The highest ever food inflation at 7.4 percent in 15 months in July and RBI hinting at far more rises in prices, the government is mulling wheat imports from Russia to stem food shortage despite the highest ever production of 330.53 tonnes.
Price curbs are not easy. So after over 53 years, the government is considering wheat imports to boost supplies and curb food inflation ahead of the series of state elections this year and the Lok Sabha polls next year. It may cause foreign exchange drain. The balance of payment position is largely not in favour because of import surges. Eightfold pay rise needed to be called developed at constant 7.6 percent growth till 2047. A tall order
The import is needed also to serve the free food grain programme to 81 crore people. This has affected the stocks that need fast replenishment. Any fall in supplies is feared to raise the prices beyond the normal level. The wheat productions are estimated at 112 million tonnes, according to the third advance estimates. It is higher than the last year\u2019s figure of 107.4 million tonnes and even the 2020-21 production of 109.58 million tonnes.
The private firms had imported 5.9 million tonnes wheat in 2017.
However, in diplomatic terms no import was made since 1970, when the PL480 imports were stopped with the Green Revolution changing the food grain scenario.
The government is exploring the possibility of imports through private trade and government-to-government deals. The government is serious about checking prices of key commodities like fuel, cereals, and pulses. It also wants to improve supplies in the rural areas to ease the impact on the poor. They are a major vote bank. Even small price disturbance can have wider political impact, which the government wants stay clear of now. India reaching the global market also has its problems. It impacts the prices.
Despite that the imports partly through the government channels and partly private might touch about 8 to 9 million tonnes of wheat. The officially shortage is expected to be around 3 to 4 million tonnes.
The RBI has cautioned on the price front in its August bulletin. It has found July inflation abnormally high at 7.44 percent in terms of consumer price index (CPI). The RBI has raised its second quarter, July-September, inflation forecast to 6.2 percent against 5.4 percent earlier.
It states that incidence of supply shock is not over as it was evidenced with the sudden spurt in tomato prices and slow surge in onion prices. The National Cooperative Consumers\u2019 Federation of India imported 50000 tonnes of tomato from Nepal that crashed prices to around Rs 60 a kg from Rs 200.
The vulnerability of economy to recurring incidence of vegetable price shocks warrant major reforms in perishable supply chains covering transportation networks, warehousing and storage technologies and value addition processes that dampen the amplitude of these swings, the RBI says.
Price stability is being considered key to the race to become the third global economy in GDP terms.
Prime Minister Narendra Modi has a dream for India to be among the most developed economies in the world. That\u2019s a dream Indians have been cherishing since long. Can it happen in a hurry? The government thinks it can with unleashing of spending spree ahead of elections and high debt. Normally, a debt should not be an issue if it is supported with high income, low inflation and measured actions for improvement of the living conditions, just not vague development. Spending and debt, however, spurt prices
The benchmarks are high and is hindered by underassessed inflationary trend to retain bank rate. A policy contrary to the US policy of firming up anti-inflation measures. The US benefiting with Federal Bank approach of increasing interest rates continuously. It has made investments flow faster to US, a stronger dollar, despite not so bright economic performance. The Federal Bank rate hikes are in reality against the developing countries as it robs of fund flow.
Indian rupee is losing continuously in this melee. It has slipped to Rs 83.15 to a dollar. As there would be more such US moves in the next few weeks, rupee could slide further.
Still a SBI research note claims that India could get to the third global spot in GDP terms as early as 2027 provided the economy grows at 8.7 percent for four years till 2027. Even with a bit of slip, touching the third is almost a certainty. That does not guarantee that overall living condition would match that of Japan (GDP $4.4 trillion) and Germany (4.2 trillion), which India is aiming to surpass. Interestingly higher the inflation, in GDP terms the economy could look \u201cbrighter\u201d. Cost rises reflect in GDP in quantitative terms.
Qualitatively, it has also to match the total number of the population of about 140 crore or 1.4 billion against 12.5 crore of Japan and 8.32 crore of Germany. In per capita income terms India remains far behind.
By virtue of population, India could qualify to be a \u201clarge economy\u201d but in actual terms it would remain a poor country. It ranks 139th in the world and the poorest among the G20 nations with a per capita income of $ 2601. So without check on prices, increase in production and jobs, the country may attain a \u201chigh\u201d rank but in reality it has to work harder to come out of the developing syndrome.
The per capita income has to rise by eightfold to $ 21,664, as per IMF classification. According to July 2023 RBI bulletin, economy has to grow at 7.6 percent for 25 years till 2047 to attain a moderately high income level. The economy has so far clocked growth higher than 7.6 percent just seven times since the 1991 liberalisation.
It calls for larger sharing of the fruits of growth and just not linear rises. People have to have larger income rises so that they can spend more. It needs, as per World Bank research, an end to inequalities in education and health.
The New Education Policy needs review and reforms else a generation could forfeit the opportunity to move up the income ladder.
To ensure it an affordable price regime is a must so that India can leapfrog.<\/p>\n","protected":false},"excerpt":{"rendered":"
The highest ever food inflation at 7.4 percent in 15 months in July and RBI hinting at far more rises in prices, the government is mulling wheat imports from Russia to stem food shortage despite the highest ever production of 330.53 tonnes.Price curbs are not easy. So after over 53 years, the government is considering […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[397,395],"tags":[],"class_list":["post-371045","post","type-post","status-publish","format-standard","category-columnist","category-opinion"],"_links":{"self":[{"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/posts\/371045","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/comments?post=371045"}],"version-history":[{"count":0,"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/posts\/371045\/revisions"}],"wp:attachment":[{"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/media?parent=371045"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/categories?post=371045"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/tags?post=371045"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}