Food Inflations-the Real Problem of Common Man in India

In simple terms inflation, or equipment casualty boost is caused by too a great deal m oney chasing too some goods, or, demand being more than supply. The free play of the twin sustenance market forces of demand and supply determine the equipment casualty of every commodity or service. In a mixed economy resembling India, Goernment is in addition an important player in the market. Hence to search for the causes of inflation, ope enumerates somewhat complex. The terminal couple of months witnessed a sudden and al close a run-away type of viands inflation. The way the equipment casualty of vegetables and new(prenominal) feed items so atomic list 18d, it created doubts in the minds of the common the great unwashed and the economists alike.Winter is gener solelyy the time when fruits & vegetables argon at the lowest prices. This was non so this year. The prices were way above the expected customary. This happened in spite of the normal monsoon and average inflation i n other sectors. It was the other way cycles/second this time. Inflation in the diet sector spilled to other sectors causing the rise in overall inflation. The organisation and RBI are working on the lines of monetary regulations like change in the interest rates, CRR etc. entirely looking at the way the nutrition prices are stuck at the higher(prenominal) side, dont these monetary mea reals appear just temporary remedies?thither are certain deeper, grass root causes which generate to be actually tackled. India has come a long way in case of food grain productivity. on that assign was a time when our Balance of payments, account was everlastingly weighed down by food grain imports and the debts incurred for these essential imports. It is not so anymore. We are self reliant now. In case of gelt, global prices are determined by the amount of Indias sugar fruit States like Punjab, Haryana and Gujarat are doing well in the field of agriculture. mathematical product may be sl ightly short of demand considering the huge nation. Such inflation earth-closet be checked by importing. But our problem is actually the middlemen. There is a huge difference between the cost of labor and the price the final consumer pays. The farmer gets a very small amount of this clear/difference of cost and final price. For example If we are buying a vegetable for Rs. 40 per kg. , the dealer at the wholesale market gets Rs. 10 per Kg. , and the poor farmer gets a meager Rs. 3. Again this Rs. 40 too give differ depending on the locality it is being sold.Then in that respect is always the problem of black selling & illegal crinkleing of goods to get a higher price. So we actually need checks on the middlemen and the sellers. Secondly, the system of contract farm to shops has to be developed, so that the farmers are the real beneficiaries. This result as well as motivate the farmers to change magnitude production. Wastage is another important avoidable problem, leadin g to shortage. Production we render raised. But so much is wasted because we s money box are a laggard when it comes to state of the art storage facilities.Even the brasss huge food buffer store stock lies unused till it gets at long last rotten. Why doesnt the government release its buffer stock on time to check shortage and food inflation? Is the buffer stock merely for psychological security? The government has raised the swan prices of some food items. This along with the rural employment schemes and high urban salaries has also infused excess money in the market causing the inflation. Lastly, does the government know or sincerely follow, what is happening to the prices which are subsidized or fixed by the government?There are cases where the inflation will not show in the Government statistics, but will for certain affect our household budget. As usual when the Union Budget is presented, all eyes will be on the Finance Minister and his diction will be thoroughly scanned for all the implications on the economy. But this time, thither is one particular reason why ordinary citizens will be specially focused on the Budget the hope that the Government is finally going to act decisively to contain food price inflation.It is not surp raise that questions of food security and the right to food have become such(prenominal) urgent political and social issues in India today. Rapid union income growth over the past two decades has not addressed the prefatory issue of ensuring the food security of the population. Instead, nutrition indicators have stagnated and per capita calorie function has actually declined, suggesting that the problem of hunger may have got worse rather than better.So, despite apparent material progress in the last decade, India is one of the worst countries in the world in terms of hunger among the population, and the number of hungry people in India is reported by the UN to have change magnitude between the early 1990s and the mid-20 00s. These very depressing indicators were calculated stock-still before the recent rise in food prices in India, which is promising to have make matters much worse. Indeed, the rise in food prices in the past two years has been higher than any period since the mid-1970s, when such inflation sparked widespread social unrest and political instability.What is especially strange is that food prices have been rising even when the general price might (for wholesale prices) has been almost flat thus, when the overall inflation rate was notwithstanding 1-2 per cent in the past year, food prices add-ond by nearly 20 per cent. Sharp rise in prices It is unmixed that the price increase has been so rapid as to be alarming especially over the past two years, with rice prices increasing by nearly fractional in Northern cities and more than half in Southern cities. Atta prices have on average increased by around one-fifth from their train of two years ago.The most shocking increase has b een in sugar prices, which have more than doubled across the country. Other food items, ranging from pulses and dekalitre to milk and vegetables, have also shown dramatic increase especially in the past year. There are many reasons why food prices have risen at such a rapid rate, and all of them point to major failures of state form _or_ system of government. Domestic food production has been adversely bear upon by neoliberal economic policies that have opened up craftiness and exposed farmers to volatile international prices even as