The initial belief that runaway food inflation is a temporary result of a failed monsoon is now being challenged by the inconvenient truth that higher support prices to farmers and cash transfers to those who work on projects under the Mahatma Gandhi National Rural Employment Guarantee Scheme also have a role to play. President Pratibha Patil did well to suggest this in her recent speech to both houses of Parliament.
If food prices are indeed on a permanently high plateau because of higher demand, then public policy to raise food output in India is a must. One obvious way is to promote a second green revolution based on biotechnology, a medium-term goal. The more immediate challenge is to do something about criminal waste, as food rots because of a lack of storage facilities, a tiny food processing industry and an inefficient supply chain riddled with middlemen.
There is one answer to all these problems: private investment in modern retail. It seems to have completely slipped off the government agenda.