Rising Prices of Essential Commodities in India

Commodities prices in India are continuing to rise, especially on goods. Over the years, the prices of many commodities have been rising steadily. Prices rise when demand for certain goods is higher than their supply. Since India imports petroleum, vegetable and edible oil, the prices of essential commodities are also affected by international price fluctuations. Although India is self-sufficient in agricultural products, there are other factors like transportation that lead to price rises.

What are essential commodities?  

Essential commodities are goods that are important for living. There are a total of seven essential commodities. 

1. Medicines essential drugs
2. All types of fertilisers like  organic-inorganic or mixed 
3. Food items or items that can help make food like oil or edible oil seeds
4. Wool and yarn that is made of cotton for clothes
5. Petroleum or petroleum products
6. Raw jute or jute textile. 
7. Types of seeds like vegetables, fruits, cattle or jute and cotton seeds. 

In 1995 the Essential Commodities Act was passed by the government of India. Its aim was that in times of need essential commodities can be easily available to the consumers and protect them from monopolies of businesses when the supply is short. 

Prices list of essential commodities in India exhibiting inflation 

This price list of essential commodities in India shows the prices of each of the products in Rs/Kg (Rupees per Kilogram)

Causes 

The demand and supply directly affect the prices of the products. An increase in demand causes prices to rise and a decrease in demand causes the prices of the product to be decreased. 

On the other hand, an increase in supply causes prices of the products to decrease whereas a supply decrease will result in prices rising. 

When the population of an area has increased the supply of products/goods is divided between them more, and so the prices of the products increase 

When the salaries of people increase, they have more disposable income and so they will spend more of their money, as a result, the demand for goods increases and so prices rise. Disposable income is the amount of money that is left after giving out the taxes it is used for personal expenses.  

An increase in money supply in the country causes inflation; inflation is another word used to indicate that the prices have risen. 

Furthermore, India imports a large fraction of its petroleum, vegetable and edible oil from other countries. Since vehicular fuel is essential in transportation, prices of essential commodities are also affected by global prices. The sudden price spike in global petrol prices post the 2019 pandemic is also said to be a reason for inflation.

Uneven agricultural output, when the agricultural sector is in difficulties, meaning the crops are not grown or are growing less than earlier, will cause a reduction in the supply and so the price levels of fruits, vegetables as well as crops like grains and rice rise. 

Impact

The Impact of the rising cost of commodities on the country is huge, people are stressed and businesses go into loss, some even shut down. 

The consumer’s disposable incomes and standard of living decrease, as they cannot afford many things with a dent in their incomes due to the rising prices of products. 

As the commodity prices are rising in India, consumers spend less on buying luxury goods, they rather spend their income on essentials that they will be needing.  

The impact of the rising cost of commodities is not only endured by the consumers who pay for the goods, it is also on the business owners. 

As commodity prices are rising in India, the demand for products reduces according to the elasticity of demand. If the demand is elastic then the business owners will suffer losses as a little increase in prices will cause an even greater fall in the demand for the product.  

When people spend more on essential goods than on luxury items, it will mean that commodity prices are rising in India. 

The impact of the rising cost of commodities is also on the government, for example when people in the country spend less on luxury, like hotels resorts spas, the tax collection decreases.

 The businesses face challenges but the government does as well, because if there is less spending on these things, then the tax payable amount of the businesses will be reduced because their revenues will decrease. 

When the tax payable amount is reduced, the government will have less income from the tax that the country’s people give. And so the government will be unable to spend more for the betterment of the country.  

In a way, there is even a positive impact on the people as the essential commodity prices are rising in India as people spend more on crucial goods and stop wasting their money. Businesses need to pay fewer taxes to the government.  

Conclusion

 Essential commodities are goods that are important for living, and it is crucial for survival. The impact of the rising cost of commodities is on the government, businesses, countrymen, as well as tourists. The Impact of the rising cost of commodities on the country is huge, people are stressed and businesses go into loss, some even shut down.  An increase in demand causes prices to rise and a decrease in demand causes the prices of the product to be decreased. On the other hand, an increase in supply causes prices of the products to decrease whereas a supply decrease will result in prices rising.