Study of Food Inflation in India

Topics: Agriculture, Inflation, Food Pages: 3 (672 words) Published: March 29, 2011


India is the world's second largest producer of food next to China, and has the potential of being the biggest food and agricultural sector. The total food production in India is likely to double in the next ten years and there is an opportunity for large investments in food and food processing technologies. India is one of the world’s major food producers but accounts for less than 1.5 per cent of international food trade. "The food inflation is rising and the wholesale price index has also reached double digit figure and in the month of March it was 9.8 percent, now it has reached double digit. It will continue till the middle of July,". Food inflation is usually calculated using CPI, where as in India, it is calculated wholesale price index (WPI). Exports of agricultural products from India are expected to cross around US$ 22 billion mark in the next five years and account for five per cent of the world’s agriculture exports. India’s annual food inflation fell slightly to 16.12 percent for the week ended June 5 from 16.55 percent for the week before. Following is the rise and fall in prices of some of the main commodities that form the sub-index for food articles over the past 52 weeks:  

Cereals| : 5.41|
Rice| : 6.76|
Wheat| : 3.97|
Pulses| : 34.40|
Vegetables| : (-)1.03|
Potatoes| : (-)34.96|
Onions| : (-)17.84|
Fruits| : (-)13.67|
Milk| : 21.12|

Possible Reasons:
* The roots of today’s food inflation are global, and cannot be tackled by the individual government in isolation. Inflation will come down only when world food production rises, and world prices fall.

* Another major reason for the rise in the prices of vegetables is more demand and less supply. One more reason, some suspect, could also be that the local vegetable vendor might be fleecing the customers

* Indian agriculture is largely dependent on...
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