Goans are living in challenging times. Cost of living is at its worse with price of petrol at an all time high and the never-ending increase in food prices which no government has been able really resolve it for good. Don’t go by the figures the Reserve Bank of India dishes out, as they are unable to capture inflation numbers especially of Goan food inflation sitting in their ivory towers on the Mint road of Mumbai. According to them inflation is less than 10% which in other words means your favourite food should have taken 10 years to double its price and yet prices of onion have more than doubled from last March and refuse to come down and we are yet to complete the year. Onion is just an example; there are so many food essentials that have gone up way more than 10% a year.
So in this new expense scenario how is the Goan supposed to survive. This does not apply to Goans who have someone abroad and is financing the family with foreign currency earnings, taking advantage of the favourable rupee exchange rate, or those who have a healthy nest egg, as both are able to cushion the shock in the system. But what about those who earn on a daily or monthly basis a fixed salary, naturally their savings if at all they managed earlier, are going to take a hit now and the situation will slowly manifest itself into a hand to mouth type.
Goa at one point of time slashed VAT on petrol to almost nothing; making the State the cheapest provider of petrol to the public. Nothing of that sort can be expected now because the government is putting its financial mess in order. Agreed there was a pandemic shock to the system to deal with, but the government has decided that this is the most opportune time to pass on the shock to its citizens and mess up their personal finances too. India has a high savings rate which is going to be under threat if our taxes keep increasing the way they are. For those who are satisfied that their personal income tax rate has not increased, well the government knows how to take it all back through some other method.
Goans should not think they are paying high petrol prices due to the high international crude prices, because when crude prices crashed at the outset of the pandemic petrol prices never came down proportionately. In fact price at the pump and international crude have decoupled a long time ago in India. The government has decided to tax either way, with no benefit to pass on low crude prices and be quick to pass on the increase when crude shoots up. With petrol price increase all associated costs of logistics and transport of everything we consume will also move up, so be prepared to get our pockets pinched even harder.
In September 2016, in one of my article to this publication titled ‘Goan Debtonomics’ and subsequent follow-ups, I had sounded the pitfalls of State government taking huge debt, which many of the readers might have just shrugged it off thinking, how does that affect me personally. Well actually it does in terms of price of petrol you pay now. The Goa government’s reckless spend on infrastructure and the huge government workforce that it has to feed, is not making your life any easier. The cost of living is going to go up and with interest rates going down Goans lucky enough to have their own savings will be forced to chip away their retirement nest egg. When income does not keep pace with costs then standard of living is bound to go down, we might mask it for sometime by income from overseas family members or some other income but eventually it will show up.
Goa also has a yearly demand shock to deal with, every year when tourists start pouring into Goa, prices of food shoot up. When a Goan has to pay more for his daily subsistence, just because there are tourists visiting Goa all ready to pounce and pick food at exorbitant prices, the locals are going to take a hit on their cost of living. For example during the beginning of the pandemic Goans living in coastal villages relished the best fish available at affordable price, enter the tourist season and the best fish is either hoarded or available at exorbitant prices. Nothing wrong in inviting tourists, but make sure locals get their share of Goan resources as first preference and at an affordable price.
Many might wonder they don’t see too many tourists at the marketplace to make a material difference in the price. True, tourists are not going to waste time going to shop especially when they have limited time to spend on their visit, that job is delegated to staff or owners of restaurants that frequent at the market, pick food in wholesale and alter the supply of produce especially that is exclusively and available in Goa and in limited quantity. In short, none of the governments thought it fit to realise that their citizens are first priority then the temporary visitors.
Frankly speaking, Goan politicians really don’t have to think a lot about their people because most of them have already paid the voters to get their votes. So if you find out that your neighbours, friends or family members are selling their votes for cash or kind and it does not have anything to do with you, think again, it has everything to do with you, in fact it has direct relation to your standard of living going down.
By the time we get the pandemic situation in control, the government would have got its growth rate back, its fiscal deficit in order, for fear of being downgraded by rating agencies. The country might even escape the wrath of the rating agencies, but how much of a toll has it taken on the cost of living of individual citizens is something we will have to learn to figure out.
(The author is a business consultant)