Price Rise: Could Different Price Slabs for the Rich & the Poor be the Solution?

Posted on July 10, 2010 in Society

By Shruthi Venukumar:

After a long hiatus, monsoons finally hit Delhi matching the step of the new week. The arrival was not bereft of the usual fussy attitude of the clouds. The clouds were as adamant as a career woman’s cold feet at getting pregnant in her prime, but were finally (seemingly) tamed by the scorching angry days’ seething gaze. The clouds conceived and showers bestowed sparkling blessings!

“I should be saving energy. Putting on tubelights in the daytime is not going to reduce my carbon footprint. But what to do? Monsoons bring in dim days and artificial lights are mandatory,” I doled out my state of affairs to a friend on my brand-new iPhone 3G. At this precise juncture, as if to indicate that my time is up, vending out opinion on high-sounding environmental jargons, the doorbell rang.

“Oh that must be the maid. I gotta go sweety. Catch ya in a while,” I signed off.

Squinting my eye as if to protect against a pesky amalgamated drop of rain and mud waiting to catapult onto my face, I pulled the door ajar. “Hi,” I greeted Rukhsar, the maid a.k.a eloquent wisecrack with a squeaky voice, opening up the door all the way. The world-weary woman nodded with a smile as weak as the milky tea I only about manage to rustle up when situation compels. “Aaj bahut mushkil padi aane mein.” (It was very difficult to make it here today.) I squinted again, this time from wonderment. Oh! Today’s supposed to be Bharat Bandh! Hence the trepidation!

“Aane mein taqleef hui hogi na? Bandh se koi fayda nahin,” (It would have been worrisome traveling today. A Bandh is useless.) I shook my head. All the while my eyes tuned into Rukhsar as she shed her raincoat, twirled out the maddening binds of her faded green saree folded away from the areas outside the canopy of the dilapidated raincoat. “Bus mein aane mein darr laga hoga na? Kahin aag waag lagai gayee hoti toh?” (Was it scary on the way here? Felt someone would torch down your bus?)

The woman’s normally pouty lips were prim when she said, “Bus mein nahin aayi. Paidal aayi hoon.” (I haven’t come in a bus.)

“Toh phir? Itni door? Paidal?” (On foot? This far?) My mind whirred imagining a situation where I would have to walk ten kilometers to reach my workplace. “Haan. Bahut time se paidal hi aa rahi hoon. Jab pehli baar tickets ke daam badhe hain na, tab se. 15 rupaye ke hisab se poore din ka bus ka kharcha 60 rupaye ho jaate hain mere. Bahut zyada hain,” (Yes. I’ve been walking to walk since long. I stopped traveling in a bus the day they jacked up ticket fares. At Rs.15 per ride, it would cost me a good 60 bucks a day going around the households that I work for. Too much!), she rattled off. In a second, her day began to flash before my eyes. Getting up at 4 to household chores, scurrying half a score kilometers to her workplace(s), whizzing off to another locality, half a dozen kilometers away this time, to repeat the rhythm set followed twice already … all this minus mechanical help from the public transport because it would take away the sheen off the wages she earned. Nothing to pat contentedly at the end of the day and think, “It’s hard work, but it pays!”.

I caught the “This Bandh is a waste. Prices are not going to be affected by the Opposition calling a national holiday and destroying defying entities with vandalism. That in fact would go a long way to augment taxes the next time round in the name of development.” The figures of losses to the tune of thousands of crores incurred by governments across the country as reported by NASCOM, ASSOCHAM and CII froze on my tongue. (The rational part of me was also apprehensive about these losses being overstated to make the common man beware of future Bandhs and in the process become pro-government.) She will not understand. Her family is worst hit by inflation and hike in fuel prices.

And once again, dealing a big blow to my academic ego she said, “Is Bandh se koi fayda nahin hoga. Aaj mere marad ka dhanda manda padega.” (This Bandh is useless. My husband business is going to be disrupted today.) Her husband owns an obscure spare parts shop in a dark low-on-rent corner in the bustling Karol Bagh Market. So it’s not rocket science. Survival issues can never be rocket science for the deprived.

For the next one hour, it heart-breaking for me to watch her back-breaking work.

My mind was in treacherous waters. On one hand, my economics and commerce injections held down the logic that international oil price rise will definitely make fuel prices go through the roof in any country that relies mainly on oil imports. The government’s obligation to shoulder some of the common man’s burdens comes with a shelf life. Against the backdrop of a mounting fiscal deficit, it was imperative to remove subsidies. Cutting losses to oil companies was the morale behind deregulating oil fuel prices.

