Raghuram Rajan Explains Why Dosa Prices Are Still High

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4:24 pm 15 Feb, 2016

The price of a dosa varies across India. While a dosa of similar quality and size might cost less than Rs.20 in some parts of southern states, you might have to shell out upwards of Rs.50 in cities of the north.

The price of dosa has not gone down anywhere despite the fact that inflation in the country has come under control. Why?

This is exactly the question that was put to RBI Governor Raguram Rajan at a Federal Bank event in Kochi, and he accused this: (click on it to reveal)

The tawa! Yes, that flat pan on which the batter is spread over to make a fine, crispy, and delicious dosa, that tawa is the one responsible.

But why?

“Because the preparation of the dosa still follows the traditional way,” says Rajan, “There is nothing new in technology.”

But tawa is not the only culprit here. And the other factor that contributes to the rise in price of dosa is, as Rajan points out, the rise in the wages of the cook.


So, rising wages and old technology are the reasons why dosa price is not down yet. Let us explainas simply as possible:

Rajan is not talking about replacing the batter; what he means by technology is a finding way that might help in making more dosas in the same time it now takes to make one without the need for additional labour.

In his book ‘Agricultural Growth, Farm Size, and Rural Poverty Alleviation in India’, Economist C.H. Hanumantha Rao wrote how Punjab increased its rice production through introduction of mechanical methods.

The rice production thus achieved would have required an increase of 6 per cent in labour force if the mechanical methods were not used, which would have cost the Punjab government more in terms of wages, thereby increasing the price of rice.


Not only did Punjab increase rice production through mechanical methods, it also utilised less labour for the same.

It is the same with a dosa. And no, a dosa maker is not the solution because there are shops where one cook can make six dosas at a time on a huge tawa.


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