Despite wayward monsoon and inflation, consumers find it difficult to reduce expenditure on essentials
For Rameshbhai Thakur, a resident at Chhatral, a small town located some 20 km away from Gandhinagar, high inflation is not a great concern.
The only impact of inflation, says Thakur, who works at a nearby Nirma plant, has been on leisure and entertainment. “We now watch only one movie in a week against two or three some six months ago.”
Thakur’s is not a unique case in Chhatral, or in most small towns in Gujarat, one of India’s largest states.
The town, which houses around 10,000 people, speaks for itself. Chhatral greets you at its entrance with a series of solar-powered street lights and a posh new high school. Adding to that, almost 20 per cent of the locals have relatives staying abroad (mostly in the US). “Indeed, prices have risen due to inflation. But that has not stopped the locals from buying their Pepsodents and Pantenes,” says Ramnikbhai Metdiya, who runs one of the largest provisions stores in Chhatral.(CONSUMPTION COUNTS)
India’s wholesale price inflation rose 7.25 per cent in June, much above of the Reserve Bank of India’s five per cent “threshold level”. Consumer price inflation stood at 10.02 per cent in the month. The country’s gross domestic product growth slowed to a nine-year low of 5.3 per cent in the March quarter, triggering fear that the economy is slowing down sharply.
Metdiya, however, says residents in Chhatral would not compromise on shopping. “In the last couple of years, consumerism has picked up here so much that one would not like to compromise on his shopping.”
The rise in the town’s purchasing power is mainly attributed to two things--first, land appreciation due to industrial development nearby areas (Chhatral is close to heavily industrialised Mehsana and Kalol) and second the presence of a Gujarat Industrial Development Corp (GIDC) industrial estate in Chhatral.
“Today, even the farmers wear jeans here,” says Kishore Patel, former sarpanch of the town’s Gram Panchayat, referring to Chhatral’s economic progress.
Says Pratapji Thakur, the sarpanch at Chhatral Gram Panchayat: “Most of the farmers in Chhatral have sold a couple of bighas from their land bank, turning rich overnight recently. Today, every house has a two-wheeler and over 20 per cent farmers own four-wheelers in Chhatral. We also have local branches of HDFC Bank, Dena Bank, Bank of Baroda, SBI (State Bank of India) and ICICI Bank, resulting in considerable savings.”
Rural and small town consumers in Gujarat generally share the views of Chhatral residents in terms of consumption. They agree that inflation has put them under pressure, but are still upbeat on spending for consumer goods.
Dhruv Patel, who studies at an engineering college in Kalol, an industrial town near Gandhinagar, says he has cut down on eating out due to price pressure. “Six months ago, we would be frequenting these new restaurants twice a week. But now, it has come down to just once or twice a month,” says Patel.
Monsoon in India is 22 per cent below normal so far, Gujarat being one of the worst hit states.
According to Y K Alagh, a renowned economist and a former member of the Planning Commission, rural consumption in Gujarat remains high as inflation has had a mixed impact on farmers in the state. “At 42 per cent, Gujarat boasts of a higher proportion of non-rural population against a national average of 30 per cent. This means more and more rural areas are getting influenced by urban consumerism. Adding to that, food inflation has also resulted in rise in incomes for farmers in Gujarat, thereby, strengthening their purchasing power. This has made sure that rural consumption in Gujarat remains high,” says Alagh.
Mahesh Patel, a medical store owner Singarva, near Ahmedabad, will agree with Alagh. “Consumers continue to buy costly branded items, although the quantity of purchase has reduced. Our sales are not much affected,” says Patel. Locals maintain the spending on personal care and food items is difficult to curtail in the current lifestyle. However, some say they feel the heat of inflation, which forced them to postpone plans to buy expensive durable goods.
Dinesh Patel, who lives with a family of five in Singarva, says the high prices of food items and reduced earnings from the farming business have brought him and many of his fellow residents in the town to reconsider their spending. “There is already much pressure on our pockets due to high prices of routine consumption goods. Very less is left for saving. We are holding back spending on items like fridge or television or tractor for now,” says Patel, who has about eight bighas (around 18,600 square metres) of land.
A town of 15,000-16,000 people, located about 10 km from Ahmedabad, Singarva has agriculture and animal husbandry as main activities. Nearly 45 families from Singarva depend entirely on farming — mainly paddy, bajra and wheat.
“It’s difficult to cut spending on regular items like powder, hair oil, etc. We have cut our vegetable purchases instead, as prices have shot up sharply,” says the wife of a local resident.
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