The Hindu Business Line : A festival of high prices

On the eve of yet another season of celebration, feasting and sanctitude - Onam, Kerala's traditonal harvest festival, alongside Ramadan, the holy month for Muslims, observed by daylong fasting and prayers - the people find themselves up against a formidable dampener of festivity - price rise.

The prices of several essential commodities - pulses such as green and black gram, red chilli, sugar, jaggery, bananas (the latter two important ingredients of traditional Onam food fare such as fried banana chips and `payasam', the sweet kheer-like pudding) - are soaring. Further, dry fruits such as dates - popular as fast-breakers during Ramadan - have also become prohibitively expensive.

In Kozhikode, ordinary dates are costlier by Rs 40 a kg, while dry dates prices have risen by 20 per cent. A kilo of lemons now costs Rs 70, up from the recent Rs 40 - 50 price range. Sugar is now priced at Rs 32 a kg, up from Rs 25. And a kg of apples can set you back by Rs 85 to 100.

No wonder that K.E. Ismail, Member of Parliament, recently told the Rajya Sabha: "The unprecedented rise in the prices of foodgrains and other essential commodities is the burning issue that agitates the mind of everyone in this country. The price rise affects Kerala most severely because Kerala has to depend on other States for all commodities."

According to the Kerala State Planning Board's Economic Review 2008, during that year the average retail prices of almost all the essential commodities showed an upward trend. The exceptions were red gram, potato, bitter gourd and snake gourd.

STATE-WISE COMPARISON

A State-wise comparison by the National Sample Survey Organization (NSSO) shows that Kerala had the highest Monthly Per Capita Consumer Expenditure (MPCE) of Rs 1,055.6, followed by Punjab at Rs 1,009.8. (The MPCE for a household is the total consumer expenditure over all items divided by its size and expressed on a 30-day monthly basis.)

According to the Kerala State Planning Board, the average consumer expenditure in Kerala and the rest of India matched fairly closely during the early 1970s. However, from the late 1970s, the average consumer expenditure of Kerala gradually surpassed the all-India level in both urban and rural sectors.

The rate of change in the rural sector was more pronounced than in the urban sector. The percentage variation of consumer expenditure in Kerala over the all-India level in the urban sector stood at 8.4 per cent in 1983-84, while it was 29.5 per cent in the rural sector.

This rising trend continued in all the following NSS Rounds and reached a peak level of 81.3 per cent in the rural sector during 2004-05 (61st Round) and 33.7 per cent in urban sector during the latest NSS Round, 2005-06 (62nd Round).

Interestingly, the NSS statistics reveal that out of every rupee spent in 2005-06 by the average rural Indian on consumption, 53 paise was spent on food.

Of this, 17 paise was spent on cereals and cereal substitutes, 8 paise on milk and milk products, 6 paise on vegetables, 5 paise on sugar, salt and spices, and 4 paise on beverages, refreshments and processed food and purchased meals.

Out of every rupee spent in 2005-06 by the average urban Indian on consumption, 40 paise was spent on food. Of this, 9 paise was spent on cereals and cereal substitutes, 7 paise on milk and milk products, 6 paise on beverages, refreshments and processed food, and 4 paise on vegetables.

The latest NSS figures put the expenditure on food items in the rural sector of Kerala at 43.95 per cent , against the all-India figure of 53.34 per cent. In the rural sector, the expenditure on non-food items stood at 56.05 per cent in Kerala and 46.66 per cent in India as a whole. "This shows that rural Kerala spends more on non-food items than on food items," notes the Economic Review.

The wholesale price index (WPI) is the most popular measure of inflation in the country. The WPI of agricultural commodities in Kerala rose by 541 points in 2008, compared with the previous year, an increase of 17.8 per cent. The highest price rise was recorded for molasses (32.6 per cent), followed by rice (27.2 per cent) and condiments and spices (15.9 per cent).

The price of food crops increased by 20.4 per cent, while non-food crops prices rose 12.9 per cent. The least price hike was recorded for fruits and vegetables (5.8%), says the Economic Review.

PDS role

The State's public distribution system (PDS) dates to the beginning of the Second World War. Universal and statutory rationing was introduced in 1966, with the implementation of Kerala Rationing Order 1966. The State's PDS caters to the needs of 70,32,702 ration-card holders, who can buy rationed articles at subsidised prices through a network of 337 authorised wholesale dealers and 14,229 authorised retail dealers.

The Kerala State Civil Supplies Corporation (Supplyco), set up in 1974 with the mission of "food security for Kerala", acts as a second line of PDS by distributing essential commodities at reduced prices through a network of 2,874 outlets spread all over the State.

Clearly, unless there is substantial State intervention through an efficient PDS and other market-intervention and social security programmes like the mid-day meal programme to provide nutritional support to primary school children in classes I to V, Kerala's citizens will find little to cheer about this festive season.

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