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Price rise is a bugbear

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R.S. Deshpande: Hoarders creating price rise
R.S. Deshpande: Hoarders creating price rise

Deepa Kurup

The middle class has borne the brunt of escalating prices

‘Price rise cannot be connected directly with recession’

All sections of society were impacted financially this year

In 2009, Bangaloreans found their lives reeling under the impact of two significant economic phenomena. While the global economic recession threw scores of employees — particularly in the IT and services sectors — out of work, a consistent rise in the price of everyday commodities made subsistence unaffordable for people in the city.

Speaking to The Hindu, R.S. Deshpande, Director, Institute for Social and Economic Change (ISEC), had this to say: “I think that price rise cannot be connected directly with recession. While the recession, which impacted a certain section of people, was part of a global phenomenon, the price rise we are witnessing was created by hoarders and market intermediaries or those who stand in between the producer and the consumer.

“However, almost all sections of society were impacted financially this year. Those who could have been affected by the recession belonged to the higher income groups. That they were impacted trickled down to the service sector, and the lowest earner was indeed impacted. The middle classes, which typically comprise office goers with permanent jobs, were not affected by recession in India. However, this section has borne the brunt of escalating prices.

“Take, for instance, the fact that when I went to buy vegetables recently. Peas were being sold at Rs.100 a kg while just three days ago near Kolar it was being sold for Rs. 25. How does one explain that? What has happened is that to combat the reduction in profit margin due to the increased presence of direct marketing companies such as Reliance Fresh or Food Bazaar, the traders lobby has created a cartel to see that the prices remain sky high. Unfortunately, there have been no curbs by the state. And the result is that the lower middleclass has to hesitate to buy something as common as chickpea.”

Farmers should unite

Mr. Deshpande says: “This situation can only be reversed if farmers, a largely unorganised force, come together. In an agriculture policy that I drafted for the Karnataka Government in 2006, I proposed the concept of Pragatipara Raitharu Okkoota. This means that farmers are incentivised to come together in groups and the influence of middlemen is eliminated.”

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