INC Vice President and an influential member of Indian Parliament, Rahul Gandhi, lamented that potatoes were sold at 10 INR while potato chips cost almost 400 times more. I don’t want to go into calculating the cost involved in each steps involving the production of chips from raw potatoes but I would remind the potential readers that huge taxes; to both state and Union and also to producing countries’ governments, and dividends to shareholders; both Indian and foreign ones, are involved. To say the minimum, it’s not as simple business as Mr. Gandhi pretended to show. The chips producers are not looters, at least. The Indian yoga guru Baba Ramdev also complained about drug producers selling medicines at million times the cost of material. Funny! I don’t know where they would keep their dividends. Anyway, the argument is not what Mr. Gandhi and his supporters in the INC and the UPA think but question is does he want to regulate prices and wage? Sure, all government all over the world have say in deciding the price of products by regulating minimum support prices and levying taxes and also in dictating the cost of labor by regulating minimum wages, arranging insurances and other benefits for laborers. What if because of Mr. Gandhi’s suggestion the government increases the minimum support price for those potatoes which are used in chips and also increase minimum wages of the laborers? The prices for consumers would increase because in wake of increasing current and fiscal deficits and ambitious subsidy programs, the government cannot decrease taxes on chips. Also, farmers would more like to sell their potatoes to chip producers which can affect the balance in supply and demand relations and could also make India more obese by increased potato-chips and related products’ consumption. Now calling for farmers to produce chips without they having any expertise in that industry is funny and would induce eternal inefficiency in the system without the majority of them getting benefited by the supposed action. Cooperatives are no answer to industries and entrepreneurship, even in labor surplus society like India. Also, Mr. Gandhi should agree that brighter India is also a part of India. This is not the first time Mr. Gandhi has said so. But no one should have illusions about the buying powers of Indian middle classes: it is there but by increasing taxes, subsidies for poor and prices, their size can only shrink or else increased consumption would result in increased dependence on foreigners. While India has its own version of markets; Haatt, the fact is that the latter is derivative and can never become independently operational.
Posted on: Tue, 08 Oct 2013 10:11:39 +0000
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