Experts say the tiffin centres that fall under the informal sector are feeling the economic pinch of price rise and poor consumption, and the problems lie in the present farm crisis.

Pakoda economics How tiffin centres in Hyderabad are hit due to rising costs
news Economy Saturday, August 31, 2019 - 13:01

Until a year ago, Harihara tiffin centre behind ECSI hospital at SR Nagar had plans to hire more hands at their family-run enterprise. But the poster offering jobs was taken down earlier this year. The tiffin centre that sells medu vada, idli, dosas and poori is run by 52-year-old K Varalakshmi along with her mother, daughter and granddaughter. Business used to be good, but not anymore. This year, they hung a poster seeking buyers for the shop.

"The price of vegetables, oil, pulses, gas have all gone up. We used to make a profit of up to Rs 1,000 a day up until a year ago, now we hardly make Rs 400 to Rs 500 profit a day that too only if all items are sold," says Varalakshmi who insists the secret to her crispy medu vada is just her changing the cooking oil every day. "Most tiffin centres don't change oil every day, it helps them cut costs. But we can't do that as most of our customers are regular and they will stop coming if we compromise on quality," she adds.

While economists say the tiffin centres that fall under the informal sector are feeling the economic pinch of price rise and poor consumption, farmers and those working closely with agriculture markets say the roadside eateries are experiencing the ripple effects of the present farm crisis. 

Varalakshmi is unaware that according to government data, the consumer price index (CPI) in the country rose to 144.20 points in July and has been on the rise since January 2018. These government numbers to track prices of food, transport and consumer goods mean nothing to her. "Every three days, we have to get a new LPG cylinder but the cost of LPG has gone up from Rs 800 to Rs 1100. The price of onions which used to be Rs 20 per kilogram is now touching Rs 80 per kilogram, and the price of pulses has also gone up by a few rupees. We can’t raise our prices as we will lose customers and so have to take a cut from our profit," she says.

Earlier, in an interview in 2018, Narendra Modi, the Prime Minister of India had said, “If someone opens a 'pakoda' shop in front of your office, does that not count as employment? The person's daily earning of Rs 200 will never come into any books or accounts. The truth is massive people are being employed.” The comment by the PM has now been dubbed as ‘pakoda economics’. 

In the first week of August, at Ameerpet, Hari wound up his tiffin stall that also sold pakodas in the evening. He had taken the stall on rent, paying Rs 300 daily for the stall and another Rs 500 daily wage for the cook. The 32-year-old was quite upbeat in June when he started the stall and had said, "There are a lot of students living in the area, any dosa or idli shop would run in this street.” The stall shut after finding it difficult to manage operational costs due to rise in prices of vegetables and other commodities. Hari now works at another tiffin centre in the locality as a helper. 

The price rise pinch

In the last fifteen days alone at the Bownpally market in Hyderabad, the price of onion has risen from Rs 1,800 per quintal to Rs 2,800 per quintal. Onion was priced at Rs 1,000 per quintal until this January. The price of tomatoes throughout 2019 has risen from Rs 1,200 per quintal to Rs 4,400 per quintal, while the retail price for onion ranges anywhere between Rs 40 to Rs 60 and for tomatoes, it ranges between Rs 60 to Rs 86 depending on where one buys from in the city. 

C Kutumba Rao, an economist and former chairman of the Andhra Pradesh Planning Committee tells TNM that the high prices of vegetables and commodities have led to the public tightening their belts. "The problem with high prices right now is that people are not ready to spend as they are trying to save every penny. When prices of commodities go up, people tend to reduce household expenditure and turn to gold. The roadside vendors feel the pinch as now the prices are high and customers also drop. The economics part, in reality, is different from what is read in theory or the past.”

Under the policy radar

Most, if not all roadside eateries that operate in the city, are not under any tax bracket and often get left out of consideration when changes are made in laws, policy and regulation, points out Dr GV Ramanjaneyulu, Executive Director, Centre for Sustainable Agriculture. "Whenever the government talks about the ease of doing business, it’s from the investors point of view but 80% of businesses in the country are small family-run businesses. Like how small and marginal farmers were never looked at and no policies were framed for them, in the same way, other small businesses, like roadside eateries, have been left out and are never kept in mind when tax, regulatory and licence issues are discussed. So they are never in the picture, and when there is a change and there is an impact, that too goes unobserved.” 

Dr Ramanjaneyulu paints a bleak picture for the coming months. "The crisis that we are seeing in small farms, we are now seeing them in small businesses also. It will become serious and the moment we see a collapse of the unorganised sector, then it would hit the organised sector as well.”

Himanshu, an economics professor with Jawaharlal Nehru University (JNU) wrote for the India Forum saying, "The crisis in agriculture is deep-rooted and is a result of an accumulation of distress over the last decade or so.” The professor points out a few reasons behind this. ”Unlike earlier episodes, when acute distress was the result of a disruption in production or weather-induced factors, this time it has intensified at a time when the monsoon has been normal. Sure, the crisis was aggravated by the twin droughts of 2014 and 2015, but its genesis and its subsequent intensification have been a result of factors unrelated to monsoon failure. Apart from the impact of a sharp decline in the prices of agricultural produce since August 2014, the current episode of severe adversity is the result, more of a larger neglect of the agricultural sector since 2012-13.”

This time it is not agriculture alone that is in distress but the entire rural economy has been affected by a severe decline in demand including in activities other than farming (what is called the “non-farm sector”), wrote the professor, who pointed out that unlike before "when the response of governments to some extent managed to alleviate the suffering of farmers and revive the agrarian economy, this time the government’s actions have only worsened the crisis.”

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