From UPSC perspective, the following things are important :
Prelims level : NA
Mains level : Food-price inflation in India, food security, impacts and solutions
What’s the news?
- India, touted as the world’s fastest-growing large economy, is grappling with a formidable challenge: soaring food-price inflation.
- The rise in the price of food first accelerated sharply in 2019 and has climbed in most years thereafter. In July this year, annual inflation exceeded 11%, the highest in a decade. An implication of continuing high food-price inflation is that a section of the population could face hardship in consuming food of adequate nutritional value.
The grim reality
- The FAO’s State of Food Security and Nutrition in the World report reveals a staggering figure: an estimated 74% of India’s population cannot afford a healthy diet as of 2021, encompassing roughly one billion individuals.
- Given a population of 1,400 million, this makes for approximately one billion Indians.
Factors contributing to the failure to control food-price inflation in India
- Supply-side Challenges: Weather disruptions, infrastructure gaps, and supply chain inefficiencies hinder food production and distribution.
- Rising Input Costs: Increased expenses for fertilizers, pesticides, and labor raise production costs, leading to higher food prices.
- Government Policies: Distortionary policies like minimum support prices (MSPs) and export restrictions affect market dynamics and prices.
- Ineffectiveness of Macroeconomic Policy: Traditional macroeconomic policies, which have been relied upon to control inflation, have proven ineffective in addressing food-price inflation.
- Failure of the Reserve Bank of India (RBI): The RBI, responsible for monetary policy in India, has consistently failed to control inflation, with rates exceeding the target for four years.
- Inadequacy of Inflation Targeting: The RBI’s approach of “inflation targeting,” involving output contraction during inflation spikes, is considered misleading and unsuitable for managing food inflation driven by supply-side issues.
- Limitation of Central Banks: Central banks, including the RBI, are perceived as incapable of effectively addressing the problem of food-price inflation, particularly within a reasonable time frame.
A study report: Trend in the price of food in Mumbai over 2018–2023
- Rising Food Prices: The primary factor behind food price inflation is the significant increase in the cost of food items. Specifically, the cost of preparing a traditional thaali meal at home in Mumbai has risen by 65% from 2018 to 2023.
- Wage Growth Lag: Although there has been wage growth for both manual and salaried workers, with manual workers’ wages increasing by 38% and salaried workers’ wages increasing by 28% during the same period, these wage increases have not kept pace with the rapid rise in food prices.
- Purchasing Power Erosion: The households in Mumbai have experienced a substantial reduction in purchasing power. As food prices have risen considerably, households are forced to allocate a larger portion of their income to food expenses, which leaves less for other essential needs and discretionary spending.
- Nutritional Consequences: Food price inflation has led to adverse nutritional consequences, particularly an increase in the prevalence of anemia, especially among adult women in Mumbai. This rise in anemia cases is primarily attributed to nutrient deficiencies caused by reduced access to nutritious food due to escalating prices.
- Validity of the FAO’s Estimate: The FAO’s estimates that over half of India’s population may struggle to afford a healthy diet. Even in the event of a potential 100% overestimation by the FAO, it would still leave a staggering 500 million people in this category, surpassing the populations of most countries globally except China.
The significance of the Green Revolution
- Food Self-Sufficiency:
- At the time of the Green Revolution, India was grappling with severe food shortages due to consecutive droughts.
- The government’s supply-side response, which included providing farmers with high-yielding seeds, affordable credit, and guaranteed prices through procurement, was highly successful.
- Within a few years, India achieved self-sufficiency in food production and was no longer dependent on food imports.
- Economic and geopolitical significance:
- While some mistakes were made during the Green Revolution, such as the excessive use of chemical fertilizers and a focus on cereals over pulses, the program’s success had significant economic and geopolitical implications.
- It allowed India to assert self-reliance in a polarized Cold War era, a vital geopolitical consideration.
- Poverty Alleviation: The Green Revolution played a pivotal role in reducing poverty in India by increasing agricultural productivity and farm incomes. The increased food production also benefited the poor, as it made food more accessible and affordable.
- Lessons for the Future: While acknowledging past mistakes, the article suggests that the Green Revolution’s lessons can be applied to address the current challenges of food price inflation. Specifically, the focus should be on correcting past errors and launching a second agricultural revolution to lower the cost of food production while ensuring sustainability.
Proposed initiatives to combat food price inflation and ensure access to nutritious food for all
- Increase Public Investment in Irrigation: Address inefficiencies in public expenditure on irrigation to expand irrigated land.
- Facilitate Land Leasing: Lift restrictions on land leasing to encourage productivity-enhancing capital investments.
- Revitalize Agricultural Research: Reinvigorate India’s network of agricultural research institutes to harness innovation.
- Reinstate Extension Services: Restore and strengthen agricultural extension services to disseminate best practices.
- Focus on Protein Production: Develop a program to substantially increase protein production to address India’s protein deficiency.
- Taming India’s food-price inflation crisis demands immediate and concerted efforts. Our past achievements, such as the Green Revolution, serve as a testament to our capabilities when we address food security head-on. Let us seize this moment to launch a second agricultural revolution, ensuring that every Indian has access to affordable, nutritious food and once again reducing poverty and malnutrition on a massive scale.