BackWhy India’s food inflation will not go away
Protectionist food policies have resulted in India’s food prices rising far faster than world prices
PremiumIndia’s protectionist policies on food prices, though reducing volatility, have resulted in an inordinately rapid increase in price levels. While world food prices, following several ups and downs, have nearly doubled from 1990 to 2013, Indian food prices have steadily increased six-fold over the same period.
A comparison of the Food and Agriculture Organization’s food price index and India’s wholesale price index (WPI) shows the difference in growth rates of Indian and world food prices quite distinctly. The FAO’s index shows world food prices have risen almost 96% from 1990 to 2013. The WPI for food increased a whopping 514% over the same period.
India’s policy of raising import tariffs in times of surplus and implementing export bans during shortages has resulted in a closed economy for food. While it is a good thing this has protected India from volatility in world food prices, such a policy has likely contributed to the rapid rise in domestic food prices seen over the last decade, according to Bharat Ramaswami, professor at the Indian Statistical Institute and expert on food prices.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
