Relatively cheaper food improved common man's welfare, says Economic Survey

Did the falling prices of food items that caused widespread resentment among millions of growers in the countryside since 2016-17 benefit anyone?

Well, it added on an average around Rs 10,887 per year to your family if it eats vegetarian food and approximately Rs 11,787 per year if it consumes non-vegetarian food.

The 2019-20 Economic Survey added a chapter called ‘Thalinomics’ to understand how factors such as low inflation impact the daily plate of a common man and whether the citizen is well-off or worse over a period of time because of it. The Survey found that between 2006-07 and 2019-20, the affordability of a vegetarian thali has increased by 29 per cent while that of a non-vegetarian thali has improved by 18 per cent for an average common man because of falling inflation. 

“In terms of the inflation in thali prices and all the components, we find a distinct declining trend during the period under review. Affordability of thalis vis-à-vis a day’s pay of a worker has improved over time, indicating improved welfare of the common person,” the Survey said.

The Thalinomics, which to some is Indian version of the Big Mac Index, also found that rising food prices in the first seven months of 2019-20 were making the thali less affordable for a common man on the street as compared to previous three years.

The affordability index has been constructed using the annual earnings of an average industrial worker.  For a vegetarian thali, the Survey has assumed that an average household of five individuals consumed two thalis a day that comprises 300 grams’ cereals, 150 grams’ vegetables, and 60 grams of pulses. 

In case of non-vegetarian thali, all the components remain the same, except that 60 grams of pulses is replaced by an equal quantity of non-vegetarian food be it egg, meat, or fish. For fuel, the index uses cooking gas prices as well as firewood prices for which data is available consistently.

The Survey claimed that 2015-16 could be considered as a year when there was a shift in dynamics of thali prices as many reforms were introduced to enhance the productivity of the agriculture sector as well as efficiency and effectiveness of agricultural markets for better and more transparent price discovery.

RAISE CEREAL PRICES UNDER FOOD ACT, CUT COVERAGE

At a time when falling food prices seem to have benefitted the common man, the most in the past few years as per Thalinomics, the Survey has not only advocated raising the price of cereals distributed through ration shops but also relooking at the number of people covered under the programme in order to curb spiraling subsidy.

“With a large share of poor people, maintaining food security is still a challenge. The rates under the National Food Security Act (NFSA) and the coverage need to be revisited,” the Survey said.

Foodgrains via ration shops are supplied at highly subsidised rates of Rs 3 per kg for rice, Rs 2 per kg for wheat, and Rs 1 per kg for coarse grains according to NFSA. It covers over 67 per cent of India's population in the present form, which the survey has advocated revisiting. 

For farmers’ welfare, the Survey advocated land reforms for freeing up land markets as the proportion of small and marginal holdings in country’s overall agriculture is significantly large.

It also said small holdings of India can be better harnessed through appropriate use of farm mechanisation as the degree of farm mechanisation is low as compared to the other major developing countries like Brazil and China. 

That apart, the Survey favoured expanding the coverage of irrigation facilities while ensuring an effective water conservation mechanism. It said an inclusive approach to provision for agricultural credit has to be undertaken to address the issue of skewness in its regional distribution. 

It also harped on the need to give increased focus on exploring global markets for agricultural commodities to give an additional source of market for the surplus of agricultural produce India currently has.