internal concomitant systems have been dismantled and input prices have been rising continuously.Inadequate hoidenish research, poor extension services, overuse of groundwater, and incentives for unsuitable cropping patterns have caused degeneration of modify quality and reduced the productivity of bolt down and other inputs. Women farmers, who constitute a large (and growing) proportion of those tilling the land, have been deprived of many of t he rights of cultivators, ranging from land titles to find to institutional credit, knowledge and inputs, and this too has affected the productivity and viability of cultivation. myopic statistical distributionBut in addition to production, poor distribution, growing stringency in the market and inadequate earth involvement, have all been life-or-death in allowing food prices to rise in this appalling manner. Successive governments at the Centre have been reducing the scope of the public food distribution system, and even now, in the face of the massive increase in prices, the profound Government is delaying the allocation of food grains for the Above Poverty Line population to the States. This has prevented the public system from becoming a viable alternative for consumers and preventing private speculation and hoarding.In addition, allowing corporates (both national and foreign companies) to enter the market for grains and other food items has led to some increase in conce ntration of distribution. This has not been adequately studied, but it has many adverse implications, including the fact that farmers will proceeds less from period of high prices even as consumers suffer, because the benefit will be garnered by middlemen. Sugar is slightly more complicated, as marketing margins appear to show different trends in different regions and also execute to be significantly lower than the other major crops.The dramatic increase in sugar prices is more a reflection of massive policy errors over the past two years, in terms of supply and domestic price management and exports and imports. Marketing margins So what exactly is happening? It appears that on that point are forces that are allowing marketing margins at both wholesale and retail levels to increase. This means that the direct producers, the farmers, do not get the benefit of the rising prices which consumers in both rural and urban areas are forced to pay. The factors slow these increasing ret ail margins need to be studied in much more detail.In addition to this, there is also initial recite that there has been a process of concentration of crop distribution, as more and more corporate entities get involved in this activity. Such companies are both national and multinational. On the prat of international experience, their involvement in food distribution initially tends to bring down marketing margins and therefore leads to their increase as concentration grows. This may have been the case in certain Indian markets, but this is an area that clearly merits further examination. numerous people have argued, convincingly, that increased and more stable food production is the key to food security in the country. This is certainly true, and it calls for concerted public action for agriculture, on the basis of many recommendations that have already been made by the Farmers Commission and others. But another very important instalment cannot be ignored food distribution. Here too, the recent trends make it evident that an efficiently functioning and widespread public system for distributing essential food items is important to prevent retail margins from rising. Food securityA prevalent system of public food distribution provides economies of scale it reduces the transaction be and administrative hassles involved in ascertaining the target group and making sure it reaches them it allows for better public provision because even the better-off groups with more political articulation have a stake in making sure it workings well it generates greater stability in government plans for ensuring food production and procurement. It is clear that emergency measures are required to strengthen public food distribution, in addition to medium-term policies to improve domestic food supply.A decent funded, efficiently functioning and accountable system of public delivery of food items through a network of fair price shops and co-operatives is the best and most cos t-effective way of limiting increases in food prices and ensuring that every citizen has access to enough food. In a context in which the inflation is surd on food prices, measures such as raising the interest rate are counterproductive because they affect all producers without striking at the affectionateness of the problem.Instead, if he is serious about curtailing food inflation, the Finance Minister mustiness provide substantially more funds to enable a correct and effect to public food distribution system. Inflation Statistics. Snapping the five week rising trend, food inflation softened to 16. 91 per cent for the week ended January 1, 2011, although vegetables, onions and protein-based items continued to remained costly. Food inflation fell by 1. 41 percentage points from 18. 32 per cent recorded in the previous account week.Even as the index of food inflation showed a bare(prenominal) decline, vegetable prices soared by 70. 3 per cent on an one-year basis in the who lesale market, official data showed. Also onions continued to shot the pocket of the common man as the prices went up by 70. 70 per cent on a year on year basis. Among the soul items in the food inflation index, egg, meat and fish became costly by 16. 70 per cent, milk by 13. 20 per cent and fruits by 17. 71 per cent yearlyly. However, prices of pulses declined by 14. 84 per cent, wheat by 4. 87 per cent, potatoes by 1. 67 per cent and cereals by 0. 12 per cent on an annual basis.Meanwhile, in the non-food category, the prices of fibers and minerals have climbed up by 36. 1 per cent and 16. 70 per cent, respectively. Indias food inflation rose marginally to 15. 57 percent for the week ended January 15 from previous weeks 15. 52 percent. According to official figures from countrys Commerce ministry, the primary articles price index was up 17. 26 per cent in the latest week, compared with an annual rise of 17. 03 per cent a week earlier. India has the highest food inflation of any m ajor Asian economy, but other emerging markets such as China and Brazil are also battling double-digit food price rises.