Inflationary pressure on food items remains concern: Pranab

New Delhi: Finance minister Pranab Mukherjee today expressed concern over inflationary pressure on food prices, but said the Reserve Bank of India (RBI) and his ministry will take appropriate action as and when needed, reports PTI.

"Inflationary pressure is still there because food prices have gone up because of the erratic monsoon and certain other things," Mr Mukherjee told reporters here.

The Wholesale Price Index (WPI) for the month of August stood at 8.51%, as per the new series of inflation based on 2004-05 prices released by the government today.

"The RBI is constantly watching the situation. We are in touch with the RBI. The RBI and the Ministry of Finance will take appropriate measure at the appropriate time," he added.

As per the old series, WPI inflation stood at 9.5% in the month of August.

"I do hope that annual inflation would be much lower and it will be much below in the new series at 8.5% in the annualised rate... I think it be well below in the annualised rate," he added.

As per commerce ministry data, food articles became 14.64% dearer in August year-on-year, while prices of non- food articles likes fibre and oilseeds soared by 16.04%. Minerals became 23.82% more expensive.

As per the old index, which considered 1993-94 as the base year, inflation remained in double digits for five straight months till June. It fell to 9.97% in July.


New WPI series comes into effect; August inflation at 8.51%

New Delhi: Inflation for the month of August stood at 8.51%, according to the new Wholesale Price Inflation (WPI) series released by the government today, reports PTI.

As per the old series with a base year of 1993-94, WPI inflation stood at 9.5% for the month, according to the commerce ministry.

Overall inflation in August witnessed a fall of 1.27 percentage points from 9.78% in the month of July, as per the new series, which considers 2004-05 as the base year.

As per the new WPI index, inflation was 0.31% in August last year.

"It (the new index) will help in informing both the government and people how the prices are moving. This will give a robust picture and reflect actual price movement," commerce minister Anand Sharma told reporters here.

He said food inflation is still a cause of concern.

As per the new WPI data released today, prices of primary articles - food, non-food articles and minerals - shot up by 15.76% on an annual basis.

Finance minister Pranab Mukherjee said: "Inflationary pressure is still there because food prices have gone up because of the erratic monsoon, but I do hope annualised inflation would be much lower in the new series."

Year-on-year, food articles became dearer by 14.64%, while prices of non-food articles likes fibres and oilseeds soared by 16.04%. Minerals became 23.82% more expensive.

Fuel and power, including LPG and petrol, registered an annual inflation of 12.55%.

Manufactured products - foods products, beverages, tobacco, cotton textiles, wood, paper, etc - saw an average price rise of 4.78% on an annual basis.

However, sugar became cheaper by 0.63% year-on- year and leather and leather products also witnessed a fall of 0.08%.

Consumer items widely used by the middle class, like ice-cream, mineral water, microwave ovens, washing machines, gold and silver are reflected in the new series of WPI inflation.

The new WPI series has 241 more items than the old index. With the additional items, the WPI now measures a total of 676 items against 435 earlier.


The great Indian pharmaceutical rip-off—II

Taking advantage of poor knowledge of consumers, malpractices by doctors and weak regulation, drug companies are selling medicines at hugely inflated prices. What is the government doing to combat this menace? This is the second part of an exclusive Moneylife investigative series

The Drugs Price Control Order (DPCO) of 1995, issued under Section 3 of the Essential Commodities Act, 1955, was meant to regulate drug prices. The National Pharmaceutical Pricing Authority (NPPA) was set up in 1997 and vested with the powers to implement the DPCO but with little impact. The NPPA is an autonomous and independent body of experts that monitors, fixes and revises drug prices. It is attached to the ministry of chemicals and fertilisers and is hobbled by the requirement of having to refer all actions to the ministry before issuing orders.

Dr Chandra M Gulhati, editor, Monthly Index of Medical Specialities told Moneylife, "The objective of the drug price regulation is to help people to get quality drugs at affordable prices. Over the years, the number of drugs under price control has steadily decreased from 347 (in 1979), to 142 (in 1987), to 76 (in 1995); now it is just 74. Of these 74, the 24 molecules currently under DPCO (such as captopril, chlorpromazine, phenylbutazone, etc) are outdated and superseded by newer molecules which are naturally outside the price control.

Of these 74, only 63 drugs have been notified. Hence, 11 drugs have no ceiling prices. And, the number would have dropped to 34 under the Pharmaceutical Policy 2002 but for a legal stay granted by the Karnataka High Court. This corresponds to less than 5% of all major molecules in India." 

Clearly, there is an urgent need to make NPPA effective and enlarge the list of price-controlled drugs to at least cover the National List of Essential Medicines (NLEM), which has 354 drugs and covers a market size of Rs7,000 crore. Based on demands from NGOs and social organisations, the health ministry has mooted a proposal to amend the NLEM to cover cancer drugs. These are mostly manufactured and sold by multinationals such as Novartis, Roche and GSK and can cost up to Rs1.25 lakh for a month's treatment.

Branded, Generics and Branded-Generics

What exactly do these mean?

In India, branded medicines contain one or more ingredients marketed under brand names given to them by their manufacturers. It allows doctors to promote the brands and it is an open secret that many receive a kickback from manufacturers for doing so. In Western countries, it refers to new drugs developed by the innovator patent-holding companies. (After India signed the WTO agreement, all medicines patented after January 2005 are monopoly products of manufacturers and are sold under brand names).

