Breaking India State Business Entertainment Biography Lifestyle

Inflation is killing the rural poor, as this international report reveals

Sagar Patel

By Sagar Patel

Published on:

This is how inflation is affecting the poor. Image Credit Source: DrSKN08-Moment-Getty Images

‘Village’ and ‘poor’… When Mahatma Gandhi also presented his economic principles to the world, he talked about them first. He had said that whenever a policy is adopted in the country, one must first keep in mind what effect it will have on the lowest section of the society, i.e. the poor. Today, it is these poor people and towns who suffer the most from the impact of inflation. The full outline of it has been outlined in an international report.

When the country’s economy started to gain momentum again after the Covid pandemic, it remained different for different sectors. This was called the ‘K-Shape’ recovery, meaning a boom in some sectors and a slowdown in others. The same goes for inflation in India. A report from international brokerage firm HSBC was published on Tuesday, stating that some sectors of society are affected more than others by inflation.

The situation of the poor in the villages is worse

HSBC economists say rural consumers are being hit harder by inflation than urban consumers in India. He said in a report that just as a ‘K’-shaped recovery was observed in the economy, a similar situation exists on the issue of inflation.

read this too

HSBC chief economist Pranjal Bhandari also cited the recent extreme heat in his report. According to the report, if on the one hand the inflation of food products in the country is high (around 8 percent for a long time), on the other hand the country’s core inflation rate is decreasing. One of the main reasons for this is crop loss and livestock mortality in villages.

When the country’s core inflation rate is calculated, the impact of food and fuel prices such as gasoline, diesel, etc. is not included. The report says the government has lent a hand by reducing fuel prices, but petrol, diesel and LPG are generally not used in towns like cities. Due to this, the inflation rate in rural areas is higher than that in urban areas.

Food inflation is a very worrying situation.

The HSBC report says that the food inflation rate in the country is very scary and creates confusion. The question will come to everyone’s mind that when grains are produced in villages, inflation should be less compared to cities, but it is not so.

This is because farmers are losing income due to crop loss. Their effort is to sell most of the product to urban buyers. This may give them marginally higher crop yields, but it is reducing the supply of food grains in rural areas. Prices are also increasing due to this.

On the contrary, urban areas have better infrastructure to transport goods from ports to tables. This helps to make imported products available at low cost to the people and at low prices. HSBC believes that if the rains are not normal, then the Reserve Bank of India (RBI) is unlikely to cut the policy rate anytime soon.

Wheat and legume stocks are low

According to the report, if rainfall is not normal in July and August, considering low stocks of wheat and pulses, the situation on the food grains front in 2024 may be worse than last year. So far in June, rainfall has been 17 percent less than normal. At the same time, there has been 63 percent less rainfall in the northwest region, where most of India’s food grains are produced.

The report says that if the rains return to normal, inflation could drop quickly. The RBI will be able to cut the policy rate and could reduce it by 0.5 per cent by March 2025.

(input language)

Sagar Patel

Sagar Patel

I am Sagar Patel, specializing in business news reporting. With a keen focus on economic trends, market analysis, and corporate developments,

Related Post

Leave a comment