Wednesday, February 21, 2024

Meghalaya’s high inflation rate

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Meghalaya has now managed a place in the national mind-space because of negative trends. The latest is that this hill state has the highest inflation rate in the country. Howeber this is not news for Meghalayans. It becomes news because a national institution says so. Anyone who works or studies here and has to rent a place and cook their meals have one thing to say – Shillong is the most expensive place in the country. This was heard 25 years ago so it isn’t really news but a reconfirmation of what people have known all along.
The reasons for inflation are plenty. In plain economics, inflation is a situation when too much money chases too few goods and services. Inflation is measured by the Consumer Price Index (CPI). John Maynard Keynes famously stated that inflation is an imbalance between the aggregate demand and aggregate supply of goods and services. Is this true of Meghalaya? What essential commodities are in short supply here. As pointed out in the report most of our food products come from outside the state. They include rice, sugar, atta, dal, sugar, salt, oil, onion and even potatoes. Among the other edibles that the state imports are fruits (apples, grapes, papayas etc,). The state relies on Assam and Andhra Pradesh for fish as the fish ponds in the state are unable to meet the huge demands. Even cattle, pigs, chicken and eggs are imported. The cost of road transportation is very high and as stated by those doing business in the state, bringing in goods trains would result in reducing the transportation costs and hence bring down the cost of essentials.
However, retailers inform that they are all paying money to various pressure groups who demand a sort of “hafta” from the dealers. As of date, there are not less than a dozen pressure groups in Shillong alone and several more in the districts. Non-tribal traders are usually the soft targets but so are the fish vendors who have to pay a fixed amount weekly or monthly or any day of the week. Naturally this pushes up the prices of essential commodities. For those having to rent a space in Laitumkhrah or Police Bazar the rent is exorbitant. A small shop measuring 10×10 square ft costs Rs 30,000 in Laitumkhrah. Restaurants pay higher prices. There is no regulatory authority to control rent. In prime locations, space goes to the highest bidder. In this ecosystem where extortion has become rife and with no one daring to complain things will get difficult for the middle class and worse for the poor. The Government has to have the spine to bring in the railways and to put the lid on extortion.

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