Food Prices Soar in India

Voa News reports that food prices soar in India.

(emphasis mine)

Food Prices Soar in India
High food prices are of particular concern in a country where despite a growing economy, millions of people are still poor.
Anjana Pasricha New Delhi 18 December 2009


Photo: AP
Supporters of various left parties shout slogans against the government to protest the rising prices of food items and for implementation of job security in New Delhi, India, 16 Dec 2009

In India, the government says it may consider imports to counter spiraling food prices which have risen at the fastest pace in a decade. High food prices are of particular concern in a country where despite a growing economy, millions of people are still poor.

Slogan-shouting lawmakers demanding that the government control rising food prices have disrupted parliament on several occasions in recent days.


Food prices have been soaring at an unprecedented pace.
Government data shows they have risen to a nearly 20 percent high over last year - the fastest rate of increase in over a decade.

The spike in prices comes in the wake of lighter than normal monsoon rains, which led to a poor harvest of summer crops such as rice and sugar.

Finance Minister Pranab Mukherjee admits that rising food prices are a matter of concern, and says the government may consider imports to augment supplies of essential commodities.

The head of the independent economic think tank, RPG Goenka Foundation in New Delhi, D.H. Pai Panindiker, says the step should have been considered earlier.

"Once you import not only do you have additional food grains, but it changes the market psychology, and prices automatically remain suppressed. This should have been done long time back," said Pai Panindiker.

The government has already eased import restrictions on several food items such as wheat, lentils and edible oils.
But a panel of lawmakers says the steps taken so far are not enough to address what it called "the burning issue."

Food prices are a top concern in a country where more than half the population of over a billion people lives on less than two dollars a day. These poor people spend much of their income on food, and there are concerns that higher prices could expose them to malnourishment.

India is the world's second biggest producer of food grains such as wheat and rice, and usually grows enough to feed its massive population.

Even this year, the government has assured that despite the recent drought, it has sufficient food grains in stock. It is also hoping that the output of winter crops such as wheat will ease prices.

But
agricultural productivity has been declining in recent years, raising fears that in the coming years India's farmers may not be able to meet domestic needs.

Political analysts say
food inflation could undermine the popularity of the Congress-led government which got re-elected earlier this year on promises to alleviate poverty.

My reaction: Food shortages in India are only going to grow worse. As domestic prices are driven up, India will import massive quatities of agricultural commodities, and food inflation will begin soaring on a global scale.

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4 Responses to Food Prices Soar in India

  1. Mark says:

    no food shortage in India, sorry.

    It rather seems that they have started to debase their currency due to easy money. Where do you think hyperinflation starts first when using easy money? In the deflationary US or a fast growing country like India? Easy question, huh?

  2. smartnath says:

    india had been buying dollar and due to weak mansoons & drought conditions, food prices have soared. To fight rising prices, they are going to import essential commodities by selling their reserves and raising interest rates. It will lead to rise of rupee against dollar

  3. Mark says:

    @smartnath:

    *retail* food prices have soared. Primarily.

    And that India does not tender its food/grain reserves at below market levels is rather speaking of sane government action. What would happen if they did? They would make the farmer's life even worse and the situation would get even more worse in the future. To me it looks like they are trying to achieve a sane balance between producers and consumers.

  4. ????? says:

    not yet India is the second larget country at the world ????????

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