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Wednesday, November 30, 2011

Indian Inflation - A personal experience

Indian Inflation - A personal experience

When I visited India to organize and realize my sister's marriage, I came face-to-face with the ground reality of "artificial inflation". Inflation in a place like Tirunelveli is purely greed driven. I could not find any clear cost-price and definitive profit margin associated with for any commodity. The amount of money that had to be spent on flowers etc would increase by the day. By the time you get quotes from one, compare with another and call the first guy back, the price would have been pumped up. My father and I were flabbergasted and at some point left to wonder how we would pull the wedding off.

My maternal grandmother lived with us for the past 2-3 months. She is next to immobile and my parents were providing her with physical and medical care. Some scan had to be performed and the bill was Rs 3000 for a scan. However, since my father was a friend of the doctor, the scan price was halved to Rs 1500. My father remarked to me : "There must definitely be a profit in that Rs 1500. If so, what is the real cost price and what is the profit margin of such endeavors ?!"

My wife was appalled to know that my sister's make-up woman charged Rs 8000 for a shoddy job ! Lalita was telling me that even in places like Bombay, the branded salons like Lakme do not charge so extravagantly. What was Rs 1500 in Bombay "cost" Rs 5000 in tirunelveli !

It is one thing to note things are expensive and another to note that the quality does not scale proportionately with the price. I witnessed that a brooch that was bought from one of the better stores in Australia for Just $5 (on sale), was miles ahead in quality than the one bought at Pothys for Rs 400. The matter of the fact thus is that, most of these so called "prices" are completely unfounded and only serve to strengthen the retail giants like Pothys and RMKV without much attention to serving customers with good quality products. And all that for a brooch. You can imagine what would have been the state of our minds when we had to shell out money for the maNdapam and other things like sarees.

"Loot and Live" is the Mantra ! And this goes in circles. If people buy stuff at higher prices, they will end up balancing their losses by increasing the prices of their goods and services. I see a potential zimbabwe like situation where INR would be scrapped and a new currency will be floated on par at least with the "25 cents" of USA ! Or else in the future, one may have to stack up Rs 10,000 in his pocket only to go to a restaurant and pay for a couple of dosas and come home empty-handed.

A fundamental change in the mindset is needed else this economy will go down the drain.