Food inflation

In simple terms inflation, or price rise is caused

by too much money chasing too few goods , or , demand being more than supply . The free play of the twin market forces of demand and supply determine the price of any commodity or service . In a mixed economy like India , Government is also an important player in the market . Hence to search for the causes of inflation , becomes somewhat complex . The last couple of months witnessed a sudden and almost a run - away type of food inflation . The way the price of vegetables and other food items soared , created doubts in the minds of the common people and the economists alike . Winter is generally the time when fruits & vegetables are at the lowest prices . This was not so this year . The prices were above the expected prices . This happened in spite of the normal monsoon and average inflation in other sectors . It was the other way round this time . Inflation in the food sector spilled to other sectors causing the rise in overall inflation .

 The government and the RBI are working on the lines of monetary regulations like change in the interest rates , CRR etc. But looking at the way the food prices are stuck at the higher side , don't these monetary measures appear just temporary remedies ? There are certain deeper , grass root causes which have to be actually tackled . India has come a long way in case of food grain productivity . There was a time when our Balance of payments account was always weighed down by food grain imports and the debts incurred for these essential imports . It is not so anymore . We are self reliant now . In case of sugar , global prices are determined by the amount of India's sugar production ! 

Thekey causes, particularly of rise in food prices can primarily be attributed to the cost - push inflation . According to a survey done in 2008 , India loses approximately 58,000 crore worth of agricultural food items due to lack of infrastructure such as transportation and storage facilities . Furthermore , till date , Indian agricultural produce is largely dependent on monsoons since more than 60 % of the farmlands are not artificially irrigated . Therefore , during erratic or bad monsoons , food inflation grows stronger . Another reason is that the increase in the productivity of the existing farmlands has been non - existent or negligible at best . This has led to stagnant production which has not matched up with the rate of growth of population .

 To remedy this , obviously the medium term strategy requires addressing the problems of agriculture and making food cultivation financially viable for farmers . But distribution is also important . 

A critical role can be played by a public distribution system in moderating food price spikes and dampening inflationary expectations and tendencies of hoarding . That is why the proposed new Food Security Act that will soon be brought to Parliament is so important - but the current form renders it worse than useless . Only a distribution system that ensures universal access to some basic food items at affordable rates will have any chance of ensuring genuine food security for most of the Indian population .