Spiraling Food Prices and The Economic Recovery of India (Courtesy: Career Launcher)

India is in a midst of an economic recovery and there are expectations that the economy will grow by more than 7 percent in the year 2009-10. But the bad news is that spiraling food prices have far outstripped the (expected) growth rate of India.

The wholesale food prices in India touched a 10-year high with food inflation coming at 19.95% for the week ended December 5, 2009.
The key reason cited for the spiraling food prices is the bad Monsoon in India. But, bad Monsoon is just one of the many reasons responsible for prices that go through the roof for most of the Indians. Some of the lesser-known reasons for the spiraling food prices are as follows:

•We are one of the worst managers of food crops: In 2008, it was estimated that India loses INR 58,000 crore worth of agricultural food items due to lack of post harvesting infrastructure such as cold chains, transportation, and storage facilities.

•Sixty percent of the total cropped area of India is not irrigated: The Indian farmers are largely dependent on the four-month monsoon season during which 80% of the year’s total rainfall takes place. These facts don’t point to any meaningful efforts to help farmers in a country where over 10,000 farmers have committed suicide over the last decade.

•The per hectare agricultural yield in India is half that of China. This again points of inefficiency and the failure to help the farmers adopt latest technology in order to increase the crop output.


However, some ways to ease food prices would be:

•Crackdown on hoarders and black marketers could help prevent prices from rising further. This step might not significantly reduce prices but will ensure that prices don’t escalate further.
•The Government should allow the private sector to import and store the primary agricultural commodities at zero import duty. This will help east the prices to a large extent.