Saturday, December 12, 2009


After boasting of low to negative inflationary trend during the last few years based on the Whole Sale Price Index (WPI) figures, India is facing a situation where inflation in prices of food is about to reach beyond 20%. There has been all around price increases for almost all food items whether they are groceries, restaurant foods or processed products. While one of the reasons could be the widening gap between demand and supply, the chaos that can be seen in the trading business with large scale hording a rule rather than exception, must be contributing to the unbearable price escalation which is affecting the livelihood of millions of low income population.

In sharp contrast, a country like the US which imports large quantities of various food commodities is experiencing practically zero inflation in the food front. "Grocery prices may not rise much more than 1 percent for the year, said Ephraim Leibtag, an economist with the Department of Agriculture. Historically, food prices have risen 2 percent to 3 percent each year, so 2009 will mark one of the most benign years for food inflation in the last two decades".

It will be a tragedy of epic proportions if the democratically elected government is to shirk its responsibility to control food prices effectively in the coming days. While prices of groceries are fluctuating widely in different parts of the country, the farmers are not better off as they are getting only a fraction of the price paid by the consumer, rest being swallowed by the trading community. Added to this the PDS which was a source of assured staples at reasonable prices has become largely dysfunctional, thanks to the sustained neglect during the last decade.


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