“Deregulation” is a red word pointing to a capitalist mode of functioning in a layman’s mind. Breaking it down to its basics, public transport fares are set to enter into Round II of rises. Autowallahs are geared to get an additional layer of stiff tissue to their upper lip. How can one blame them? With their vehicle rental fares always ricocheting past day wages, would it be square to deem them the culprits? I think of college students whose day begins with a crowded over-flowing, bursting bus jerking them to full consciousness from last night’s sleep. Pay 15 bucks for a joyride looping a hand to one of the many rickety horizontal or vertical rails in the bus, because a decent edge of a seat is divinity in the cluttered box. The joyride is set to become dearer. Well, at least to some. Such dearness is not something to crease a brow over to for businessmen with a shade of shadiness. While prices bounce high on a trampoline, all they need to do is give their own retail products a jacked up tag and there! The effects of price rise stand negated for them! The ultra rich cut no major glitz to their life. Government employees? Now here’s where the lines start solidifying. Barring some fish swimming in the cesspool of corruption, the majority of government employees live within the tight ambits of a fixed salary, two mortgages and fluctuating (yet decent by some standards) demands from kids. While they wait for their dearness allowance to see implementation, price rise can stifle major financial arteries of theirs. Scale a few notches lower on the social ladder and there you find the discomfort changing into distress. A construction worker might have to hide his tears in the sweat rolling down his face seeing his toddler eye that 5 rupee candy fancifully. Buying it would mean draining one-third of his transportation cost to get back home to the slums. This, when already his daily wages plunge below the minimum wages set by the Government owing to a wily contractor.

The maid’s case is not the maiden one about disparities arising out of uncontrolled price rise. All through the day when Delhiites found themselves glued to their T.V sets, the idiot box for once squeaked out sense. Deregulation of prices would put a demand-supply cycle in place whereby the phenomenon of judicious use of fuel is gradually expected to arrive. Logic suggests that judiousness is the luxury of the endowed. What about lower middle class students who already go through the grind deciding between the most economic daily commute options and wage labourers whose only option traveling long distances is the buses? Many would be torn between economics and a moral dilemma here.

Is a middle path possible?

India takes pride calling itself a welfare state. The constitution falls just short of enjoining the same upon the State (owing to poor finances of the country at the time it was penned down). Keeping in mind the welfarist nature of the Indian state, it is imperative for the Government to make sure that citizens have adequate means of bare minimum supplies. Transport is increasingly becoming that benchmark along with classic food. An option that the Government may want to look at to alleviate the pressures of the poor is that of different price slabs for different economic strata. Just like Public Distribution System where essential commodities are subsidized, there needs to be brought a system in place where public transport tickets are allocated to one according to one’s financial status. The same goes for auto and taxi fares (these are no longer items of luxury and have transcended into the utilities list). The State already has a list of the BPL populace. These can be issued concession cards which when produced, entitles them to subsidies on tickets and fares. Such a provision can also be made for the middle class based on their income with a slightly higher price slab. The top echelons of society can be asked to fish out a price proportionate to their level of affluence. The system thus proposed is in no way a rendition of the old Robin Hood tale. The price cuts as demanded from the different economic strata will be according to their affordability. It should be so planned that judicious use of fuel is encouraged and followed and price waivers do not act as disincentives to work. The have-nots will find their burden lifted off.

For skeptics who might argue that this would leave “haves” to bear the brunt of rising costs, it may be suggested that since price slabs will be proportional to pay packets, the percentage of total income of someone living BPL that would go towards fuel will, in most cases, be higher than the percentage of total income to be pumped into fuel expenses of the moneyed class. Thus even if the rich end up shelling more than the market price of fuel to plug the holes left by cost waivers, it won’t pinch them as much as it would a poor man. Costs will thus be shared in a fair manner and the fiscal deficit can be bridged without compromising on anyone’s square meal.

Like all other policy decisions, this system too needs checking of malfeasance. Waivers should not come misplaced and only those who truly need subsidies should benefit from it.

It is again a system of subsidies. Only, this time, the Government can rest easy without having to rollback or divert budget from major long socio-economic projects like Right to Education etc. to fill in the fiscal deficit. This method of citizens subsidizing fuel for the downtrodden would not be a mean task seeing through implementation. Criticism can be expected from major quarters. But if implemented, the classic divide between the rich and the poor in term of amenities enjoyed can be narrowed. Making use of literary licence (and not intending to offend hardcore economists by twisting a standard term), I’d informally call it equalizing purchasing power parity (PPP) for the rich, poor and everyone in between in India. And Purchasing Power Parity leads to People Power Parity. Otherwise called “democracy”.

The writer is a Senior Editor of Youth Ki Awaaz.

image courtesy: http://sakthiinfotech.wordpress.com/2008/06/21/inflation-in-india/

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