Is Development making the Price rise inevitable?

Allow me to pose a question to all who support "Price rise is because of development!!!".

Which component of development is responsible for prices to rise?

With development prices should actually fall.

in recent time we have seen a surge in the food price causing the inflation  rate to become more than 16% and it remains constant there. The reason for such hike in the price can be attributed to the demand pull theory. According to that theory the massive demand is hitting the price up. If there is a real development that would mean that there will be adequate supply in the market to satisfy the demand. And if that happens the price will automatically go down. In India the population is growing gradually resulting in increasing demand for goods. But the supply on the other-hand is not enough to meet the rising demand. The government is planning for a GDP of more than 8% but in practice is it really growing. The price that we are paying today is the same going to the hand of the producers. The farmers are still in distress condition. The small scale industries that contribute almost 40% of gross industrial value added to the economy, are the being properly compensated? The answer is 'No'. So how can we say that there is a development. It is the fact that some rich people are getting richer and some big industries are listed in the Fortune 500 list but that is not enough for the development of the economy. The price is rising because the Govt. is inactive. If there is a real development price rise will not be a matter for discussion.

Development means an activity / project that results in the increase of purchasing power of people, help reduce cost of production and reaching the goods and services to people, improves the living standards of people and help save for the future generation and soon. That being the case how can any one agree that the development leads to raise in price of goods and services? In absoloute terms if you reduce the prices to the base year level you should find that the price should show a reduction trend year by year because of development. If it is not happening that only means in the name of development Political, rich and the Influencial are looting the country in the name of development. Take for example governmet provides free housing to the people below poverty line. The estimated cost for each house Rs. 1 Lakh for a 250 Sft builtup area. What is the basis on which the built up area need of a family irrespective of number of people living in the family and their needs and the uniform cost of construction is decided? First of all ask questions yourselves - Can you build a house at this cost, what is the life of such houses? How much money is really spent for consstruction and what is the profit allowed for a contractor? Can we allow profit booking even in such activity? How many houses are really required and how many are sanctioned, built and allotted to the needy? How many are built in Paper and the Money swallowed? If you have experience of involving in such exercise then you will know the truth. Therefore dont say development raises prices. it is misuse of development funds resulting in prise raise. The average earning of an Indian has grown from Rs. 16729 in 2001 to Rs. 40141 in the year 2009 as per the central Stistical Organiztions report. Growth in percapita income for the current fiscal is pegged at 9%., taking the income to 43471 in the current year. Reduce the prices to a common bench mark and you will still find that the price has increased along with the increase in purchasing power may be at a higher rate than it should have raisen. This is because you will be investing some money for future building and there is people trying to take away your earnings through their ginmikcs and misuse of rules and this results in widening the gap between the rich and the poor. That is waht is happening in this country. People are allowed to form cartel and increae prices and the Governments in power sleep over such issues.

Laxminaran is very right.

And the price rise is only perception. There definitely has been an increase in the consumption within India. But that does not mean our production has increased or the exports have dropped. Lots of good quality grains still find its way outside our country. The price raise is more of an issue of government stepping in to control the essential commodity prices.

Ideally with development it should be easier to produce goods and transport it so it should become cheaper if we are really developing. I dont think the price at which farmers selling these goods have increase, its only in the middle that more margins are now needed. Properly working tax policies and tight commodity control should see the prices falling.

Shivanand I throughly agree with your comment. 

Its not the development, its we who are making the price inevitable. Especially in India it is because of the corruption and the cartel. We should try to control it or else this will not come to an end. The price will keep on increasing. 

Thanks :)

Development is not making price rice inevitable but apparently that our Govt. is not taking good care of farming sector. I think because no youth is interested regarding this sector.

The top leaders are inciting the traders and hoaders by way of their wide publicised speeches that the price rise is inevitable for a particular commodity on onde day and for another on next day. The result of these speeches is felt immediately. The people in echeloeons of power are just watching for fear of losing power.

Question is 'IF DEVELOPMENT IS THE REASON FOR PRICE RISE' NOT WHERE IS THE DEVELOPMENT.

Govt. is corrupt, may be but who is voting them to power. We all are responsible for this. Now and never, Development never is the reason behind the price rise.

Hoarders, Exporters of eatables[ Making Body building food from Milk,300 kg of milk consumed for one kg of material], and exporting it. Hiding from all what is the raw material, so money industries doing this. Politicians/businessman cum politician’s hording the food grain items are directly responsible for this.

