Food Price Rise in India Essay Example

because of the mismatch in supply and demand. The rising population, escalating incomes, and elevated consumption levels represent one side of the equation. On the flip side, challenges such as decreased production due to natural calamities, shrinking arable land availability, inadequate irrigation water resources and growing oil-related manufacturing and transportation costs burden the supply side. It's particularly discouraging that this situation is unfolding amidst consistent growth in GDP each quarter.

The usual rationale provided for the escalation in prices is that the growth rate of India's population has surpassed that of Food Production. This failure of Food Production growth to keep up with the acceleration in population growth has led to a disruption in the balance between supply and demand, subsequently raising prices. Nonetheless, this situation cannot be reduced down to such oversimplified logic. Through this article, we aim to dissect several elements that contribute to this occurrence. We intend to pinpoint distinct dynamics at play in this crisis and identify the entities affected by it.

In the food supply chain, key contributors like farmers play a critical role. Governmental initiatives such as PDS and MSP act as vital links connecting these suppliers with their consumers. The government, in its capacity as a policy maker, exerts significant control over national food production and price regulation. The development of new policy structures has ushered in another dimension to India's food industry through the emergence of large corporations and retailers.

Their involvement in food production and procurement is steadily increasing, and they are becoming a significant player to contend with. The inauguration of commodity trading and derivatives has linked food prices with financial institutions and traders. The surge in production

costs is a crucial factor contributing to the escalation of food prices. As inflation continues to rise, the cost of essentials continues to soar daily. Take fertilizer, a global commodity, as an instance. The concessionary retail price for chemical fertilizers has remained steady since February 2002.

Indeed, there has been a significant rise in fertilizer usage, often seen in the quantity of fertilizer the government needs to import to meet this demand: Source: The Hindu, Business Line [2]. In an attempt to encourage appropriate use of all kinds of fertilizers, the government is contemplating introducing nutrient-based subsidies instead of the existing product-based ones. Such a move will not be objectionable if its primary goal is to ensure fair use of fertilizers. However, if it's a precursor to deregulating fertilizer prices, it could severely impact Indian agriculture.

The scenario of water irrigation in farming is a mirror reflection. The use of aquifers for irrigation has seen a multi-fold increase recently, leading to an alarming reduction in ground water resources. This overutilization pairs with unpredictable and sparse rainfall across different regions in the country. There hasn't been significant dedication towards collecting this rainwater. An urgent improvement in our water and irrigation resource efficiency is crucial. Additionally, the impact of oil price fluctuations has been another contributing factor to the escalation of prices through directly and indirectly affecting the agricultural costs in numerous ways.

The escalating importance of energy, both in the process of farming and in the transportation of agriculture products, is evident. The increased use of machinery such as tractors, harvesters, and threshers in agriculture demands a higher usage of oil. Furthermore, the expansion of irrigation methods, especially via

groundwater exploitation, needs energy from sources like diesel and electricity to operate pumps. In a country like India, the effects of rising energy costs are increasingly felt due to lack of government support measures like those provided to farmers in developed nations like the USA.

It has lessened the safeguards and funding for agriculture. As such, the expensive energy costs are directly reflected in higher cultivation costs, and subsequently, increased output costs. The direct effect of this is the escalated cost of food crops. The agricultural sector does not operate in isolation. The trade terms between agriculture and non-agricultural sectors significantly influence production cost. Given that these terms are becoming more expensive, it's clear that the final product, food, would inevitably become more costly.

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