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Tackling food inflation

Tackling food inflation
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First Published: Tue, Feb 02 2010. 09 57 PM IST
Updated: Tue, Feb 02 2010. 09 57 PM IST
This is regarding the column “A counter-inflation subsidy” by Rajiv Kumar (Mint, 27 January). This was very good and timely. Monetary policy is not the answer to food inflation at present.
I would just like to add a little bit to the article. A subsidy increases the fiscal deficit. This may be corrected in the future, as Kumar indicated. However, there is always the danger of a possible fiscal crisis, given that the fiscal deficit is already high relative to the gross domestic product and, more importantly, relative to tax revenues.
An alternative policy is to have a temporary increase in food subsidy and supplement it now by a temporary increase in some tax. Recovery is on the way. So this seems bearable.
—Gurbachan Singh
I differ with some of your views in the editorial “The last anti-reformers” (Mint, 21 January). “A supply-side response with FDI in higher education is the right answer,” your opinion says. We must never forget that ours is a poor country and we need a primary/higher education system affordable to everyone. FDI (foreign direct investment) in the education sector will not serve the purpose. We need more government investment in a subsidized form to make higher education more affordable.
This UPA (United Progressive Alliance) government has done well in initiating action against some of the deemed universities which are liable to downgrade the quality of our education system. More state-sponsored universities is the answer in the current socio-economic scenario.
—Kalyan Kulkarni
This refers to the Views page article “An incomplete promise” by Chapal Mehra (Mint, 25 January). The issue of health, more so in relation to the women who are the primary beneficiaries of the microcredit movement, is like Cinderella’s lost shoe.
This is despite the fact that a majority of loans availed wherever microfinance has made inroads is for health-related issues. Even then, the dovetailing between self-help groups (SHGs) and the agencies involved in the business of health is at a nascent stage. A small start was made by some firms in pockets of Bihar where they tried to market health- and hygiene-related products through SHGs.
With the prohibitively high cost of medicines, healthcare is slipping away from the reach of the rural populace. The way out is to use microfinance federations to market medicines and other related products. Tools of healthcare have to be delivered through innovative mechanisms. A positive step in this direction was taken by cooperative banks in Chittorgarh district in Rajasthan, which started distributing generic medicines through its networks. The outreach was phenomenal, and health costs reduced for the rural populace.
Cooperative banks are the major financing agencies for SHGs all over the country. If this step can be emulated by such banks in different parts of the country, it could have a beneficial effect on the rural economy. The benefit would accrue from healthy individuals who can contribute in more meaningful ways to the economic growth. For the banks, it could have a spin-off effect—with healthy individuals available in abundance, they could think about innovative loan programmes in rural areas.
It is also worth mentioning that in association with cooperative banks in some pockets of Maharashtra, a clean village competition is being organized and SHGs are being used as a tool to propagate it. As a result, the villages have become clean and the incidence of illness has reduced drastically. Maybe cooperative banks could also think about broadbanding this initiative in different parts of the country.
Microfinance is about innovation, and tailor-made vehicles for innovation are required to address issues of health in rural areas, so that it translates into a quality workforce that can work for the cause of the economy.
Unless the issue of health is given its due recognition, a double-digit growth rate will be an elusive dream.
—Nalin Rai
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First Published: Tue, Feb 02 2010. 09 57 PM IST
More Topics: Food | Inflation | UPA | Education | Health |