Nantoo Banerjee
Contrary to government claims of falling food inflation, prices of almost all food articles, except rice, are shooting up across markets all over the country. Potato prices have appreciated the most, almost 100 percent since the beginning of the year. In most retail markets in north and western India, a kilo of potato costs Rs. 20-25, depending on quality. In Uttarakhand, local varieties of potato, grown mostly in the mountains, cost as much as Rs. 30-35 per kilo. Few vegetables cost below Rs. 30 per kilogram. Beans, gourds of various kinds, green peas, tomato, green papaya and lady’s fingers are priced between Rs. 40 and Rs. 90 per kilo. Prices of green chilly, ginger and garlic have gone through the roof, varying from Rs. 120 to Rs. 180 per kilo. Coriander leaves, which add flavor to your favourite curry, cost in excess of Rs. 250 per kilo in most vegetable markets across the country.
Similarly, prices of wheat, atta, flour, cereals, sugar, tea, coffee, cooking oil, soya nuggets, cow milk, butter, eggs, chicken, meat and popular varieties of sweet water and sea fish have increased by 15 to 30 percent over their rates only two months ago. But, these rates don’t seem to impress those statisticians in the government, who claim the food inflation as also the wholesale price index (WPI) are downward. Prices are softening, they say. Based on these findings, hawks in the union finance ministry have joined the chorus with apex industry associations and private banking and financial wizards for lower lending rates to the discomfort of the country’s key inflation manager, the Reserve Bank, as the Indian economy continues to be under an inflationary grip.
The lone realistic assessment of the current foods situation has come, rather surprisingly, from none other than octogenarian C Rangarajan, head of the Prime Minister’s economic advisory council, who expects India’s food inflation to remain high in the coming months. Rangarajan is also in agreement with the present RBI governor, D Subbarao, that time is not yet ripe to relax the monetary policy with regard to inflation control measures. The RBI holds the large government expenditure on unproductive areas and a striking fall in investments in infrastructure and large projects more responsible than the bank rate for the current economic slowdown.
Rangarajan’s latest remarks, which came in the course of his releasing a report on the country’s economic performance, may have something to do with the fact that India’s rain-fed kharif crops this year, harvesting season of which starts in September with the arrival of sugarcane and jute, are certain to miss their targets. The delayed monsoon, moderate to severe drought in several parts of the country, including rice producing states in the east and southern parts and cash crop producing Maharashtra and Gujarat, and unexpectedly heavy unseasonal rains and flash floods in other parts have badly affected the kharif schedule and crop prospects.
In fact, the global food forecast for 2012-13 has turned from a ‘comfortable’ outlook at the end of 2011 to ‘unstable’ or even ‘crisis prone’ towards end-July, with reports of crop failure coming from various parts of the world. After four months of consecutive price declines, the World Bank’s Food Price Index went up by 8 percent from December 2011 to March 2012. The price indices of grains, fats and oils, and other foods all increased in each month since January 2012. Fats and oils increased the most, with a quarterly increase of 13 percent, followed by a 6 percent increase in the global price of other foods and 4 percent the price of grains. Notably, the fertilizer index remained almost unchanged during the first quarter of 2012, halting the strong decline observed through the previous quarters.
The prices of all key staples increased, except for rice. Maize prices increased by nine percent, soybean oil by seven percent, wheat (U.S. HRW) by six percent, and sugar (world) by five percent. These price variations were the largest increases observed since June and July of 2011. The price of rice declined in the same period by six percent mainly because of a five percent price fall in the case of Thai varieties on reports of excess production, adding to the price decline of two per cent observed in the fourth quarter of 2011. Both abundant supply and strong competition among exporters have caused the international price of rice to decline.
It may be recalled that global food prices reached their historical peak only 18 months ago, in February, last year. The current price trend raises the fear that the food prices may scale a new height by the end of 2012-13, underscoring the volatility of food prices. Unfortunately, the union cabinet seems have a different view of the local and global food situation. Some of the latest decisions such as rice export in the falling international market and bid to change the age old system of fixing sugarcane price by states appear to be wrongly timed. The government could have waited till the harvesting of the kharif rice crop before allowing the export of the surplus grain from the last rabi crop. Similarly, the proposal to deregulate sugar and cane sectors, which has already been strongly contested by Uttar Pradesh Chief Minister Akhilesh Yadav, needs to be considered more carefully in view of its impact on future cane production and sugar prices. India is among the world’s largest consumers and producers of sugar.
Time was when benevolent ancient Indian rulers – kings and nawabs – often used to leave their palaces and masquerade as commoner to visit the market place and mingle with the poor to update their firsthand knowledge of the quality of life and problems of ordinary citizens. They chose not to depend entirely on official public happiness index reports to formulate state policies that impact the poor and the common man’s life. Modern times are different when poverty levels are indexed by those who never had the misfortune to personally know or taste it. For some of them, an income above Rs. 28 per person per day is a smart beginning point of a national poverty index. Bureaucrats and official statisticians design price indices to defend government policies. In the process, the country’s political rulers, operating out of the stoned fortresses on New Delhi’s Raisina Hills, appear to have been drawn too far away from the people to take realistic note of their daily struggle to cope with the increasing prices of bare essentials, especially the food articles. (IPA)
Follow our WhatsApp channel
