How to cut corners – The Times of India

 The Times of India ,  Nov 14, 2012

KOCHI: Cutting down on family expenditure and borrowing could be two strategies that are likely to be adopted by families to cope with rising prices.

Nutrition, healthcare and education could be the prime targets of cost cutting in families in the backdrop of the rise in cost of living, says Vimala Chelat, who teaches at S N College, Nattika.

“The poor will be forced to compromise on the quality and quantity of food they consume, reduce spending on education and healthcare. Aged members, children with some disabilities and women will have to bear the major brunt of those cost cutting exercises. So the rise in cost of living without corresponding increase in earnings will have a negative impact on our family and social lives,” she says.

“At the macro-economic level, Kerala may be able to absorb the shock of these hikes considering the high level of remittance to the state. But at the micro level, people will resort to borrowing and postpone a crisis. If they are not able to get loans from one Kudumbasree, they will go to Janasree or other SHGs floated by church-related entities and community organisations,” says Thomas Isaac.

“There has been at least 50% rise in demand for credit in the last two months, for loans being extended to joint liability groups. These loans are being given by the banks to promote entrepreneurship among the SHGs,” says Meera Mohan, co-ordinator, Stree Shakti, a women’s self-help group based at Costford, which is working as a facilitating agency for the disbursement of such loans in Thrissur.

These loans could eventually push beneficiary families into debt traps as there would be definitely attempts to divert loan funds to meet increasing expenditure, experts warn.

Studies by the National Sample Survey Organisation (NSSO), Kerala have revealed that the state has the highest level of inequality levels among Indian states. The rice in cost of living would further aggravate these disparities. The upper income groups will be compensated with the rise in DA for the price hike. But the poor will not have any such relief, says Shyjan Davies, a research scholar with the Centre for Development Studies (CDS) in Thiruvananthapuram.

The upper class in Kerala are already comfortable as they have houses, cars and air-conditioners. So they don’t bother about these price hikes, says D Dhanuraj, chairman, Centre for Public Policy Research, Kochi. 

But experts suggest that the state must urgently strengthen market intervention mechanisms by increasing the number and quality of items distributed through the public distribution system (PDS).

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