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LATEST NEWS UPDATES | ‘Food inflation can push 3 cr Indians into extreme poverty’

‘Food inflation can push 3 cr Indians into extreme poverty’

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published Published on Mar 20, 2012   modified Modified on Mar 20, 2012
-First Post

A ten percent spike in food prices could push 30 millions more people into extreme poverty in India, a report by the Asian Development Bank (ADB) has said.

Ironically,  data released by the Planning Commission on Monday showed that poverty had declined significantly between 2004-2005 and 2009-2010.In absolute terms, there were 35.5 crore poor people in 2009-10 against 40.7 crore five years earlier. As per the data, poverty across the country declined by 7.3 percentage points from 37.2% in 2004-05 to 29.8% in 2009-10.

However, this decline is based on a poverty line that is even lower than the earlier Rs 32-per-day mark .

“A 10 percent rise in prices could push almost 30 million more Indians into extreme poverty,” the report ‘Food Price Escalation in South Asia: A Serious and Growing Concern’ said.

India’s wholesale price-based inflation, which remained high during most of 2011, was at 6.95 percent in February. Retail inflation was at 8.83 percent in February on account of higher prices of protein based items and edible oil products.

Besides India, the report said that the ten percent rise in food prices could push nearly 4 million more Bangladeshis into extreme poverty.

Pakistan is also at risk, with the same price leap causing an additional 3.5 million more people to drop to or below the $1.25-a-day income mark, it said.

However, Nepal and Sri Lanka would be less affected, although a further surge in wheat prices would be especially painful for Sri Lanka, which is completely dependent on imports of the staple and has already seen prices hit historical highs in recent years, it added.

According to the report, South Asia is one of the most vulnerable regions in the world to food price shocks because of its high population growth and the high number of people already living on or close to the extreme poverty line of $1.25 a day.

But food subsidies targeted at the very poorest in the region would help them cope with still-high prices, it said.

“Subsidising the cost of a basic meal for the poorest and most vulnerable in places like India means the help goes to those who need it the most without putting an excessive burden on government finances,” said Hiranya Mukhopadhyay, an economist in ADB’s South Asia Department and an author of the report.

Spending on food already accounts for half the total budget of low-income households in the region.

First Post, 20 March, 2012, http://www.firstpost.com/politics/food-inflation-can-push-3-cr-indians-into-extreme-poverty-250034.html


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