*****Anger Mounts Over Price Hikes In India*****

The Malaysian Insider reports that Anger mounts over price hikes in India.

(emphasis mine) [my comment]

Anger mounts over price hikes in India

NEW DELHI, Dec 2 — India is bracing itself for nationwide protests against spiralling prices, which analysts say could potentially lead to instability if left unchecked.

Various political parties and trade unions have called for countrywide agitation against the government's failure to check the price rise.

Two days ago, street protests organised by an opposition party turned violent in the eastern metropolis Kolkata, with the protesters torching two state-owned buses, smashing windows of private cars and stoning office buildings.

Kolkata is the capital of West Bengal and ruled by the communists, who themselves have organised protests against the price increase in various states.

The mounting protests come at a time when the annual food inflation, based on the official wholesale price index, jumped to 15.58 last month.

Indian families complain that
the soaring prices of vegetables and other essentials are playing havoc with their household budget.

"My monthly expenditure on provisions, excluding vegetables, has shot up from about 3,000 rupees (RM220) to more than 7,000 rupees," said Meenakshi Mani, a school teacher in suburban Noida.

Said Aradhana Gupta, a housewife in Rajouri Garden neighbourhood,
"Just a few weeks ago, I bought two kilos of potatoes for 35 rupees. Now I have to give the same price for just one kilo."

One of the drivers behind the rising prices is the uncertain weather:
A weak monsoon — the weakest since 1972 — followed by flooding has hit output, squeezing supply and thus driving up prices.


D.K. Joshi, director and principal economist of Crisil credit rating agency, said the depreciation of the Indian rupee also pushed up prices in an import-dependent country like India.
[The rupee is depreciating because India is buying dollars to weaken the currency]

According to N. R. Bhanumurthy, economist at the National Institute of Public Finance and Policy, a lower yield for summer crops and the rise in global prices helped push up inflation.

"Demand-side pressures might start showing up from December," he was quoted as saying in Business Standard newspaper.

"Going forward, we expect monthly inflation at 7.8 per cent by the end of March 2010," he said.

Observers say that
such huge price increases in a country, where the average worker earns less than S$3 (RM7.34) a day, could lead to serious political turmoil and instability.

According to figures released by the Commerce ministry, potato prices have more than doubled and onions have become dearer by 27 per cent in the last 11 months. Both potatoes and onions are staple vegetables in Indian households.

Not only vegetables, but other food items have also registered a steep rise in prices. The common 'dals' or pulses, wheat, rice, milk and fruits have become costlier by 11 per cent to 35 per cent, according to official figures.

...
In a bid to hold the price line, the government has already banned export of all food items, including wheat and rice, with the exception of the premium Basmati rice.

The government has also asked the states to crack down on black marketers and said it was also considering a ban on futures trading on sugar.

"We will see that hoarding and black marketing will not be there," Agriculture Minister Sharad Pawar said.

He noted that
the states had detained 156 persons on charges of hoarding during January-October, "but I think they should take more action in this regard', he said. — The Straits Times

Nogger reports that Indian Food Price Inflation Running At 17.5 Percent.

Friday, 4 December 2009
Indian Food Price Inflation Running At 17.5 Percent

Complete inactivity from the Indian government to help arrest spiraling prices has seen food price inflation at the wholesale level rise 17.47 per cent for the third week of November, up from the previous week's yearly rise of 15.58 per cent.

This followed a surge in the price of basics such as potatoes and onions, which were up 94.17 per cent and 30.89 per cent respectively year-on-year. Pulses were up 37.83 per cent, reports the Hindu Business Line.

The constant stream of rhetoric from the government, insisting that "there's plenty of food to go round, don't panic"
must be starting to wear quite thin by now.

And where the hell is that key to the key to that bloody wheat shed??
[That wheat is rotten or doesn't exist]

Afp reports that the Indian government seems to be doing nothing about spiralling food prices.

Rising prices: What the govt isn't doing
Shweta Raj, al Kohli
Friday, December 04, 2009 (New Delhi)

Finance Minister Pranab Mukherjee may have lost his cool in the Parliament over the issue of price rise, but spiralling prices continue to haunt him and the UPA.

In fact, the figures are rather worrying.

If the new mantra of this government is inclusive growth, Thursday's inflation figures show that it is failing.
Food prices are rising faster than any other commodity and food prices hit the poor the most.

While overall inflation is just 3 per cent,
food prices are rising at unforgivable 17.7 per cent. Prices of rice and wheat have gone up in double digits in one year (10 per cent).

Onions are up 30 per cent and potatoes at 95 per cent.

Perhaps the most surprising is that
while food prices are rising, the government seems to be doing nothing, although it is fortunate to have many policy options at hand.

One option is to release food grain stocks [which unfortunately, DON'T EXIST], say analysts. They argue why should wheat and rice prices rise when India has near record stocks of food grains.

Accusing the government of inaction, analysts say that food prices could fall sharply if even 10 million tons of food grain stocks are released now.

The second option that the government has to reduce the inflation in potatoes, onions and pulses is to use some of India's enormous reserves of foreign exchange to import these food items so crucial for the poor. [See this? It is mounting political pressure to sell off India's dollar reserves (US treasuries) to contain domestic food inflation. This is the end of the dollar.]

India today has $270 billion in forex reserves. A small fraction of this could be used to import food and help the poorest. Instead, our forex reserves are rising every day. [India is buying dollars to weaken the rupee, feeding food inflation]

With the almost total lack of action by the authorities, many economists are highly critical of the government's inertia.

Despite having major policy options available, the large stocks of food grains and record foreign exchange reserve,
nothing is being done.

My reaction: Anger mounts over food price hikes in india is boiling over.

1) India is bracing itself for nationwide protests against spiralling prices, which will lead to instability if left unchecked.

2) In a desperate bid to hold the prices in line, the government has already banned export of all food items, including wheat and rice.

3) 156 persons have been detained on charges of hoarding during January-October

4) Complete inactivity from the Indian government to help arrest spiraling prices has seen food price inflation at the wholesale level rise 17.47 per cent for the third week of November

5) Food prices are rising at unforgivable 17.7 per cent for the third week of November.

6) Food prices are rising faster than any other commodity and food prices hit the poor the most.

7) While food prices are rising, the government seems to be doing nothing, neither tapping its (non-existent) stocks of food grains nor its record foreign exchange reserve.


Conclusion: I can just picture someone at the US treasury/Fed being in constant contact with the Indian government while begging/threatening them not to start dumping their Forex reserves. However, it is simply a matter of time before domestic anger over soaring food prices forces the government to start dumping their dollar holdings.

This entry was posted in Food_Crisis, India, News_Developments. Bookmark the permalink.

4 Responses to *****Anger Mounts Over Price Hikes In India*****

  1. misso says:

    "...
    However, it is simply a matter of time before domestic anger over soaring food prices forces the government to start dumping their dollar holdings..."

    God bless that moment!
    Amen.

  2. Trader says:

    I am waiting it to be true. Me here in Indonesia can only say, government does not always works for its people..

    I have seen it myself before at asian crisis 1998..

    Not because food prices is rising, then our exchange rate will go up to help people.

    Most of the time, USA always win. Damn USA!

  3. Martijn says:

    If left unchecked, such a rapid rise of food prices is a basic ingredient of hyperinflation.

  4. Trader says:

    Lets see who hyperinflate first, all others or that damn USA..

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