Generics are medicines sold under their chemical names. In Western countries, it refers to medicines whose patents have expired and can be produced by anyone under new brand names. The term 'Branded-generics' is an Indian coinage that refers to branded products that are marketed through heavy incentives to retail chemists (not promoted by doctors). Obviously, such products are unethically and illegally sold either without prescription or by substituting prescribed brands. This is a well-kept secret. Moneylife discovered, quite by chance, that whenever you ask for a product by a generic name (we asked for vitamin E and erythromycin in two separate cases, with two different pharmacies at different times), many pharmacies immediately offer you the product of an unknown company at a hugely inflated price. Naturally, they don't bother with a prescription or a bill. In both cases, the packaging and the colour were very similar to those of the market leaders such as Pfizer's Erythrocin 250 and Merck's Evion 400 for vitamin E.

Companies manufacturing drugs that are not in the price control list can raise prices by 10% annually. If the rise is more than 10%, the NPPA requests them to reduce prices, says NPPA chairman Mr Jharwal. Dr Gulhati says, "NPPA's power to monitor and control prices needs to be vigorously used." He also says that the base price which is the starting point for subsequent hikes, also needs to be reviewed to "prevent acute, recurrent and chronic profiteering" and "in no case should the MRP exceed the current retail price of an existing equivalent brand for setting the base price of a new brand in the decontrolled category. Otherwise companies will launch products at a high price and still claim an annual hike of 10%."

In any case, companies continued to violate the 10% ceiling on price hikes too. We found that 22 brands in the non-controlled categories had hiked prices by 20% in 2007. They reduced the prices after an NPPA order. There has been continuation of stray violations in later years. NPPA needs to be better empowered. For instance, if a multi-ingredient formulation with one price-controlled molecule is launched, it should be mandatory to seek NPPA approval for pricing. Otherwise, action is initiated only when NPPA notices over-charging. Even here, it cannot take drastic action. It can only issue notices to seek reimbursement of the excess charged. This ends up in a legal battle and does not help the customer.

(In the next article in this series, we look at the rumblings in Parliament over the exorbitant pricing of drugs, and the recommendations of the Standing Committee)



sunil hemnani

7 years ago

It is a nice topic and the considerations are many as far as pharma products are concerned.How often have we as consumers are made to pay more than an M.R.P.When season of certain drugs are in demand a shortage gets created so as to make a price more acceptable for the drug.Let us understand many of our Indian MNCs are guilty of this.The problem gets more intense when we consider as in the article was being debated a generic and a branded drug.I would like to say i personally like to confirm to you they are quite different .Personally i would have reservations about using a generic of an unknown and certain lesser known companies.Unfortunately the issue is far more complex at a basic level than is being discussed in the series thus far.Do we ever wonder why certain brands are available in specific regions of a city only.The price is inclusive of the mkting cost to convince the doctor and the retailer to actually stock the brand.I have serious doubts about certain generics and what they really contain.Just how rich are offenders (interested parties )willing to bend the law is beyond imagination .There is a cost that gets passed on to a consumer (patient in this case) this is variable in terms of not just money but the life of a patient too.Drug Control has a reputation and a duty to live upto ,when is its time going to come. MNCs are known world over for bending laws to suit themselves to justify prices .We do have to thank the Indian Pharma Industry on this count for the relative cost advantage we as consumers in India get and equivalent Quality (certain companies).There are black sheep and naughty erring companies,but there are a good number of companies to whom we need to be grateful too.


7 years ago

Charman and the MD of phrma marketing plays an important role in making the product available as well as its pricing. When the price becomes unattractive they can find very many reasons to discontinue the same irrespective of the product's popularity and utility. A British pharma major in India when handed over its reigns to the French pharma major company ,within a very short period of time many of its very popular tropical medicines were withdrawn and in its place many of the exhisting money spinners were introduced as me-too products. Always the drug controle department is a mute spectator as its beaurocrates are controled by the ruling central govt netas who in turn are taken care of by the Pharma Industry be it Indian or Multinational.


sunil hemnani

In Reply to RNandakumar 7 years ago

@nandakumar-Firstly lets understand companies mfg&mkt drugs with utility of patients welfare and the obvious motive of profit.These are the two motives which drive companies so a product if its doing well and has a utility ,i find hard to imagine any company could remove the same. The drug control dept is as expected from us corrupt and inefficient at all levels.


In Reply to sunil hemnani 7 years ago

I have had the personal and bitter experience of marketting pharma products and can authentically say that neither the popularity nor the utility of the brand counts. Only profitability counts. Service to population or reaching the poor are all for publicity stunts. Generics market has not only spoiled Indian Pharma market but has now corrupted even the foriegn countries where Pharma is a pet subject at election times.


In Reply to RNandakumar 7 years ago

The fundamental reason we have affordble drugs in this country is GENERICS.Regards to your experience i am a consultant and have over 25 years experience .The fact remains that companies exsist to make profit patient welfare is also important so lets not take credit away where its due.There will always be black sheep .The world over GENERICS are accepted lets not give the indian industry the credit for creating this! Today we have affordable drugs due to the efficency of this industry lets learn to appreciate also the good with the bad.

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