Economics of Economy

Economics of Economy

The status of our country is now defined in terms of “inflation” and “growth”. Various analyses are being incessantly forwarded in validation of these arrived at conclusive definitions. The advent of a plethora of TV channels, private, is deemed “a must” for creating awareness amongst us, the common people, regarding the supposed “burning issue”. True, burning issue it is, but not in the sense it is being projected. Rather the “literal implications” would be a better advertisement, as it is literally burning the wallets!

I cannot quite fathom the depth of such in-depth analyses that we invariably find ourselves subjected to whenever we switch on our television sets. As I am a person of the “chemical field”, my neurons are not that receptive to finance. So I am at a loss when confronted with such discussions. Instead of appreciating the efforts of the people, experts of their field: who try to so hard to explain such “terms” with respect to their implications and applicability, I end up more confused. Confused because I do at least tackle my own finances necessitated by my required visits to the market. It is here that the disparity between what is being projected and what we are actually facing, comes to the fore. Thus the aura of the percentage analyses compounds the confusion.

Inflation, the word, is sourced to “inflate”, which means an amorous increment over the present status (of the parameter under consideration). Inflation is noted as price increase. Whereas, every other day, we are being informed that the rate of inflation has touched a record low. Then quite inconspicuously the statement is reversed projecting an upward inflation.
This swinging projection of inflation has left me perplexed. And further inexplicably India is in the forefront of the countries with “Growing Economy”. We too are concerned with “Economy” & “Inflation” & “Growth”. And we’ve a right to know as well. True, we do not understand the technical jargon but are being forced to face the hard ground reality. We can feel the severe pinch on our pockets when the hard earned money is being drained without allowing us any scope to provide a friction on this flow! We have been reduced to mere hapless martyrs at the altar of our growing economy.

Let us consider some of the basic realities affecting all, though the extent might vary. The price of 1kg “potato”, the maximum consumed vegetable, crossed the Rs 20 mark and even hovered around Rs 30. Onions, have activated the lachrymal glands manifold with its pricing at Rs 36-40/kg. Other vegetables too are not lagging behind. Pulses have hit the century mark with cereals too vying for a high score. Cooking oil with its price makes one wish to be endowed with talent so as to cook without oil! All other edibles are gradually stretching people to their limits.

I refrain from mentioning the state of the non-vegetarian items to make this petition universal in applicability.

Then there is the case of drug pricing. Drugs too are giving all other essential goods a run for their money.
Herein I have restricted myself to one of the most rudimentary requirements, edibles.

Amidst all this mayhem the poor common man is made to run from pillar to post. And at the end of the day is left panting like an overworked Alsatian!

Just imagine, with India having a huge population below the poverty line (BPL), what these people are being subjected to, if we, the middle class, are hit so badly. Without having an even a proper shelter, they have been rendered miserable with the price of essential and elementary (just imagine, potato has become a big revenue generator leaving these hapless people wondering!) goods skyrocketing.

Yes, I am aware of the “Supply & Demand Theory”, with the parameters having an inverse relation. Given the exponential rise in population, demand will always be much greater than the produce and availability of the goods. This naturally implies that there should be a sharp increase in the prices. But to what extent? Is the rate of increase infinite?

Leave aside the increase of prices and its extent. This I can understand to some extent. But what intrigues me is the correlation between this mindless price rise vis-à-vis economy and growth. When the lower middle class and the middle class is finding hard to make ends meet, India’s economy is growing! True, even people BPL are surviving. “How”, is nobody’s lookout. The natural instinct and craving for survival is keeping them afloat and not their affluence. So is there any need, even to try, to bring down the prices?

Here I have focused only on food and drug. The trend is seen to be prevalent in matters of covering (clothing) themselves and procuring a shelter (house). All taken together, this presents not a rosy picture of an economic growth, but a frightening proposition, of decimating such people.


I don’t understand anything of conventional economics. But I do know that people don’t buy luxury items everyday; even those who can, don’t. But yes, goods of daily needs need to be bought: both by people who, can, and even those who can’t! Those who can’t are forced to spend beyond their limits to survive. It is not the affluence of the affluent, which makes any difference to the growth of the economy. They will spend, without any stress, under any circumstances.
It is the major cross-section of people below that level, who should decide the economic growth. Nobody buys a TV, refrigerator, air-conditioner etc., daily. But everybody has to buy edibles and medicines. These are essential and emergency items.

So if the price of the essential goods were increased there would be a sharp growth of the market. But the saddest and the cruelest part is the “manipulated projection” of economic growth. People are being forced to spend more, which is being deliberately advertised as an enhanced spending capacity, as a manipulated extrapolation. This in turn implies an increase in the income. Though salaries have been hiked but so has the market rate, which has increased for one and all. But the fact remains that the pay packets of all have not been graced by increment. There are sections of the society who have been denied of this blessing of bulkier pay packet. But given the universality of the increase in the market rate, they now stand cursed by this exorbitant price rise.
Do they, rather all of us, have any option but to accept the situation and aid in “such” a growth of our country’s economy?

If the spending capacity of the citizens is one of the parameters on which the economic growth depends, then isn’t India’s economic growth manipulated? If not in totality, at least even partially? The motto seems to be: increase the price of essentials, force people to buy them by spending their hard-earned money and project a country whose citizens are apparently so well-to-do that the economy is thriving.

When common man is barely surviving, how can that country be on the path of a growing economy?

Though I am not a person of Economics, I am not economical with my words. And though I do understand price rise to be an inevitable outcome of population blast, I do not understand how this can be the reason of economic growth.
I would definitely like to get under the skin of this Economics of Economy. So long I don’t have the answers, to me, this projected economic growth is nothing but an outcome of manipulation mechanism.

Sushmita Mukherjee,
23rd December, 2009.