The UPA's lucky this isn't election time. Ordinary folks are justifiably in a foul mood about grocery bills. A united opposition is on the
offensive on price rise. With food inflation touching 19.95 per cent in December's first week, a 10-year high, the government is mulling imports. In some quarters, there's optimism this strategy, along with the rabi yield, will ease pressures. Others warn this won't impact prices of vegetables
, fruits and milk. Nor are they sure if the November surge to 4.78 per cent of wholesale price index-based inflation reflects the start of a trend. If food prices do fuel dearness elsewhere, RBI's dilemma on hardening monetary policy will deepen. Yet raised interest rates are a mood depressant nobody wants at a time India is chasing 7.5-plus per cent growth this fiscal.
Clearly, the government must prevent a 'psychology of shortage' from taking hold of the larger economy. On foodgrain imports, India must strategise and be selective. It wouldn't want to push up international food prices, which rose considerably in November. Nor will it want to shell out high prices for, say, rice and be seen as benefiting overseas farmers. Some experts have counselled release of grain from central stocks
rather than imports or even higher than usual procurement that could squeeze out private players. However, ruling out imports entirely would be impractical. A judicious mix of options will work best.
Next, commodities must actually reach people through a leak-free PDS and in the open market. Apart from ensuring proper storage to prevent wastage, there must be demonstrated political will to check and punish diversion of foodgrains meant for the poor and to strictly implement anti-hoarding laws. Central ministers may be right in calling for states' cooperation in ensuring delivery mechanisms work smoothly. That doesn't mean administration can't be improved at their own end, for instance by professionalising the slow-reacting babudom of the Food Corporation of India.
On runaway prices of vegetables, fruits and other food items, scope for public intervention is limited. But solutions for the future must be sought, starting now. It's crucial to promote local markets allowing growers access to end-consumers, as well as integrated food value chains connecting farmers to processing units and big retailers. The supply chain in traditional wholesale markets suffers predatory pricing thanks to intermediaries. Modern retail - organised retailers sourcing directly from growers - will curtail farm-to-fork price anomalies. There's urgent need for agri-marketing reform, including eased contract farming rules. This is something states still holding out on the Centre's reworked model Agricultural Produce Marketing Committee Act must realise. Finally, recurring crises make year-round vegetable production under hothouse conditions an attractive proposition and call for better cold chain infrastructure. Such initiatives require major capital investment, buttressing the case for liberalised retail.
offensive on price rise. With food inflation touching 19.95 per cent in December's first week, a 10-year high, the government is mulling imports. In some quarters, there's optimism this strategy, along with the rabi yield, will ease pressures. Others warn this won't impact prices of vegetables
, fruits and milk. Nor are they sure if the November surge to 4.78 per cent of wholesale price index-based inflation reflects the start of a trend. If food prices do fuel dearness elsewhere, RBI's dilemma on hardening monetary policy will deepen. Yet raised interest rates are a mood depressant nobody wants at a time India is chasing 7.5-plus per cent growth this fiscal.
Clearly, the government must prevent a 'psychology of shortage' from taking hold of the larger economy. On foodgrain imports, India must strategise and be selective. It wouldn't want to push up international food prices, which rose considerably in November. Nor will it want to shell out high prices for, say, rice and be seen as benefiting overseas farmers. Some experts have counselled release of grain from central stocks
rather than imports or even higher than usual procurement that could squeeze out private players. However, ruling out imports entirely would be impractical. A judicious mix of options will work best.
Next, commodities must actually reach people through a leak-free PDS and in the open market. Apart from ensuring proper storage to prevent wastage, there must be demonstrated political will to check and punish diversion of foodgrains meant for the poor and to strictly implement anti-hoarding laws. Central ministers may be right in calling for states' cooperation in ensuring delivery mechanisms work smoothly. That doesn't mean administration can't be improved at their own end, for instance by professionalising the slow-reacting babudom of the Food Corporation of India.
On runaway prices of vegetables, fruits and other food items, scope for public intervention is limited. But solutions for the future must be sought, starting now. It's crucial to promote local markets allowing growers access to end-consumers, as well as integrated food value chains connecting farmers to processing units and big retailers. The supply chain in traditional wholesale markets suffers predatory pricing thanks to intermediaries. Modern retail - organised retailers sourcing directly from growers - will curtail farm-to-fork price anomalies. There's urgent need for agri-marketing reform, including eased contract farming rules. This is something states still holding out on the Centre's reworked model Agricultural Produce Marketing Committee Act must realise. Finally, recurring crises make year-round vegetable production under hothouse conditions an attractive proposition and call for better cold chain infrastructure. Such initiatives require major capital investment, buttressing the case for liberalised retail.
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