India’s Inflation has hit school fees the most since 2004…

An interesting piece in ToI today. They point to a CSO report which looks at how retail level prices have risen in rural areas from a historical perspective. I did check CSO’s website and could only see these reports which is for randomly selected periods from Oct 2011 onwards. So not sure where the report is.

And this report talks about school fee only in rural areas. Imagine the school fee inflation in urban areas where it is faster than the taxi meter:

The fact that inflation has been an area of concern for some years now is well known, but exactly what goods and services have seen prices rise most sharply? School fees, a CSO study shows, have seen the most dramatic spike over the tenure of the UPA, up 433% between March 2004 and March 2013. 

The chart topper is quite ironic given the much-talked about Right to Education law enacted by the UPA. The CSO study tracks rural retail prices and shows that school fees were Rs 48.7 per student on average in March 2004 and had risen to Rs 259.6 by March 2013. 

Mango prices recorded the second highest rise, up 320% from about Rs 16 per kg to just over Rs 67 per kg on average over this nine-year period. Oranges (275%), black pepper (232%), beef (229%), and buffalo meat (228%) were the others at the top of the list. 

Among more widely consumed items, mutton (210%), salt (182%) and moong dal unwashed (190%) have been others that have really burnt holes in pockets. Cigarettes too have on average become dearer by 188%. 

There are certain items whose prices have been stagnant:

On the positive side, there are some, though not many, goods and services that have seen prices stagnate or even decline over these nine years. Among them are postcards, inland letters and local railway fares. 

The minimum rail fare for an adult has reduced from Rs 8.8 to Rs 8.1 in these last nine years, a reduction of 7%. There has been no hike in inland letter cards, which cost Rs 2.50 in March 2004 and were priced at the same level in March 2013. Postcards too have seen their price remaining unchanged at 50 paise each. 

The average price of a transistor radio was Rs 421 then and has risen to 481 now – a modest price rise of just under 10% in nine years.

We all know how this brought railways to near bankruptcy and then prices were raised in recent times. Transistors, inland letters etc are hardly used now a days. So not much of a gain really.

In urban areas, I would guess housing to be the most inflated category along with school fees. And these are things for which prices hardly come down. They just go up and up.

Each parent dreads the school circular which announces another revision of school fee hike, And this has become such a regular feature of life. I thought it is just an urban thing but it is pretty much a rural thing as well. Most newspapers in June-July have some parent community opposing some school fee hike.  And lifes goes on. One can cut down on things like diesel etc but what to do of education? You cannot consume less education. Moreover, the more expensive the school, better is its perceived quality.  So shifting to cheaper options is not really a choice. Even if someone wants to shift looking at costs, shifting schools is a really difficult business given the transaction costs/hassles – distance from home, change of school friends etc etc

And then CSO report is unlikely to include the fee which is charged below the table (actually pretty openly) from parents. If you add it all up, gives you a scarier preposition.

But then who cares? This is a price I guess all have to pay for India’s growth..

The point is inflation trends in India  is deeply worrying for past 5-6 years. There are prices of many things like school fees which have gone up sharply particularly services- like household help, hair-cutting etc etc. It is not just about food prices alone which can atleast decline. One hardly sees a decline in prices of these essential services. And prices of these things have gone up lookinbg at prices of food, fuel etc.

For most of media,policymakers, experts inflation is just a number. For most elite policymakers do such things actually effect them at all? Inflation is just like one of those many subjects in a report card where you are given an A, B. C etc. It does not really effect them except when they are ranked on several economics parameters.

It is people who face the consequences of these inflationary policies. For instance, diesel prices getting revised. It is important to remove these subsidies but it is not right to say the impact is going to be short-lived. It actually remains permanent. With each hike in diesel prices, parents face higher school bus fares as well. And yes, this hike shows in numbers once but remains there. So just because it does not lead to inflation reading next time does not mean it has disappeared. And then there is no alternative as how else does someone send kids to school? Likewise, costs of travel to office etc also goes up. So should people stop going to work? Yes we have cycles as an option but where are the roads for one to cycle to work?

Inflation is as much a social trouble as it is an economic one. As we have an aam aadmi party in politics, perhaps we should also have an aam aadmi committee advising RBI on inflation.  I think it will  be really useful as the central bank will get some reality check on inflation . Not sure how this AAC can be constituted though..

Someone on FB reacted to this ToI Article saying Does India Inc care? Why should it? Infact quite a few popular schools are run by politicians or India Inc. So why should they complain? Infact there is a possibility that this is the most profitable venture for them. Business cycles do not really hit school revenues especially the premium/popular ones..

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