Commodity prices outwit India's PCI by miles
At a time, when prices of essential commodities keep surging, the industrial body, Associated Chambers of Commerce and Industry of India (ASSOCHAM) has revealed a startling variation between the pace of price rise of the commodities and the growth of per capita income (PCI) of the country.
In an analysis by ASSOCHAM, it was noted that the prices of seven essential commodities like condiments & spices, eggs, fish & meat, milk, tea, wheat, pulses, coffee have gone up by 18% on an average from August 2009 to August 2010, while per capita income of an average Indian went up by 10.4%.
While prices of condiments & spices, eggs, fish and meat and milk witnessed a sharp increase, ranging between 40%, 27%, and 26%, respectively, other essentials like tea, wheat, pulses and coffee saw upward moment in the range of 11%, 10%, 9% and 7% respectively, the study noted.
The per capita income of an average Indian estimated about Rs.40,141 per annum in FY 2009 went up by about Rs.4,404 in 2010, amounting to Rs.44,345 per annum.
The ASSOCHAM adds that the rise in essential commodities prices and per capita income was utterly disproportionate. This will not only harm the individual consumption and savings capacity but also in the long run damage the growth of industries, which can contain the growth of investments.
The prices of condiments & spices and condiments edged much higher from period in August 2009 and have witnessed extremely higher volatility in their prices which went up to the extent of over 40% between August 2009 and August 2010.
The per capita consumption of condiments & spices in India is said to be on the rise following a change in the food habits of the people. Winter, which is the season of weddings in North India along with Christmas and New Year, may also lead to an upsurge in demand for the spice, the study noted.
As the industry experts opine, the good demand due to upcoming festivals such as Navaratri, Dussehra and Diwali, has resulted in condiments & spices prices rising during the festive seasons and the production of cassia, poppy seeds and cloves in the country is negligible when compared with the demand.
Inflation has taken several essentials like condiments and spices, eggs, fish, meat and milk out of the common man's reach, an Industry body said. Prices of Eggs, Fish and Meat also edged higher from august 2009 to August 2010 of over 27%.
It was not limited to the agro commodities, but the prices of milk too have started pinching to the common man as during August 2009 and August 2010, milk prices had increased by 26%.
The demand for milk is increasing much faster than production and consumption of milk and milk products has significantly gone up in the country. Apart from the fast increasing appetite of Indians for dairy products, increased cattle feed costs and shortfall in milk procurement during the winter season are the major factors behind the increase in milk prices.
The WPI (wholesale price index) for milk has shown a rise of 26% on year for 2010. The multiplier effect can be seen on milk products where prices of critical products like ghee and butter have increased respectively during the period.
The eating habits have undergone a major transformation with the growing demand for pizzas, where large quantities of cheese and butter are used.
Tea prices too not to be left out as the plant crop is largest consumed in India. The country consumes the largest quantity in the world, accounting for nearly 16% of global retail volume sales.
Geographically, tea is widely consumed in the North, East and West of India, and is popular with a wide variety of social classes and consumer age groups. Prices of Tea have increased by 11% from august 2009 to august 2010.
The ASSOCHAM study noted that wheat prices have remained firm on the back of low stocks and high international prices. On a year-on-year basis, wheat prices have increased by 10% from August 2009 to August 2010.
The recent increase in the price of wheat is clearly because of demand exceeding supply a situation arising out of lower market arrivals, lower procurement, decline in the buffer stock below the norm.Wheat, the staple used to make bread, pasta, chapatti and much else, epitomizes the trend, said D.S. Rawat, Secretary General, ASSOCHAM.
All essential pulses have witnessed extremely higher volatility in their prices, which went up to the extent of over 9% between August 2009 and August 2010.
The gap between demand and supply in the country has led to a hike due to dormant production of pulses. Wheat prices have remained firm on the back of low stocks and high international prices. Gram, urad and moong were particularly on upswing.
Coffee prices, according to ASSOCHAM have increased by over 7% during the period, beginning august 2009 to August 2010. The principal reason for the buoyant coffee market is the anticipated tight supplies that would be just enough to satisfy the growing demand.
The study bears significance at a time, when the government has taken special measures to ensure adequate food supplies and thereby remove the supply-side factors causing price escalation. Secondly, the price rise of the essential commodities is aptly taken into consideration by the industry body with respect to the growth of incomes of the individual citizen.
The time is ripe for the policy measures to be taken up to contain inflation, especially in the food category as it directly affects the common man. Raising income levels of a select few groups in the society will not solve the problem; on the contrary it will only add to the burning fire of the price rise and lead to over-consumption by the society and further escalate prices.
