It has been a long time since I wrote a blog post. During this period if you analyze the front page news items, two major news items have dominated the front pages; Corruption and Inflation.
There are enough articles about corruption written by various columnists that I am bored of thinking about it let alone write on that.
Although inflation is equally talked about and discussed by everyone I thought of presenting a different analogy: A comparison of Inflation with auto fares. Why? One reason could be to make you to read further. Another, I happen to think about it. No specific reasoning behind it. Let me know whether this analogy appeals to you.
In my childhood days we rarely used to take auto. We generally used to travel by local bus as auto was considered to be costly. However since the public transport is not dependable sometimes we do travel by auto. During the late 80’s the auto fare for going to my uncles place from our place used to cost us Rs 5. For a government employee (clerical grade) the salary at that point of time was around Rs.5000.
Now auto fare for the same distance costs Rs.50. Auto fares keep increasing on a regular basis to factor the increase in the fuel prices and to factor in the inflation in the economy. Hence I thought considering this as a basis for the inflation is justified. Assuming that my assumption holds good (in sincerely believe it is), one should be earning Rs.50000 a month to be in the same category of the government clerk 20 years back. This shows how bad the purchasing power of a rupee has diminished over the years. If you consider the figure of 5000/50000 in the above example as net of tax, the gross figure should be around 65000-80000 (approx) assuming that you would be in a tax bracket of 25-30%
If you compare the above figures with your 5/6/7 figure salaries you can imagine at what level you are in the society vis-a-vis the government employee (clerk) a two decades back.
All these figures are for the period during administered pricing for the fossil fuels were in place. Going forward I cannot imagine a situation in which the prices keep fluctuating (read it as going up as the chances of downward revision is just a dream). Rupee has seriously lost value over the years, and what we have done is just added a few 0’s to our expenses and our salary. In actual terms either we have stagnated or went from bad to worse.
6 comments:
if u r taking auto fares as the basis of calculation, then this calculation also depends on the city...i feel chennai auto fares increase w/o any logic..u should take an average of different city fares to normalize the irrationality of chennai auto fares..!! ;)
Fares will keep going up and common man won't be able to much. With these Rickshaw wala's trying to extract more money, things are getting worse.
Check out www.taxiautofare.com to know the fare before you travel! I found it useful in many ways... and results are pretty accurate. The commuter is empowered and fare system becomes fair...
@Pallavi - Yes. Chn auto fares are irrational. But i guess the rate of increase would be the same (slightly more or less) across India. Absolute figures may not tally.
It’s not an appealing analogy to me as the comparison is between mangoes with oranges for an inflation blog :(
@Priya - I thought it may not appeal to many when i wrote it. I hope it was a different one at least, from what you have read so far about inflation.
Very Interesting Analysis. People in chennai can relate to it absolutely, while I also believe the logic applies to the whole of India. As with any price increase of any service or commodity, auto fares too reflect the inflationary trend. Hence, I think your basic premise is right.
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