Tackling the effects of vegetable price inflation

Price Inflation is a serious problem that affects the common man, especially when it results in an increase in the price of essential commodities. An increase in the price of vegetables affects the common man, the poor in particular. In absolute terms, the effect of a rise in the price of vegetables will equally affect all classes of society. However, when one considers this effect in relative terms, the poor have to spend a disproportionate amount of their income on food. This leaves them with very little money for other essential commodities and adversely affects them in a manner unlike those experienced by the rich. This is a well-known fact and controlling the price of essential commodities has been a top priority of every government in power and plays an important role in the political scenario. One such example is of the BJP government losing power in the 1998 Delhi Assembly elections due to its inability to control the price of onions. 

Causes of vegetable price inflation

  A sudden increase in the price of vegetables can be due to the following reasons:

1.      Crop Failure

2.      Hoarding

3.      Supply-side infrastructural problems

4.      Transportation

a.      Increase in transport cost (Diesel price hike, tolls on roads, etc.)

b.      Man-made factors (Strike, blockades, etc)

5.      Wastage of vegetables

a.      Absence of Cold Storage facilities

Crop Failure is an act of nature and the most that the government can do is to make crop insurances affordable to ease the distress of the farmers. This, however, shall not reduce the price of the vegetables. Hoarding, on the other hand, can be easily tackled by stringent law enforcement. Problems in transportation and wastage of vegetables can also be tackled by investment in building the requisite supply-side infrastructure. Building cold storage facilities will extensively improve the government’s ability to control prices and help in reducing the wastage of food in the long run. Furthermore, granting tax-breaks and subsidies, in addition to building better transportation infrastructure shall also help. 

A better way to tackle

Case study on Amma Pannai Pasumai Nugarvor Kootturavu Kadai:

In Tamil Nadu, the government recognized the problems associated with vegetable price inflation, especially the impact that it has on the poor. In order to tackle this problem, the government decided to build its own supply side process and cater to the needs of the poor. Launched in Chennai, the Amma Pannai Pasumai Nugarvor Kootturavu Kadai is a perfect example of a populist scheme that also has an immense social impact. Run by the Triplicane Urban Co-operative Society (TUCS), the Amma Vegetable Markets are a boon to the poor. The USP of these shops is that the selling price of commodities is at par with the procurement price from the farmers. This greatly benefited the poor and is certainly worth reflecting in the entire nation.