Financial Matters Advocate On Food Inflation

Abhinav By Abhinav, 20th Aug 2014 | Follow this author | RSS Feed | Short URL
Posted in Wikinut>Business>Law

There are multiple factors which govern the prices of food products(cereals, pulses, vegetables and fruits) in the market and a control of any single factor can't make a big change in controlling the food inflation.

Financial Matters Advocate

Food prices India has been consistently rising since 2006 and this scenario turned alarming in 2010. For the last 4 years inflation has become a havoc for Indian masses. Despite good aggregate rainfall in the past 3 years, prices of food products never came down. The double digit inflation becomes a challenge for economist as well as policy makers. Food-grains, vegetables, fruits and even dairy products are touching the worst ever price rise in the Indian history.

The Narendra Modi-led NDA government is facing tough time to relieve the economy from ongoing inflation. The failure of the UPA government in controlling the prices of food products resulted in a devastating and shameful defeat at the last Lok Sabha election. "A country whose one-third population is stricken by poverty cannot afford such a high inflation in the long-run. That's why Centre government requested the states to allow farmers in the open market for selling fruits and vegetables." - Kislay Pandey - Financial Matters Advocate, the Supreme Court of India. Government added onions and potatoes to the Essential Commodities Act to monitor the market and thwart hoarding. The new government is planning to promote the private players in the food-grain business through decreasing the liabilities of the Food Corporation of India.

It is also worth noticing that during past 10 years, the food sector went through a set of structural changes. Government need to focus on curtailing the cost of various input factors such as cost of labour, machines, seeds, fertilisers, pesticides and irrigation. "Labour which accounts for 30 per cent of cultivation cost increased at an annual average of 3.7 per cent. The supply of farm labour decreases gradually once the NREGA came into force. Workers prefer to work in NREGA projects due to low wages in the private cultivation."- Kislay Pandey - Financial Matters Advocate, the Supreme Court of India. RBI governor Raghuram Rajan confirmed that NREGA'S impact on rural wage increased at 10 per cent annually in the last few years.

Similarly, the growth of real estate sector and rapid urbanisation in the last 10-15 years affected the availability of labour in the agricultural activities. In addition, farms near to cities and industrial area are purchased by real estate developers resulted in the decreased agricultural land and its annual produce. This decline naturally puts upward pressure on farm wages which is quite prominent in towns and villages near to metros and A-class cities.

Diesel, another vital input for agriculture and transport is getting dearer after every few months. Electricity the alternative of diesel for irrigation and many other farming activities is already in scarce quantity.


Financial Lawyer, Financial Matters Advocate, Financial Matters Lawyer

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Abhinav Kumar is a Public Relations and Digital Marketing professional who also love to write about the industry and current affairs.

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