Prices

The Times of India I read on the flight to Bangalore discussed price spikes of onions.  The Star of Mysore I read on arrival in Mysore talked about increased price of vegetables.  They were all close to Rs. 100 per kg.   I bought some oranges and mosambies at Rs. 100 a kg each.   You get about 4 of each for half kg, meaning each fruit is about Rs. 12.50.

Later that evening I was in a department store A to Z.  It is modeled on department stores in the west, albeit in a much smaller space, and carries everything from soaps to packaged snacks to groceries.  I observed with interest familiar brands like Oreos, KitKat, and Knorr soup concentrates.   An Oreo packet with about a dozen of the well-loved cookies was Rs. 20.  KitKat had smaller sizes to suit varied budgets in India (exemplified in articles and books like ‘fortune at the bottom of the pyramid’).  The typical size that costs 50 cents in the US cost Rs. 20, a packet half that cost Rs. 10, and a packet half that cost Rs. 5.  This meant that a maidservant’s daughter could probably afford a KitKat treat at times.  That's good.

It also meant that a KitKat indulgence was more affordable than an orange or mosambi indulgence.  A Knorr soup concentrate packet was Rs. 52 (with multiple vegetables, onions and tomatoes in concentrate form), the price of half a kg of one vegetable.

This was a real change.  When I was growing up, an orange was probably 25 paise, while a Cadbury bar was Rs 5.  Chocolates were expensive and out of reach.  Everybody bought vegetables and fruits for everyday use, and chocolates on rare occasions (maidservants not at all).  While fruits and vegetables (along with salaries) have gone up 50 to 100 times or more, chocolates seem to have gone up only by 4-5 times.  This seemed to similar to the situation in the US.  (I had been extremely surprised when I landed in the US to find chocolate prices on par with vegetable and fruit prices and the more processed food it was, the cheaper it seemed to be. It took me a long time to get my head around the fact that the poor are obese rather than being thin as sticks, and cheap processed food was one of the reasons.)  

Everything in India has gone up.   But processed and packaged foods seemed to be holding their own.  Is it because of efficiencies in production?  And that it is easier to maintain packaged foods when compared to fresh foods?  That is the explanation in the US.  But in India vegetables and fruits are local, don’t have to travel from afar, and don’t have to be preserved for a long time.  This is puzzling.  Was Cadbury that expensive when I was growing up because there was no competition, or are they keeping the prices low now because of efficiencies in production?

The impact of the high prices for pulses and vegetables is obvious when you order dosas at any small hotel – the sambhar has no toor dal, no vegetables.  It has some onions and tomatoes, occasionally potatoes, and I don’t know what is used to thicken the gravy.  The rava dosa price at these hotels has not gone up – a special rava masala dosa is still Rs. 45.   Is it the competition keeping prices down (there are tons of eating places of this kind) and they have to manage their margins by using less and less dal and vegetables?