The story of India's inflation.
To be sure, consumers don’t have much choice to curtail spending since price rise is seen mostly in unavoidable necessities. Over the past three months (February to April 2022), food inflation rose 7.3% on average, while the cost of cooking food (cooking gas) shot up 15%. Prices of clothing have also been rising, as manufacturers raise retail prices to cushion the impact of higher input costs.
Inflation in prices for food an daily necessities.
Moreover, necessities now go beyond roti, kapda and makaan to also include spending on
, transportation and education. All these take up two-thirds of consumer spending, and
inflation in this category jumped to 8% in April from 5.5% in December.
For instance, the cost of running one’s vehicle has surged — fuel inflation is in double digits. For those utilising public transport, inflation is 6-7%. Worryingly, healthcare bills and medical expenses have increased 7% as demand surpasses supply. This has constrained the consumer’s ability to spend on other discretionary items.
Inflation in healthcare, public transportation, and education.
Meanwhile, manufacturers are facing a double whammy. In India, in the absence of a producer price index, the wholesale price index (WPI) is often used as a proxy. WPI inflation has been in double digits for 13 months now, suggesting producers are facing a stiff rise in input costs for that long,
Double digit Inflation on input materials for manufacturers. What's gonna happen to Make in India? Short answer is: crap is coming.
No country is immune to the coming inflation wave. But India is gonna suffer a special type of pain. Inflation hurts the poorest the most. India is supposed to make good on it's 'demographic' dividend. Most of the poor and young are gonna be hurt real bad. India might be facing the possibility of a large population of hungry, desperate, and angry youths. Good luck.
The Indian manufacturers cannot manufacture competitively. Cost of input materials are going up at double digit rates. Cost of wages will go up because workers would demand more wages to stave off the inflation. Indian manufacturing is barely automated, unlike in China. Make in India is so screwed. Wanna take away Chinese jobs? Worry about your own jobs first.
Indian service sector might do better than it's manufacturing. But the Indian call centers have a negative reputation these days. They are not going to be as hot in demand as in the past. India have plenty of shady startups who are actually parasites on the economy. They are experts at scamming sucker investors who believe in the Indian 'manifest destiny'. Sucking blood out of a drying out economy, what could go wrong?
Worse for India, there is barely any hard innovation going on there. New technology creates wealth. There are no new Smartphones, PCs, Robotics, or EVs from India. India has nothing tangible to show in practically all areas of STEM innovation. Lots of hot air, but no substance.
So India has no choice but to ride out this storm. It'll be a storm of the century to ride out. The collective West whom India is betting on trading more are losing their buying power at an alarming rate. Much of Asia have already been alienated by India. There will be no rescue for India this time. Please continue laughing at China. Jai Hind!
