Everybody is talking about the rising prices of food stuffs. The costs of cereals, vegetables, pulses and edible oils have sky rocketed –in so short a period-that experts from all over the world have been profusely offering their opinions as to the probable causes of this tremendously inflationary impulses. The causes –the majority of them believe lie behind mainly two factors. Firstly, it’s the US financial depression with their sub-prime mortgage crisis has created shock waves throughout the world. Secondly, some people think that the rise of oil prices has affected the cost of commodities. As of today the price of petrol is above $60 a barrel. According to some this will continue to go up and will reach approximately $100 by the end of this year. So there will not be any let up in inflationary pressure.
So this is a matter, I think, should better be left to the economists and governments or simply to the process in times with unthought-of situations.
But what one finds at least in India that the prices of consumer goods like electronic gadgets, apparels, jeans, alcohol and hundred other items are not going up. So why is the inflation biased for this area? If we try to discuss a little –we find some ominous signs for the future.
The economic reform started in India not long ago. There were many other countries in Africa and Asia which accepted the principles of economic reform much before India. If we compare China with India we will see that China was much advanced in this matter than India. Perhaps this reform in economic sector was necessary and almost a fait accompli considering the global economic and political conditions. Owing to this economic reform the total number of employments all over the world and especially in India has much increased. So the ability to spend more has helped many persons and consequently the flow of money in the market has increased considerably. In this matter we know that this extra flow of money comes from the same group of persons who did not have the ability to spend almost nothing five years ago. In respect of India’s self sufficiency in food Amartya Sen’s opinion was that a good majority of people in India do not manage square meals a day. Most people are half-fed as they don’t have the money to go to the market for buying food articles. If all of these people went to the market to buy their needed food there would be famine in India. It’s because of some half-fed and un-fed people India are not a famine stricken country and we are able to buy food in reasonable prices. What happens now is that people who were unemployed a few years ago are coming to buy food. Moreover the the overall population has exploded into a figure of 1.13 billion in India. So there has been much demand on food articles. The middle class –whose salary has increased two fold in the last ten years are consuming without caring any control. A regular visitor in the urban markets of India is witness to this fact.
India is seriously in need of increased production of food crops. India, long one of the most productive agricultural regions of the world, could not meet its basic need for food grains during the early years of the nation's independence. The Green Revolution of the 1960s and 1970s dramatically improved yields in India. With considerable national pride, India boasted that it had achieved not only self-sufficiency in food grains, but had become a grain-exporting nation. In 2006, however, for the first time since the Green Revolution, and in part because of changes in agricultural policy, India had to import wheat. India will again have to import food grains in 2007.Now India has banned food export.
The price of steel is also soaring. In the last ten years there has been boom in the housing sector –which ultimately caused a shortfall of steel supply in the market. The price of crude oil and the future scenario has pushed many countries to produce more bio-fuels. Many governments are giving subsidies to the farmers for cultivating plants for bio-fuel leaving the traditional food production. So there has been shortage of food production in many countries. But India is still not involved in producing bio-fuels.
But there is a danger of which the governments of all the countries must be alert. This is reduction of agriculture land producing food in order to creating SEZ and bio-fuels.
Is production of more cars necessary in India? The more cars mean more oil consumption. To procure oil for these increasing numbers of cars government must have to spend more foreign exchange. How many persons can be employed in a car industry? The car market is thrived in India by the banks. But this industry can wait at least for ten years for increasing the rate of production.
Actually in India the causes of inflation are complicated. Though it can not be seen separately from the international scenario Indian situation should not be compared even with China –the country which follows communist dictatorship. Indian authorities in every field should have a deep insight keeping in mind the phenomena of economic reform-while planning for future. India is still an agricultural country and the majority of her people follow a life style (including food habit) that is in no way similar to those of the developed countries even including countries like Egypt, Brazil etc.
The most unfortunate thing is that India is dangerously lacking an efficient, strong and determined political party and leadership to govern her affairs.
