and Inflation – Some of the Citizen Posts and Comments
1. Classify petroleum products as goods of special importance with lower CST/VAT
applicable on petrol and diesel – KG Somani
2. One of the reason of food price inflation in previous government was the interest of
ministers in hoarding. Hope the current government has no such case and the same
will be dealt with an iron fist – Ashok Tiwari
3. Eliminate the roles of agents and middle men. This would reduce the price when the
products goes to the common man directly from the producer especially for all
agricultural produce – Girish Kumar
4. Inflation is built in our economy with all rent agreements stipulating 5% annual
increase. The solution is to allot lands to small and medium business and houses at
more reasonable prices. There should be permanent land use policy that allotted
land should not be sold and shall be used for business only. If as a businessman I can
reduce my rental cost, I can create more jobs than at present. Further Central, state
and city taxes should be stable – B. V. Rao
5. Stop foodgrains trading on commodity exchanges and see how prices will come
down – Hemal Jhaveri
6. Export of Agricultural produce and natural resources needs to be reviewed critically
– Anand Ektara
7. To curb the price rise of the essential commodities, I think, the most important thing
is to strengthen the public distribution system. When Govt. effectively intervene the
market, it will surely act as a retarding force to the price rise. Another thing is to give
agriculture an Industry status. We can also think of a separate budget for Agricultural
sector similar to the railway budget – Johny KV
8. Link aadar card as a resource to all activities. Initiation to maintain the existing price
of essential commodities, public transport and petroleum products. Economy in gvt
expenditure. Curtail food wastage – Venkat Rao
9. I think one of the most important things is the frequent increase in the price of fuels
and lubes, which is very much linked to price rise of everything. Further, cheaper and
alternative forms of transport like coastal shipping and inland waterways should be
prioritized for development – Dr. Jayakumar
10. There is no check in increasing population, there is fundamental law for price fixing;
demand & supply – Sudhir Gupta
11. One more reason behind inflation is 'lack of quality control authority' who can
govern many products for optimum quality requirements and there by improve
standard of living and may promote fare competition – Anand Ambekar
12. In developed countries, the basic necessities are cheap and therefore life for
common man is comfortable. That is the big missing thing in India. Price of milk in
America is same as India, so is price of fruit vegetables and petrol is slightly cheaper than India. Salaries there are 3-4 times of India so you can imagine. The basic needs
are well taken care of. We need to do the same. Let us include that in the solutions
and brainstorm how that can be made possible. Govt alone wont have the answers.
we collectively might – Aditya Goyal
13. In two years milk and milk products has increased 100% as mother dairy/amul
increase prices by Rs.2/- every three months that is rs. 16/- in two years – Chakresh
Jain
14. Real reason is we did not create enough resources from last 65 years and whatever
resources we have created are not utilise to optimum level due to poor
productivities and poor management skills majority we Indians lack emotional
commitment to our job and duties and this coupled with abnormal increase in
population from last 65 years – Dev Yadava
15. India's Economic Dependence on Oil is a direct outcome of " Open Foreign
Investments"-- to produce cars/Bykes/Go junketing . Correction needed by 2014
ModiWave must make' cars/Bykes/Go junketing ' meaningless .All possible - FOR THE
BETTER. – Mukul Mahant
16. Cultivable land is declining / reducing in size means supply side getting short day by
day whereas population is ever increasing means demand side expanding day by
day. This mis-match is the reason for sky rocketing price rise in all commodities. This
coupled with low investment in cost infrastructural facilities, cutting technologies of
production & manufacturing, logistics, etc. are added factors for price rise –Kailash
Kabra
17. Main cause of all price rise is rise in the price of Petroleum products which let
costlier transport cost which made major impact on prices of all basic goods. Other
than this I think we need to focus on the interest rate on Educational loan on priority
rather than any other loans – Ravi Chandavar
18. Taxation at Multiple point increasing the cost of final product – Partha Chakraborty
19. Simple Demand & Supply ratio is more and we are unable to manage needs of 125
Crores peoples of India. The one big factor is our population density and the growing
needs of it remained unreachable – Puneet Jain
20. Govt should made a system to check all listed commodities cannot raise the price on
their own in public interest – Kameshwar Sharma
21. We need to strengthen our Infrastructure, Warehousing, Logistics in ensuring
storage of Food Grains, Vegetables, Fruits and all perishable commodities. Wastage
of 25% to 30% can be brought down – Prakash Challa
