Food Prices In India

The study analyzes food inflation trends in India over the last decade. Annual trends show that different commodities have contributed to food inflation in different years and that no single commodity shows uniformly high inflation. A decomposition exercise shows that eggs, meat, fish, milk, cereals, and vegetables were generally the main contributors to recent food inflation. The contribution of pulses, except pigeon peas (arhar), and of edible oils remained low. Fruits and vegetables displayed a much higher degree of intrayear volatility, and high-weight commodities in the national consumption basket also showed very high inflation rates, which is a cause for concern. Results of the econometric analysis show that both supply and demand factors are important. Cereal and edible oil prices appear to be mainly driven by supply-side factors such as production, wage rates, and minimum support prices. For pulses, the effects of supply- and demand-side factors appear almost equal. The prices of eggs, meat, fish, milk, and fruits and vegetables appear to be driven mainly by demand-side factors.

Post-reform India has seen a decline in agricultural growth as well as supply–demand imbalance and rising prices. This book presents a comprehensive analysis of domestic and international prices and trade since 1980–81, covering the past quarter of a century. Backed with rich data, it provides comparisons between the pre- and post-liberalisation policies and their effect on farm profitability, domestic prices and prices variability, and examines their possible role in determining the trajectory of agricultural growth since 1991. The book will appeal to students, scholars and researchers of agriculture studies, economics, finance, and development studies, as well as policy makers and agriculture experts.

Policy making in food security is at a crossroads in India, particularly for the rice crop. Whereas India has emerged has a leading rice exporter over the last two years, the government has also introduced a large food subsidy program called the National Food Security Act. The program requires that 33.6 million metric tons of rice per year be distributed to the marginalized rural and urban populations of the country. In this study, we analyze the long-term impact of India’s Food Security Act on its domestic rice market and the international market for rice. We specify and apply a structural demand-and-supply model to India’s rice market and link it with the world rice market, as part of a broad partial equilibrium modeling system of international agriculture commodity markets. We specifically focus on three different scenarios—subsidy as a price effect, subsidy as an inelastic income effect, and subsidy as an elastic income effect—under the broader framework of the National Food Security Act. We find that at the end of the projection period (the 2024/2025 crop year), as a result of the rice subsidy program, the consumption of rice increases significantly by 6,831 thousand metric ton (MT) in the case of the price effect while the inelastic income effect has little on production, consumption which increase by 265 thousand MT and 269 thousand MT, respectively and no impact on rice export of India.

Over the past decade, India has seen a prolonged period of high inflation, to a large extent driven by persistently-high food inflation. This paper investigates the demand and supply factors behind the contribution of relative food inflation to headline CPI inflation. It concludes that in the absence of a stronger food supply growth response, food inflation may exceed non-food inflation by 21⁄2–3 percentage points per year. The sustainability of a long-term inflation target of 4 percent under India’s recently-adopted flexible inflation targeting framework will depend on enhancing food supply, agricultural market-based pricing, and reducing price distortions. A well-designed cereal buffer stock liquidation policy could also help mitigate food inflation volatility.

This Selected Issues paper examines how surges in global financial market volatility spill over to emerging market economies (EMs) including India. The results suggest that a surge in global financial market volatility is transmitted very strongly to key macroeconomic and financial variables of EMs, and the extent of its pass-through increases with the depth of external balance-sheet linkages between advanced countries and EMs. The paper also looks at food inflation, which has often been singled out as a key driver of India’s high and persistent inflation.

Food prices across the world rose dramatically between 2006 and 2008. The causes of the price rise were complex, and the event has led to heightened concerns regarding the implica-tions of rising food prices on the prevalence of food insecurity and household welfare, particu-larly in developing countries. Given widespread and chronic malnutrition in India and the country's large share of the world's total food-insecure population, this report estimates how Indian households coped with the rise in domestic food prices that accompanied global price patterns in 2006-08. Exploiting differential spikes in rice and wheat prices, we find that house-holds affected the most by rising food prices significantly decreased dietary diversity, delayed medical expenditures, and delayed purchases of clothing and durable goods. Given the existence of significant food and nonfood coping mechanisms, findings suggest that the rise in food staple prices in India had wide-ranging effects on household welfare.

Food security is one of the twenty-first century’s key global challenges, and lessons learned from India have particular significance worldwide. Not only does India account for approximately one quarter of the world’s under-nourished persons, it also provides a worrying case of how rapid economic growth may not provide an assumed panacea to food security. This book takes on this challenge. It explains how India’s chronic food security problem is a function of a distinctive interaction of economic, political and environmental processes. It contends that under-nutrition and hunger are lagging components of human development in India precisely because the interfaces between these aspects of the food security problem have not been adequately understood in policy-making communities. Only through an integrative approach spanning the social and environmental sciences, are the fuller dimensions of this problem revealed. A well-rounded appreciation of the problem is required, informed by the FAO’s conception of food security as encompassing availability (production), access (distribution) and utilisation (nutritional content), as well as by Amartya Sen’s notions of entitlements and capabilities.