Among the states voting,food prices rise fastest in Rajasthanhttps://indianexpress.com/article/news-archive/web/among-the-states-voting-food-prices-rise-fastest-in-rajasthan/

Among the states voting,food prices rise fastest in Rajasthan

Its consumer price inflation is often above India average; Delhi’s is often below.

Among the five states choosing their assemblies this month and the next,Rajasthan has consistently hit the upper range in consumer price inflation for the past one year. For an incumbent government,this is hardly a happy piece of news to confront voters with.

State-wise,monthly inflation data from October 2012 until now show that it is in Rajasthan that the rate of consumer price inflation (CPI) — which includes a large chunk of the food basket — has remained the highest,hovering above the national average in most months. For instance,as the table shows,its combined CPI in October 2012 was 12.21 per cent when the all-India average was 9.75.

A higher CPI means prices rise faster than in a state with a lower CPI.

The data have to be read with two other pieces of information. Rajasthan has a per capita income of Rs 28,851,which means it ranks tenth in India. Also,a Crisil study shows it is one of the states suffering from low prosperity and low equality standards,which means even this per capita income conceals a concentration of wealth with a few. Both factors accentuate the impact of a higher CPI.

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The CPI for Rajasthan has often been higher than even for neighbouring Delhi,which is surprising considering the latter has a far higher purchasing power.

But in the six-month period from October 2012 to March 2013,the rate for Delhi was less than the national average. The reason for the lower pace of price rise in Delhi vis a vis Rajasthan is a better supply chain for food and other items in the consumer basket in the capital.

Prices have also been lower than the all-India CPI in Chhattisgarh in the same period. This piece of comfort on the price level has,however,begun to cease in the state now. The CPI combined (rural and urban) for Chhattisgarh has begun to climb in September and October 2013,going above the national average.

The other major state going to polls,Madhya Pradhesh,seems to be positioned between Chhattisgarh and Rajasthan in price trends,too,besides geography. The CPI in Madhya Pradesh has just trailed the national average in the six-month period till March this year. After that,it exceeded the national average for a brief period but then again eased up by August this year.

Madhya Pradesh is a state whose per capita income ranks 13th in the all-India league and which has low prosperity — a low equality rank means inflation would hurt the poor more. But in the past 12 months,the state has trailed the national average CPI. For the voters,this translates into a prolonged spell of discomfort. Compared with their neighbours in Chhattisgarh,they are worse off,but compared with Rajasthan they have reason to feel better off.

The most curious case is Delhi. The inflation rate in Delhi has remained lower than the national average for most of the past 12 months. The trend has reversed in September and October this year.

A striking reason for the consumer prices remaining relatively soft is the presence of a developed supply chain in the city. This means that whenever the prices of individual commodities have begun to soar,supplies have responded fast.

On the orther hand,voters in Chhattisgarh,Madhya Pradesh and Rajasthan do not enjoy these advantages uniformly. So while some of the larger towns in these states do have a relatively developed supply chain,it is absent through most of the state,which results in the prices going up.