The Hindu : Kerala News : State consumers pay higher prices for goods

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Thursday, May 08, 2008
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Kerala

Kerala

State consumers pay higher prices for goods

K.P.M. Basheer

A marginal rise in the price level makes a multiplier effect on the State

When it comes to prices, it is a seller’s market
MRP is sacred in Kerala unlike in other States

KOCHI: If the nation sneezes, Kerala catches a cold — when it comes to price rise.

Within hours of a chilli market in Guntur, Andhra Pradesh, being gutted late last week, traders in faraway Kerala jacked up prices of red chilli by 25 to 50 per cent. The recent marginal increase in the price of petrol and diesel resulted in an outlandish hike in the prices of goods and services across the board, even of those goods which have got nothing to do with the fuels. The increase was several times more than the less than 5 per cent increase in the prices of petroleum products. For instance, the price of a cup of tea rose by 50 paisa to Re.1. And casual workers raised their daily wage by Rs.25 to Rs.50.

A consumer State, Kerala produces very little in terms of consumer goods. But at the same time the tiny State’s 32 million people make up 12 per cent of the country’s consumers. Even a marginal rise in the price level makes a multiplier effect on the general price situation in the State. A light ripple at the national level, creates a wave in the Kerala market. Traders and businesspeople, obviously, are the gainers.

In a State which is known for people’s action and collective bargaining, and which consumes a sizeable chunk of the country’s consumer goods, the consumer movement is surprisingly feeble. Consumer action groups have a sobering effect on the prices at local level in many States. In fact, even for defective goods and services, traders or manufacturers are rarely taken to court in Kerala.

No bargaining

Again, bargaining by consumers, which is a common practice in other States, is near-absent in the Kerala market. In places such as Chennai, Banglore, Mumbai or New Delhi, consumers haggle without qualms over prices with street vendors selling vegetables to salespeople at sophisticated multi-storeyed shops. The average Malayali considers it infra dig to haggle with the shopkeeper. When it comes to prices, it is a seller’s market where the seller decides the prices and the buyer has no option but to buy. While MRP (maximum retail price) is a notional price in other States, where goods are sold much below it, in Kerala, MRP is a sacrosanct one and consumers pay the maximum price without a question. The beneficiary, of course, is the trader, as the supplier usually leaves wide margin between the actual price and the MRP.

This is especially true in the case of electrical goods, textiles, furniture, paints, building materials, automobile parts and white goods. The difference in the prices of building materials and electrical goods in Kochi and Coimbatore or Bangalore is said to be about 50 per cent.

T. Nazirudheen, president of Kerala Vyapari Vyavasayi Ekopana Samithy, blames it on the government’s tax policy and officials’ corruption and high-handedness. He claimed that the 12.5 per cent VAT (value-added tax) was the main reason why prices of goods were higher in Kerala than in nearby States.

But, VAT and corruption are not Kerala-specific phenomena. It is estimated that traders and businesspeople in the State sell goods worth Rs.1,200 crore a day. Only they stand to gain from the current price situation. And, the consumer is powerless, and unwilling to, fight for a fair price.

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