Government need not appear helpless
Food inflation shot up to 18.32 per cent in the week ended December 25 from 14.44 per cent, adding to the common man's woes and the UPA government's political worries, and triggering speculation about an interest rate hike on January 25 when the RBI meets to review the monetary policy. The latest spurt in price rise comes from onions, meat, eggs and fish getting costlier. The Pakistani curbs on onion exports through trucks have erased hopes of early relief. Protein-rich food items are becoming expensive due to increased consumption by the prospering and bulging middle class. Globally, food prices in December crossed the levels that had sparked riots in Haiti and Egypt in 2008. Countries respond to price rise by tightening money supply.
The RBI may do so at its January 25 meeting despite a prevailing cash crunch in the system. India has done little in recent years to raise farm productivity and improve the supply chain for perishable agricultural produce. A lot of cereals, fruits and vegetables go waste for want of processing facilities and scientific storage. There is no shortage of ideas. Industrial growth alone cannot make India an economic superpower if agriculture, which supports 60 per cent of the population, keeps languishing.
The Tribune, January 7