IT IS DUTY OF GOVT TO TAKE CARE .

IF IT FAILS,  PEOPLE WILL TAKE CARE.

' Real development ' would not result only the purchasing power of people, it would also improve the productions of goods and services which can compete the improving purchasing power of people. What Govt. is doing and what is implementing in the grass root level is quite different and as impact the development is happening is very very slow and not a compact one. 

NO

when u cannot develop growth of food grains and other necessary requirements then where is development.further many state govt give subsidized for rice 2 rs and ,definitely it will suck out from system to counter the loss on other side.sugar !!!! we have good production this y-o-y but the where it has been sucked.I will give one example is just 2 years ago we have crude from 72 usd /brl to 147 usd/ brl . do u mean that suddenly people have started consuming double???

we have  to understand that the cartel will rule the day in different commodities at different times.In india there is cartel like in any where in the world.

It like HOney it all about MOney.

we have had NO development in agri sector and even today just like iliteracy is boon for vote bank so is the poor agri scetor is solid vote bank.more chaos more easy to rule is the name of the game.why agri reforms are not introduced,why mechanisation is going at snail pace, why farmers are not treated as partners of progress.Why the river of India are not connected even at slow pace.

we have had good rains ,good harvest than suddenly do you think we are eating more due to development and earning more, i don't think so .

if we do not wake up atleast now the our children will be greater suffers

rgds

vj fdh fkdhf kd fjd

Price rise resulting from the development work is an indication that recession is being pushed behind. It will come back soon. The solution would lie in giving funds to the industrialists who spend those funds to reduce the cost of the production significantly.

Every price increase will result in lesser production due to lesser demand. People do not adjust their spending to the price increase immediately. The immediate reaction would be to reduce the real spending. Lesser production would result in higher costs of production. So there will be chain reaction and the prices will keep on rising.

The development should be stopped immediately. That money should be spent on giving incentives to reduce the prices.

The govt hardly knows what it is doing. I will give an example. There is Tax Deduction at source on amount paid to securty personnel provided to companies by the contractor. The people are being paid Rs. 3000 to Rs. 5000/- pm.

I fail to understand the logic of this tax deduction. The people who are being charged tax deduction are forced to use dubious means of charging the cost in some other manner so the PF and other facilities are also denied to the security people.

There are small contractors who do not file income tax returns to claim refund of tax deducted. All I could see was the people earning Rs. 3000 to Rs. 5000 bearing the burnt of this TDS.

Now whether price rise is inevitable for development. I do not think price rise is an indication of development. Price rise when the volume of production is falling. To compensate the loss suffered by declining volume the prices rise. This is an indication of the disaster waiting under the armpits.

People will not eat roads for bread. There is money in the hands of people employed in development work. But where are the goods to buy. So there will be continuous pressure on the prices to rise.

Price rise would be ok if the production scales are increased dramitically and more profits are earned using those extra profits. Rather it will be better to give the money to the industrialists to increase the production scales and hence reduce cost of production.

The money can be given in the form of interest free loans to increase the capacity of production that will lower the cost of production. That will add competitiveness of the products in the export markets as well.

All development work should be stopped immedicately.

It is easy to get emotional while discussing a sensitive issue like prices. There is no correlation anywhere in the world between development and inflation. If one looks at the formation of the European Union, one of the key parameters that had to be fulfilled was that inflation had to be controlled. It cannot be anyone's argument that the original signatories to the EU are anything but developed. In our country, the rise in prices can be attributed to (a) poor agricultural productivity which in turn leads to a higher support price that is inevitable given the huge vote bank the sector represents (b) poor storage and distribution systems - estimates vary but one estimate suggests at least 30% wastage due to rodents, pilferage and spoilage (c) futures trading in commodities and politicians only too eager to fuel the speculation - when a responsible minister says a particular commodity is likely to be in short supply, it sets off an immediate chain reaction in hoarding and forward trading and (d) significant asymmetries in income. We do not complain when we receive a 15% increase in salary or a 20% performance bonus. And yet, we are the first to complain when prices go up. Statistics can be very confusing even to experts. If it is cited that some countries have a 3% inflation, it is equally true that others have 100% plus compared to last year. As a nation, we need to develop the resilience to deal with these issues without fear or favor. Simply crying about the problem will not help. Avoiding conspicuous consumption, seeking alternate products that are affordable in the short-term, coupled with measures to increase farm productivity and a more effective supply chain should be able to rein in inflation. Instead of panicking, let each one of us resolve to do something about it.

