Besides managing inflation it is pertinent that inflationary tendencies are also kept under a check. It is high time that the government starts a crackdown on commodity hoarders and enhances the open market sales. But these are only short-term measures, the government needs to actively focus on increasing production of several commodities in long term
Inflation
Due to inflationary expectations, intermediaries in agriculture value chain are having a field day. Their role in price hikes is conspicuous. It has been documented that farmers only get around 30 – 40 percent of what the consumers pay. Large numbers of intermediary are creating a notional shortage of commodities to hike prices and earn profits
Inflation, especially double digit inflation is being attributed to demand-supply mismatch in the current season, however double digit inflation was evident last year too when there was no commodity shortages. That means there is something else that that is having an effect on commodity prices and policy response to these challenges has been poor
Late monsoons, drought, and floods had an impact on food production in the country; policy makers are optimistically pinning hopes on superlative Rabi (winter harvest season) performance. But in effect, it is highly unlikely that Rabi production would be able to meet expectations. Shortages of commodity are inevitable, but do we really have commodity shortages?
Figure this, if one had purchased pulses worth Rs 100 on February 06, 2008, it would cost about Rs 161 to purchase the same quantity today. Likewise, one would be shelling Rs 137 for vegetables and Rs 233 for onions. During this intervening period since 2008, while the economy has reeled under low growth conditions, [...]
