1. Inflation higher in poorer states

Inflation higher in poorer states

This is a double whammy for the poor. Despite a fall in retail inflation to 5.18% in February from a 17-month high of 5.69% in the previous month, most of the lower-income states witnessed higher retail inflation than the richer ones, reports fe Bureau in New Delhi.

By: | Updated: March 21, 2016 3:12 AM
Rural India is reeling under stress due to a second straight year of monsoon failure, the resultant lower farm harvest and a crash in global commodity prices that have pulled down export earnings.(AP) Rural India is reeling under stress due to a second straight year of monsoon failure, the resultant lower farm harvest and a crash in global commodity prices that have pulled down export earnings.(AP)

This is a double whammy for the poor. Despite a fall in retail inflation to 5.18% in February from a 17-month high of 5.69% in the previous month, most of the lower-income states witnessed higher retail inflation than the richer ones, reports fe Bureau in New Delhi.

According to DK Joshi, the chief economist at Crisil, higher-income states like Haryana, Kerala, Uttarakhand, Maharashtra and Gujarat saw lower retail inflation in February than Bihar, Jharkhand, Odisha and Chhattisgarh. While a relatively richer state like Punjab witnessed the lowest level of consumer price index-based inflation (2.7%) in February, Odisha, adjudged in 2013 the most backward state by a panel headed by Raghuram Rajan, which developed a new index for backwardness, recorded the highest inflation of 8.04%, showed the official data released this week.

The data revealed while inflation in urban India was just 4.30%, that in rural areas was as high as 5.97%. “This shows those who are more vulnerable to price shocks are bearing a higher inflationary burden,” Joshi said. He, however, added that a clearer picture could emerge only if data for a longer period is analysed.

Already, rural India is reeling under stress due to a second straight year of monsoon failure, the resultant lower farm harvest and a crash in global commodity prices that have pulled down export earnings. This was reflected in a drop in bike sales this fiscal and subdued wage growth.

Even consumer non-durables output, as tracked by the index of industrial production, witnessed a 3.1% contraction between April and January despite a favourable base (the segment had grown just 0.3% a year before). The latest Union Budget focused on increasing agricultural productivity and enhancing rural income with higher-than-normal rise in allocations.

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