Price Rise that we see, Especially in the domestic use items and groceries, are more on assumed hyperflation and accepted price rise conditions. The Villagers are still taking their small worthy-dime for the vegetables, Ghee, Cereals, and other similar rural root products. but the middlemen have taken 'once-panicked' city people for an inflation ride. they are charging 20/- per kg for the stuff purchased at 2/- per kg from villagers. Our loudmouthed cry about inflation, created this price ditch for us. And moreover, the general business trend is, that if something rises in price, by heavy magnitude once, it never comes back to it's base price. an increase by Rs.20 is never followed by a decline of more than Rs.7/- . Hence the society accepts the price to be appropriate, at Rs 13/- more. Face it. We ARE the reason behind inflation. Our mindset creates it. Development has some role to play, but we cant blame it. it is a requirement for survival.

I am agreed, but what is happening that the main producer of all the daily need item i.e. food and grain is not getting the real amount what he is expected. 

Where is this development that is being talked about?

Are you referring to salary hikes through 6th pay commission or parliamentarians voting for better pay and perks or regulator and administrator lending helping hands to all and sundry middlemen to grow and develop.

Farmer, processor,handler and consumer are all unhappy the only person happy is the seller. So development is another sales talk of collecting several times through tolls and taxes for re-carpeting the same road that our forefathers had freely used.

Your views are absolutely right and worrying for people living in urban cities, folks of service class, businessmen, workers and affluent guys too. I feel the economy recede more called as downturn has showed up in present price rise in khan a for aam admi and maal daar aadmi.

Now i suppose the government wants to concentrate more on farmers, so that they will get the more output from their meager resources. But they are cheated. The reason is complete non transparency in the system. Government will definitely come out with some new mantra.

           Development is must for survival, the days of " survival is the fittest" is over, economy in terms of agriculture is a prime component of progress, technology, manufacturing and financial inst are some levels of living.

We have to develop a balanced system of demand and supply, keeping in mind the population.

Actually, I consider this question a highly relevant question to the entire population of our state. In-fact if we take a broader view, all the economies have this as a challenge to deal with. Let me present some of my views here.

I was reading a book written by Shri Chidambaram, our home minister and former finance minister. he was arguing in that book that if we give higher support prices to our farmers, we will have higher dispensable income at our rural population, given the fact that @65% our people live in villages.  He had sughted some numbers from WTO supporting his idea. The argument is that if we dont pay our farmers, he is in perpetual debt trap, as the financial yield per acre will not cover the entre expenses. He advocated in that article, that it is as a consumer our duty to shoulder so,e of the responsibility to help our farmers. That is if we let the prices appreciate a little bit, that can be achieved. He suggests that let us start answering this problem by ensuring higher support prices for various important crops like Paddy, Sugar etc. If we increase the raw material prices, we all know very well that the processed items will be expensive. Paddy gets higher price implies rice miller will pay more to get same rice, which he will process and pack rice and sell. Naturally he will pass that additional burden to us, the consumers.

Let us for a while give this idea a benifit of doubt, for the sake of our farmers. Obviously, we see that this additional monies will help development at rural India. But will also bring higher prices to all of us. I shall now start question the very argument that i presented above. Are we all sure that the additional higher support price will be forwarded to our farmers? Are we also sure that this higher price reward higher expenses (excessive use of fertilizers) that our farmers may undertake? Are we also sure that is this actually going to address the issue in question?

The answer to that, i can say is NO. Whereas we all know from economics that technology is the game changer. For example, one of the sugar factories in AP bought a crop cutting machine specially made for Sugar cane. They simply rented it out to the farmers in their region, taking 40% of the expenses the farmers will have to incur if they were to engage regular manual labor to cut. The farmers are so happy with this new development. They actually were paying less and getting the cane moved out of their fields and grass seperated easily in shortest of the time. Now it may hurt the agri-coolies with their jobs. But the farmer are making more money even without increasing the minimum support price. We all know that in businesses, positive changes in bottom line can be brought not only from the top line growth but also from cutting costs and improving efficiencies.

