Sunday, November 04, 2018


In the first part mitr1 I had couple of pictures of Consumer Price Index posted. That post was at a time when the fuel prices had already started "going up". For comparison, let me use this link and the Delhi prices. Jan 1st was at about 70/- , by June 14 when I had the post it had gone up to 76.43 , mid sept saw it hit 82, and end sept even 84 .

Clearly that had some impact on inflation -- what I understand from is that from a near 4% in Apr-June quarter, it went to 5.61 in July-Sept quarter. Yet, compare it with the average inflation numbers of UPA year -- 10.8 in 2009, 12.1 in 2010 , 8.9 in 2011 , 9.3 in 2012 and 10.9 in 2013 !!

And even more interestingly go to and give the 1 year option and it is interesting to see that it has kept low even in the July-Sept quarter of 2018. And overall, see the graph below, it is amply clear that Modi government has been successful in keeping it in control - much below the UPA numbers, especially since end-2016 .. 2 years straight, below 5% !

In short, a fuel price increase from about 70/- to 80/- (which is about 14%) has not caused the general commodity and food inflation to go that high. They have been in the range of 5% at max 

But do the common man really appreciate these numbers "on paper" - Is he not pained with the rising fuel prices ? Yes, rising fuel prices will impact the monthly budget of a middle class family - but by how much ? If you own a two wheeler and assume 40km a day on an average, and yet again assume that means almost 1 litre of petrol - that is about 30 litres of petrol a month - so a change of 10 Rs per litre is an additional 300/- If it is a car owning family -- well, then you are already inching closer to an "upper middle class"-- the difference may be that of 1000/-  [ 10km per litre, 1000 kms a month, i.e 100 litres.. Rs 10 additional, is a 1000/- extra]

These are average numbers, and I am not saying that a 1000/- is meager, but then the grocery (food and essential commodities) budget of such a family would typically be much higher - let us say 20K per month. A 5% increase in that would still keep it at 1000/- extra, where as a 10% increase would mean 2000 and 14% would have meant 2800/- additional per month . Play of numbers one might say, but I continue to feel that government has done a good job - well, time will tell in the form of election

So that was mostly about "Roti", and in some sense "kapda" too (well, I mean the daily commodities, not necessarily only clothing). That leaves me with "makaan" from what I had intended to cover in this part-3 . I do not have data from every city of India, but simply looking at the flat prices in Bangalore and land prices in Kerala, it is quite clear that "skyrocketing" seen during the 2010-13 time frame has long stopped. I had mentioned in my previous post that a big reason could have been the steps against black money, but another factor must also be the relatively low inflation rates 

And indirectly , the PM awaz yajana must have also contributed to this "stabilization" . Looking up , of the 20 million planned by 2022 (when India celebrates 75 years of Independence after colonial rule) , only 4 million has been "approved" as of Feb 2018 .. In 4 years, the project has to scale 4 times. Yet, the very concept and initiative has given people hopes -- I personally have heard a lot of people talk about it -- and this might turn out to be one of the game changers, in not just being a social welfare scheme, but also in triggering jobs and boosting production and economy. 

In other words, this seems to be one of the biggest "investments" that the government itself is making, and its dividends should soon start paying off - in fact, it already has in controlling prices

PS: When I posted mitr2 , India was at 100 in ease of doing business index and as I post this third part, it has jumped 23 positions to 77 ! News here 

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