The policy measures to be taken up taking into account all the sects of the society and the levels of income of these groups. The ASSOCHAM study has revealed not only the pace of price rise in the essential commodities, but has also created waves of thoughts for the policy makers to match the pace of growth in prices with that of incomes.
In an analysis by ASSOCHAM, it was noted that the prices of seven essential commodities like condiments & spices, eggs, fish & meat, milk, tea, wheat, pulses, coffee have gone up by 18% on an average from August 2009 to August 2010, while per capita income of an average Indian went up by 10.4%.
While prices of condiments & spices, eggs, fish and meat and milk witnessed a sharp increase, ranging between 40%, 27%, and 26%, respectively, other essentials like tea, wheat, pulses and coffee saw upward moment in the range of 11%, 10%, 9% and 7% respectively, the study noted.
The per capita income of an average Indian estimated about Rs.40,141 per annum in FY 2009 went up by about Rs.4,404 in 2010, amounting to Rs.44,345 per annum.
The ASSOCHAM adds that the rise in essential commodities prices and per capita income was utterly disproportionate. This will not only harm the individual consumption and savings capacity but also in the long run damage the growth of industries, which can contain the growth of investments.
The prices of condiments & spices and condiments edged much higher from period in August 2009 and have witnessed extremely higher volatility in their prices which went up to the extent of over 40% between August 2009 and August 2010.
The per capita consumption of condiments & spices in India is said to be on the rise following a change in the food habits of the people. Winter, which is the season of weddings in North India along with Christmas and New Year, may also lead to an upsurge in demand for the spice, the study noted.
As the industry experts opine, the good demand due to upcoming festivals such as Navaratri, Dussehra and Diwali, has resulted in condiments & spices prices rising during the festive seasons and the production of cassia, poppy seeds and cloves in the country is negligible when compared with the demand.
Inflation has taken several essentials like condiments and spices, eggs, fish, meat and milk out of the common man's reach, an Industry body said. Prices of Eggs, Fish and Meat also edged higher from august 2009 to August 2010 of over 27%.
It was not limited to the agro commodities, but the prices of milk too have started pinching to the common man as during August 2009 and August 2010, milk prices had increased by 26%.
The demand for milk is increasing much faster than production and consumption of milk and milk products has significantly gone up in the country. Apart from the fast increasing appetite of Indians for dairy products, increased cattle feed costs and shortfall in milk procurement during the winter season are the major factors behind the increase in milk prices.
The WPI (wholesale price index) for milk has shown a rise of 26% on year for 2010. The multiplier effect can be seen on milk products where prices of critical products like ghee and butter have increased respectively during the period.
The eating habits have undergone a major transformation with the growing demand for pizzas, where large quantities of cheese and butter are used.
Tea prices too not to be left out as the plant crop is largest consumed in India. The country consumes the largest quantity in the world, accounting for nearly 16% of global retail volume sales.
Geographically, tea is widely consumed in the North, East and West of India, and is popular with a wide variety of social classes and consumer age groups. Prices of Tea have increased by 11% from august 2009 to august 2010.
The ASSOCHAM study noted that wheat prices have remained firm on the back of low stocks and high international prices. On a year-on-year basis, wheat prices have increased by 10% from August 2009 to August 2010.
The recent increase in the price of wheat is clearly because of demand exceeding supply a situation arising out of lower market arrivals, lower procurement, decline in the buffer stock below the norm.Wheat, the staple used to make bread, pasta, chapatti and much else, epitomizes the trend, said D.S. Rawat, Secretary General, ASSOCHAM.
All essential pulses have witnessed extremely higher volatility in their prices, which went up to the extent of over 9% between August 2009 and August 2010.
The gap between demand and supply in the country has led to a hike due to dormant production of pulses. Wheat prices have remained firm on the back of low stocks and high international prices. Gram, urad and moong were particularly on upswing.
Coffee prices, according to ASSOCHAM have increased by over 7% during the period, beginning august 2009 to August 2010. The principal reason for the buoyant coffee market is the anticipated tight supplies that would be just enough to satisfy the growing demand.
The study bears significance at a time, when the government has taken special measures to ensure adequate food supplies and thereby remove the supply-side factors causing price escalation. Secondly, the price rise of the essential commodities is aptly taken into consideration by the industry body with respect to the growth of incomes of the individual citizen.
The time is ripe for the policy measures to be taken up to contain inflation, especially in the food category as it directly affects the common man. Raising income levels of a select few groups in the society will not solve the problem; on the contrary it will only add to the burning fire of the price rise and lead to over-consumption by the society and further escalate prices.
The policy measures to be taken up taking into account all the sects of the society and the levels of income of these groups. The ASSOCHAM study has revealed not only the pace of price rise in the essential commodities, but has also created waves of thoughts for the policy makers to match the pace of growth in prices with that of incomes.
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