📈 Telangana’s Inflation Sky-High: Why?
While India’s inflation troubles have cooled down a little, Telangana is still facing chronic high inflation. What’s going on? ReadOn!
😀 Good news!
India has finally gotten its Consumer Price Index* (CPI) inflation below 6%!
Our CPI inflation is 5.66% right now.
But don’t celebrate just yet.
While India may have gotten some relief, some states are still struggling with high inflation.
Telangana has the highest inflation with a mind-blogging rate of 7.63%.
What has caused this insane hike in Telangana’s inflation? Why is it so much higher than India’s inflation rate?
ReadOn!
🤨 Telangana’s Inflation Problem
Well, Telangana’s inflation problem isn’t new.
The state has been dealing with high inflation for a long time now.
Last year, Telangana’s inflation rate went as high as 10.1%!
Meanwhile, Kerala’s inflation rate was only 5.4%!
Wondering why different states have different inflation rates?
👀The Differences in Inflation
If you’ve ever travelled across India, you will have noticed that we don’t just have linguistic diversity but also economic diversity.
While some states like West Bengal have really affordable food and transportation, others like Maharashtra pinch pockets.
Why?
All because of the delicate dance of demand and supply.
Some states have low demand and high supply, so things are cheaper. Other states have high demand and not enough supply, causing the pocket pinch.
Now, Telangana is seeing high demand as more people are moving in.
Yes, you guessed it.
Telangana’s startup scene is heating up.
It has the 7th largest startup population in India.
As a result, Telangana also has one of the highest growth rates: the state’s GDP has grown 31.12% in the last decade.
Yep. With high growth, comes high inflation.
But growth can’t be blamed for it all.
There’s another silent factor to blame: climate change.
You see, Telangana has been facing a lot of crop failures recently because of climate change. And this is adding to the state’s supply shortage.
What’s worse, Telangana’s government policies are also adding to these problems. How?
📜 Policies Adding to Telangana’s Inflation Trouble
You see, all states in India have Public Distribution Schemes (PDS) which provide food items at subsidised rates to people.
The more food items available for cheaper, the lower the burden on the common people.
But Telangana’s public distribution scheme is scanty as compared to other states.
Here, take a look at the commodities Karnataka offers under its scheme:
And look at the commodities Telangana offers:
Telangana offers very few food items at subsidised rates. So, people have to shell out more money to fill their tummies.
Result? High inflation!
That’s not it, there’s another reason behind Telangana’s high inflation rate: high taxes on fuel.
Telangana has the highest fuel tax in India: a whopping 35% VAT on petrol.
Now, the world runs on petrol.
Everything from food to medicines is transported using petrol.
High costs of petrol means the price of everything goes up!
🔍 How to Solve Telangana’s Problem?
Well, the solutions seem simple.
Increase the food items in the PDS list. Reduce the taxes on fuel.
Problem solved!
If only solving inflation was this simple.
Telangana currently ranks 11th in outstanding debt among all states.
So, it can’t just afford to cut down revenue sources and increase expenditures.
It needs to work towards increasing its supply. It needs to understand what is causing crop distress, invest in R&D, and boost production.
But these are all long-term solutions.
Telangana will probably have to bear both the scorching summers and the scorching inflation rates for the time being.
What else do you think Telangana can do to bring down inflation? Let us know in the comments.
*🤓 Noob’s Corner: The Consumer Price Index, or CPI for short, is a way for economists to measure how much it costs to be alive. It's like a report card for inflation, except instead of grades, you get to see how much your grocery bill has gone up.
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Subsidizing the food prices will make it worse inseated ,reason being it will act as a price caps and cause shortage of goods.
It is management and political party issue who run state....high growth with high spending and too much money in cash certainly support high INFLATION....