Inflation!!!

As of January 07, 2011

I can’t stop myself from remembering that famous song from the movie “Peepli Live” which said “Sakhi saiyaan to khoob hi kamaat hain, mehngaai daayan khaaye jaat hain”. It’s really ironic to see that in spite of having a highly eminent economist on the country’s executive head position;India is suffering from one of the most trivial economic issue – inflation. At 18.32%, the current food inflation levels are triple the global food inflation levels (compared to the levels in Nov-2010) and comparable to many North African countries. However, our honorable economist is still silent.

Clearly, the issue is not just economical but also political here. As the media storms on to the Agriculture Minister cum ICC President Sharad Pawar for his negligence, there is a little our Honorable PM can do. With nine MPs in the government, Sharad Pawar has enough balls to make the PM think at least twice before taking any action against him. Nowhere in the world, there would be an MP, who would be handling two totally unrelated posts, one international and the other national. Yes, it happens only in Indiaand clearly, Mr. Pawar seems to be interested in nothing but POWER. While he did ask for a reduction in burden within five days of taking over as the ICC President, it was the least to make road for his daughter into the ministry rather than his concern for the future of the ministry or the country.

However, as the media cries loud for the ousting of Sharad Pawar and “aam-aadmi” busy to make the end meet, the issue of food inflation is more of a logistics issue inIndia’s context. Currently, FCI (Food Corporation ofIndia) possesses storage capacity (25-30 million tonnes) for only a third of country’s total food production. As the rest of it lie in the open for rotting, it is high time for the corporation to increase the storage capacity.  There is a need for a long term storage plan which focuses on storing the food surplus in a way that it becomes readily available for transportation in drought years. With the country likeIndiahaving a status of “alarming” in the 2010 Global Hunger Index, wastage of one-third of the food reserves itself is a shame, least due to inability to store them properly.

More than just the storage, the need for better storage in terms of temperature and humidity management along with better protection techniques from rodents is the call for the day. Faster food transportation across the countries will certainly improve situations wherein the north Indian states will not have to depend onPakistanfor onions when there is an onion surplus inNasik. Quick transport, particularly for the temperature and humidity sensitive commodities such as onions and apples will facilitate price reductions. While the FCI officials went out to China for searching the answers to the questions related to food storage, they forgot the time-tested and effective Indian techniques to store food that have been in practice in rural India.

While all of these are long term solutions, there are three major quick-fix steps, as I see, that are absolutely necessary for the government to take in order to control the food prices.

  1. Transport the necessary part of the food reserve as soon as possible to the areas where the demand is more than the supply
  2. Release Mr. Pawar from his duties as agriculture minister, or at least the portfolio of consumer affairs, food and public distribution
  3. Ban the futures trading of agricultural commodities

With ICC World Cup coming up in next month, there is no way this 70 year old guy can handle the food price inflation issue as his preference seems to be in saving his international position rather than the national one. In this situation, it is illogical to put the whole country on ransom for one person’s desires.

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