Is there anything that ties the humble tomato with a smartphone, bulldozer, manhole cover and an Aadhaar card? When objects speak, what do they reveal about our living conditions? With Talking Things, The Wire takes a deeper look at how these mundane objects have evolved against the backdrop of the Modi-led Union government’s decade-long tenure.
New Delhi: For a document that mentions ‘Modi ki Guarantee’ about 66 times, and 25 times on a single page, the word ‘inflation’ features in the Bharatiya Janata Party’s manifesto a grand total of once.
The manifesto says: “We have demonstrated low inflation, high growth and fiscal prudence in the past decade. We will continue on this path and stay committed to expand our economic prowess.”
So even this does not stand up to a simple fact check.
Given the lack of focus on inflation in BJP’s election campaign, one can’t help but wonder if it is the same country that has gone to polls where tomato prices surged to Rs 350/kilo last year.
Illustration: Pariplab Chakraborty
Promises, promises
“India under the rule of Congress led UPA has been bearing the brunt of high inflation. This has been primarily due to faulty policies and lack of proper planning to mitigate the challenge of price rise. Inflation has touched record levels during the last 10 years, but the UPA government has been unable to provide any relief from high prices,” Modi said in 2014, shortly before coming to power in May that year.
Interestingly, in July 2014, vegetable price inflation fell by 1.3% compared to the previous year. How? Tomatoes, one of the vegetables that were still selling at higher than usual prices, were simply not considered in the calculation of the wholesale price inflation (WPI) that month.
“It’s quite possible that vegetable price inflation for July has been underestimated. This is all the more probable because vegetable prices have gone up by 16.88% at the retail level last month,” a Mint report from 2014 said.
‘Farmers paying for the 4% inflation target’
For nearly four years, from 2015 to early 2019, the Modi government managed to keep retail inflation under control through a targeted monetary policy which involved controlling money supply in the economy.
In March, 2016, the Modi government amended the Reserve Bank of India Act to introduce an inflation targeting regime for the central bank to follow. RBI was asked to ensure that inflation remained at 4% with an upper limit of 6%.
To ensure low food prices, the Modi government placed harsh market controls on agricultural produce. Nobel prize winning economist Abhijit Banerjee characterised this as “farmers paying for the 4% inflation target” since agricultural exports are often banned to push down domestic food prices.
While this brought down the prices for some food items, farmers – who were producing the food – lost out.
Food inflation 2014-2024. Source: tradingeconomics.com
Even as retail inflation eased, food inflation in this period continued to soar, reaching a 22-month high in June 2016, largely driven by vegetable prices and spearheaded by tomatoes. The WPI for tomatoes stood at a staggering 51% that month.
Then another economic event took place in India.
The blow of demonetisation
Tomato farmers faced unprecedented losses in 2016 after the prime minister outlawed Rs 500 and Rs 1,000 currency notes overnight in November that year.
Yashwant and Hirabai Bendkule, Adivasi farmers from Maharashtra’s Nashik district, were among them. “[It has been] over a month, tomato prices have collapsed. Even leaving the crop standing means a loss for us,” they told researchers Aniket Aga and Chitrangada Choudhury in December 2016.
In 2015, tomato prices ranged between Rs 300 to Rs 750 per crate (20 kilos). With that in mind, more farmers sowed tomato crops in 2016, pinning their hopes on a healthy monsoon. By October 2016, the weather had been favourable; no major pest attacks took place; and the number of tomato growers had increased. There was going to be a bumper harvest.
On November 8, demonetisation was announced. The bumper harvest met with a severe cash crunch and prices came crashing down. “Rates fell by November 11, and never recovered,” Nitin Gaikar, a Girnare-based farmer, told Aga and Choudhary in December 2016.
Yogesh Gaikar, another farmer, who had planted tomatoes across his 10-acre farm, said he sold over 2,000 crates by December that year, most of them at a loss. “It is due to this note ka lafdaa [mess]. Just when we were about to make some money, Modi has kicked us,” Gaikar said.
A Pimpalgaon-based trader, Kailash Salve, bought 100 crates of tomato for Rs 4,000, Aga and Choudary wrote. “I don’t have more currency, so I could not buy more,” he told them.
“Last year [2015], around this time, we had done business in tomatoes of Rs 50 lakhs and earned Rs 3 lakhs,” Salve said. “This year we have only bought Rs 10 lakhs of produce so far, and incurred losses on it.” Two days later, he sold the tomatoes to a Surat buyer at a loss.
Farmers suffered, what about consumers?
Every year, tomato prices surge like clockwork and the government cites the defence of seasonal volatility. A 2019 editorial by Economic and Political Weekly explains why the government claims to be “helpless” when vegetable prices skyrocket:
“First, it helps shroud years of inaction behind the “urgent” actions. This makes the years of accelerated price spikes appear as some isolated phenomenon, rather than a structural malaise.
Second, it justifies the contradiction in the government’s promises and actions. A government that makes grandiose proposals like ‘one nation, one market,’ can impede farmers’ access to remunerative markets (export markets) in practice, just for the sake of gaining quick control of prices.
Third, ‘helplessness’ resonates well with the general feeling of the middle class – a pivotal vote bank of the ruling party – operating under binding budget constraints.”
It must also be noted that food inflation over the last few years has happened even when India’s food production has been quite stable, abundant even, economists C.P. Chandrashekhar and Jayati Ghosh wrote in 2023.
Between April to July 2023, the contribution of food inflation to the overall inflation rate stood at 87%. And the contribution of rising vegetable prices to food inflation in the same period was 80%. “This dominant role for food prices in driving inflation is striking because, as noted earlier, it has occurred in a period of comfortable levels of production,” they pointed out.
Inflation alone is not the problem
The fact that you could buy roughly half a tomato for Rs 20 in August last year (Rs 350/kilo) compared to a whole kilo in the same amount of money in June, is objectively bad. What makes it worse is that it happened in a country where 60% of the population survives on less than Rs 250 a day.
Food inflation is not a new problem but its impact has been amplified due to factors like stagnant wages and rampant unemployment.
For instance – food inflation in November 2013 was at 14.73%. Food inflation in December 2019, five years after the UPA government’s departure and a full Modi-term later, was at 14.12%.
However, between 2004-2014, real wages (wages that have been adjusted for inflation) were growing at 5-6% annually. In contrast, real wages for the salaried class, the self-employed and brick kiln workers (seen as employment of last resort) have remained stagnant from 2014-2024. In fact, for agricultural labour, wages declined by 1.3% every year over the last decade.
In essence, this means that people’s income has not kept pace with rising inflation.
“…We have not been as successful in controlling persistent inflation as we would have wished. However, we should remember that our inclusive policies have put more money in the hands of the weaker sections. The worry about inflation is legitimate but we should also recognise that incomes for most people have increased faster than inflation,” former Prime Minister Manmohan Singh had said in 2014, which is more than what Modi can say today.
Read more from Talking Things, here.