Inflation, Mahin Niyas and Hubli

My friend and colleague at Godrej, Mahin Niyas believed that the best way to repay a debt is by treating the debtor to a meal. His logic was that the desire or hunger for everything else is never satiated. People are never satisfied with whatever they get - gold, money, gifts, land - they always feel they deserve more. Except food. Hunger for food can be satiated. With food, the most voracious of foodies will ultimaely say "enough, I can have no more". More about this later.

I was born and brought up in Hubli, Karnataka. We left Hubli in 1985. Since then, I have visited Hubli twice. Once in 2003 and more recently last December. There were certain localities in 1985, where if you stood on the terrace, you could see acres and acres of fields - jowar, cotton, groundnut - upto the horizon. Now all you can see are layouts. More on this too.

When inflation started rising to significant levels at significant rates, the UPA government made us believe that it was due to excess liquidity in the system. Their explanation was that during recession, due to fiscal stimuli aimed at sustaining economic growth, the market was flush with money and this led to higher demand among consumers. Therefore it was demand-side pressures that was driving inflation.

Of course, the UPA government did not want to talk about supply-side triggers because it was an inconvenient truth for them. Admitting that there were problems in the supply would translate into poor planning in agricultural production system, poor efficiencies and lack of control in the agricultural storage and distribution system, inaction against hoarders and black-marketeers and so on. So, the UPA made us believe that because of economic stimulus, we had more money and we spent more and more of this money and this led to rising inflation.

But, can someone explain which of the 1 billion Indians got this "stimulus"? As far as we know, this money was injected into institutional frameworks and were largely in the form of reduced taxes, reduced duties, tax holidays etc, which was never passed on to people.

Second, from when did Indians start spending (please spare us those glitzy reports on the new-age, bold, globalized Indian consumer, flush with disposable income who wants to shop and splurge in malls) when they have more money? As far as we know, Indians continue to be the best savers and investors in the world. So, if we had more money, chances are that this would go into FDs and Post Office Schemes, MFs etc. At best, they would be spent on luxury items like a better television set, a car, a 3G handset, a new laptop: products whose prices have been stable or declining.

This is where the story about Mahin Niyas comes in.
No one will eat 10 chapaties or drink 4 litres of milk just because he/ she got a bonus. If at all a household's food basket inflates as a result of more money, it is the BPL household for reasons we all understand. But, there is no indication that a significant proportion of BPL households have suddenly become richer. So, please do not tell us that Indians have suddenly developed a rapacious appetite just because we experienced a recession in 2008-09.

So, it has got to be supply-side pressures. We all know that the population is rising. But the rate of population rise is dwarfed by the rate at which fertile agricultural land is being converted into layouts. Everyone wants a 30x40 if not a 40x60. After all, a flat in an apartment is maya. You dont own the sky, nor the ground, nor the four directions.

This is where my Hubli observation comes in.
Spare a thought for mother earth. Nature has its own pace at doing things. We cannot force our womenfolk to deliver our children in 5 months. Nay, that would be criminal and the phenomenon would be termed premature.
But that doesnt stop us from converting 1/2 of our land into a layout and then feeding all sorts of plant growth promoters and fertilizers to squeeze more from plants. Can someone tell me what is the probability of birth defects among premature babies?
A year ago, I read an article in the editorial page of Deccan Herald about how falling levels of nutrition in everyday foods like milk, pulses, fruits and vegetables is no longer a figment of imagination of our grandparents, but a rude shocking fact staring us in our face.
Nature is what makes us, nature is what we are, who we are, nature is what protects us and nature alone has the power to retaliate. Hell hath has no fury like nature provoked.

So, what do we do? It's simple, but not easy considering human behavior. We need to formulate and implement a law banning further horizontal expansion of human settlements by conversion of precious agricultural land. At a time when human food needs is rising, allowing shrinkage of available fertile land is simply unacceptable and unpardonable.