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Nandita Kanchan, a banker and resident of Delhi's Chittaranjan Park, sets aside a fixed amount to be spent on buying fruits and vegetables every month. And for the last three years, even without increasing the amount, she has managed her house well without cutting down on consumption of apples, mangoes, onions and potatoes.
"There are days and weeks when prices of certain items just shoot up. But if you take an average of prices over a period of, say, one year, I see only a marginal increase. In fact, prices of some items, like mangoes, have remained stable for many years now," she says.
Periods of sudden spikes aside, long-term trend does point to a stable food price regime since the 1990s. In fact, a paper written by Sthanu R Nair and Leena Mary Eapen of the Indian Institute of Management (IIM), Kozhikode, clearly establishes that while food prices have generally gone up, the pace of rise since 1992-93 has been slower than what was the case during the whole of 1980s.
Data suggest that in the last two decades (1992-93 to 2012-13), the pace of rise of prices of all food items except eggs, meat and fish has been slower than the decade preceding it. This happened despite steep rise in prices of all food items for close to 61 months beginning 2008.
According to the paper, of all the 14 episodes of very high food inflation since April 1954, four have taken place in the last two decades. The most severe of them was of 61 months beginning April 2008 to March 2013. The average food article inflation during this period remained at an elevated level of 11.16 per cent. It was preceded by 24 months of high food article inflation, averaging 9.22 per cent, from October 2005 to September 2007. This was the period that saw record rise in minimum support price (MSP) and spurt in rural wages. Other episodes of very high food inflation were from June 1994 to April 1997 (35 months) and May 1998 to April 1999 (12 months).
"A striking feature of India's agrarian performance during the post-ERs (economic reforms) period was the growth of agricultural output and GDP, though lower, was more stable... The implication of this finding is that even if the rate of agricultural growth is slow, low fluctuations in growth cause few disruptions in food supply, thereby contributing to low food price inflation," the IIM professors write.
Even the episodes of high inflation for few months too have come down. The last two decades have seen four such periods of high inflation. The preceding two decades had six such episodes. The longest episode of high food articles inflation till date has been from July 1979 to August 1984 (62 months).
Aside from stable agriculture production, liberal trade, better transport and storage facility and healthy buffer stock with the government are factors that have contributed to stable food price regime in the post-reforms period. "It seems that in the long run, a combination of a liberal foreign trade regime and stable, but not necessarily high, agricultural growth and food output can be helpful to keep food inflation under control," they conclude.
Occasional spurt in prices notwithstanding, stable food price regime is set to continue, say experts. "The food price situation witnessed during the post-reforms period may continue provided we (a) maintain stable agricultural growth, (b) follow liberal foreign trade policy, (c) follow rationale MSP and buffer stocking policy; (d) improve PDS further and (e) face a favourable world food price situation," Nair told Business Standard.
"Occasional shocks in the form of onion prices skyrocketing today are because of governance deficit. I take heart from farmers' response to any crisis and am confident that price hike due to production shortage is unlikely to happen in future," argues Ajay Vir Jakhar, chairman, Bharat Krishak Samaj.