SO development that leverages all options may not actually bring higher prices. Let us use this as an opportunity to think about ways to bring this type of ideas to many more people. Some of us may even consider this crop cutting as a business. Or we may see leasing out these types as another option. We may also see if we can start a NBFC to finance these sort of tools, if a qualified client (credit worthy and educated)approaches. I say please dont waste time but start doing.

Please give Leena a very big hand for this idea. If i take liberty to say so ...

What ever you give arguments on this but for sure DEVELOPMENT IS NOT THE CAUSE OF PRICE RISE.

in india its all blackmarketing and no development.. so there is no corelation between the price rise and development, government can do much better than what its doing now...

It is really surprising that how people are taking the development.

Development means growth. Not the looting of people’s money.

This price rise in food articles is only because of hording and middle-man

Profits. First the Distributor then wholesaler, the retailer and then the consumer.

In this ratio approximately 35% price goes up. When hoarder comes in picture

Price goes twice the market price.

Even in vegetables, Potato in Whole-sale market is only Rs.6/- a kg. when comes to consumer it is much more.

Development can’t be blamed for this. Well Yes Govt. Policies definitely effects.

Govt. should take hard core measures to tackle these Hoarders and provide suitable

Way to the public.

I hope you will agree with me and will not blame the Development. Rather we shall welcome the Development in all areas. This will give Jobs to people too.

Price rise is a global phenomenon and happening across the world. This is due to short supply and excessive demand for food products coupled with poor rainfall. At the same time traders are finding this as an opportunity to hike up the prices. Govt become helpless to control the prices since there is no cheap import available.

After going though all the posts, I feel that by inflation most means inflation in food produce and reality. 

Most realise that food prices had gone high due to bad monsoon. The import option was not there as there had been crop failure around the globe. NO POINT BLAMING ANYONE ON THIS! If we have good monsoon this year, I am sure the inflation is food prices will come down to normal levels.

Reality, of course demands action. The land resources are limited (multistory buildings can optimise the resource use) and anyone will be tempted to convert his land into residential/ commercial complex as it may fetch significantly high return. Here we may need a regulatory authority similar to TRAI (in telecom) that regulates residential, commercial and related infrastructure in the country. Here GOVERNMENT should take fast and suitable action at the earliest.

In may cases, we had seen heavy deflation too, like consumer durables, telecom expenses, air travel, FMCG etc. Haven't we?

Development is not he reason for price rise.

Development brings the new opportunities, more consumption , for example if infrastructure is developing then more demand for copper and other commodities. Like wise this can never be said that PRICE RISE IS BECAUSE OF DEVELOPMENT.

Development never makes Prices rise........ uncontrolled governance does...... instead when we have development that means we are more efficient to produce the same thing at the same or slightly increased cost/annum which can not inflate the consumer price index this much....... examples are bellow..

With this i dont want to infer that China is better than India....... but just that they are better at governing growth and development than us.....

AS STATED BY Mr.R K MALHOTRA,HOARDING AND SPECULATION-COMMODITY TRADING HAVE ALSO CONTRIBUTED TO THE STEEP PRICE RISE-IN THAT THE GOVT HAS ONLY BANNED TRADING IN FEW MAIN COMMODITIES-FIRM ACTION IS NEEDED

FURTHER,INADEQUATE RAINFALL HAS ALSO LED TO SHORTAGES IN FOOD GRAINS-PDS HAS TO IMPROVED

Commodity market is also for farmers to get best prise of their products.It is only speculators not the commodity markets and speculators are every where in the world.The horders in their whiter cloths.

this is only politician game shame on the goverment if they not stop the inflation

and not think abt the poor people

I bag to differ here Leena, I think its not the development, I think it to be a positive term. What is happening I think unequal development in our country in between people, states & places.

Loads of wealth is being created but is limited to a tiny fraction of our society to live up with growing economy & aspirations.

Secondly our great visionary leaders seems to be doing short with exim policy. I feel distressed when I often hear our govt. buys for more & sells for less the same commodity in a short interval.

Still our farmers committing suicides, where from we will have our crops?

Recently a TV channel exposed thousand tons of grain lying uncared under govt control, what does it tell?

Gujrat has a different story viz a viz Bihar or UP & people in these states do not have much difference in basic consumption patterns with oil or vegetables or pulses or like that.

I think length is good with GDP but not the width & depth & that's causing problems.

I agree with you.

It is not the development but the people{ we all} whome we  elect ,these white clothed monsters, who hold the commodities for their own benifits and make people starve.