Deprecated (16384): The ArrayAccess methods will be removed in 4.0.0.Use getParam(), getData() and getQuery() instead. - /home/brlfuser/public_html/src/Controller/ArtileDetailController.php, line: 73
 You can disable deprecation warnings by setting `Error.errorLevel` to `E_ALL & ~E_USER_DEPRECATED` in your config/app.php. [CORE/src/Core/functions.php, line 311]
Deprecated (16384): The ArrayAccess methods will be removed in 4.0.0.Use getParam(), getData() and getQuery() instead. - /home/brlfuser/public_html/src/Controller/ArtileDetailController.php, line: 74
 You can disable deprecation warnings by setting `Error.errorLevel` to `E_ALL & ~E_USER_DEPRECATED` in your config/app.php. [CORE/src/Core/functions.php, line 311]
Warning (512): Unable to emit headers. Headers sent in file=/home/brlfuser/public_html/vendor/cakephp/cakephp/src/Error/Debugger.php line=853 [CORE/src/Http/ResponseEmitter.php, line 48]
Warning (2): Cannot modify header information - headers already sent by (output started at /home/brlfuser/public_html/vendor/cakephp/cakephp/src/Error/Debugger.php:853) [CORE/src/Http/ResponseEmitter.php, line 148]
Warning (2): Cannot modify header information - headers already sent by (output started at /home/brlfuser/public_html/vendor/cakephp/cakephp/src/Error/Debugger.php:853) [CORE/src/Http/ResponseEmitter.php, line 181]
Notice (8): Undefined variable: urlPrefix [APP/Template/Layout/printlayout.ctp, line 8]latest-news-updates/sticky-food-inflation-a-combination-of-fiscal-indiscipline-rural-wages-global-factors-sanjeeb-mukherjee-20211.html"/> LATEST NEWS UPDATES | Sticky food inflation a combination of fiscal indiscipline, rural wages, global factors -Sanjeeb Mukherjee | Im4change.org
Resource centre on India's rural distress
 
 

Sticky food inflation a combination of fiscal indiscipline, rural wages, global factors -Sanjeeb Mukherjee
-The Business Standard


Ashok Gulati in a paper also gave measures to contain the inflation

As India's food inflation continues to remain stubbornly high - it was in double digit for the third straight month in February 2013 at 11.38% - a discussion paper floated by eminent agriculture economist and chairman of Commission for Agriculture Costs and Prices (CACP) Ashok Gulati has blamed high fiscal deficit, rising farm wages and global food prices for high rate of rice in food items.

The paper, titled ‘Taming Food Inflation in India' co-authored by Shweta Saini, an independent researcher has been based on extensive econometric analysis of India food inflation from 1995-96 through December 2012. "Domestic fiscal deficit, domestic farm wages and global food prices when put in a log-linear equation explain more than 98% variation in prices of Indian food articles," the paper said.

It also spells out a host of measures which the government should take to bring a turnaround in food inflation. The paper said that Central government should first and foremost rationalize the subsidies on food, fuel and fertilizer.

"Our calculations show that both food and fertilizer subsidies combined can be pruned by almost Rs 60,000 crore in 2013-14 financial year if the government moves towards a direct cash transfer route by using the Aadhar platform in case of food and fertilizers to direct beneficiaries," Gulati said. Of this, Rs 40,000 crore can alone be saved in food subsidy if leakages in the Public Distribution System (PDS) are plugged and high cost of storage and movement of foodgrains is saved.

The Commission in an earlier paper on food subsidy had estimated that as of 2009-10 almost 40.4% of total foodgrains (rice and wheat) lifted by the state governments for distribution among beneficiaries at cheap rates does not reach the actual entitled.

In 2013-14, Union Budget, the government has pegged the total food and fertilizer subsidies at Rs 155,971.5 crore, of which food subsidy alone is Rs 90,000 crore.

The paper strongly advocates liquidating government's foodgrains inventories through export in international market as a tool to bring about non-productive expenditure savings, which can go a long way in reducing the Current Account Deficit (CAD), which touched as high as 6.7% of GDP in the third quarter of 2012-13, and also fiscal deficit. The Centre's fiscal deficit is projected to decline to 5.2% of GDP in 2012-13 from 5.7% in the previous fiscal. It is pegged at 4.8% in 2013-14.

India's foodgrains stocks might cross a whopping 90 million tonnes by July 2013, so even if government wants to keep 40 million tonnes in reserves, liquidating the remaining 50 million tonnes can bring back an approximately Rs 80,000-100,000 crore back to the exchequer.

"Else, the very cost of carrying this ‘extra' grain stocks alone will be more than Rs 10,000 crore each year, counting only their interest and storage costs, all of which can be saved and fiscal and current account deficits improved if one moves faster on policy front," the paper highlighted.

On rising farm wages and its contribution to fanning the food inflation, the paper said that the way forward in not to stall the increase in wages, but instead complement it with increased productivity, so that increased demand caused by rising wages is supplemented by increasing output per worker.

"Labour productivity can be raised by farm mechanization, freeing up the land-lease market and custom hiring of farm machines," the paper said. It also said that part of wages distributed through MGNREGA should be dovetailed with agriculture, so that labour remains productive and farming does not suffer.

On global food inflation and its impact on Indian food prices, the paper advocated a policy of active and variable import and export tariff structure rather than outright bans. "Global food inflation is not within India's direct control, but India can moderate its influence, especially spikes, on domestic prices by a variable tariff structure," the paper said. The paper also suggested that organised retailers should have window for franchise by kirana stores or even vendors.