“As far as vegetables are concerned, it is the impact of only oil. When oil goes up, that means the transportation cost increases,” said Farooqui.
But economists such as D.H. Pai Panandikar say the main reasons for stubbornly high food inflation are neither the high cost of transport, nor - as in the case of the onion - last year’s drought in parts of the country. He said it's a simple issue of supply and demand.
“With the improvement in incomes, people are shifting their consumption patterns from food grains to fruits, vegetables, meat, milk and so on,” said Panandikar.
Panandikar said the government can take certain steps, though, to increase supply and ease prices.
“For instance, the government can give loans at cheaper rates of interest for dairies so they can develop really fast, one thing they can do. The second thing is to give vegetable growers or fruit growers better seeds with high productivity,” said Panandikar.
Meantime, analysts say food inflation not only is hurting people’s wallets; it has a broader effect on the economy.
More money spent on food means less to spend on clothes and other goods. And low consumer demand is causing India’s industrial production to continue shrinking, contributing to a gross domestic product that is expected to drop to 5 percent for the fiscal year ending in March - the lowest GDP in a decade.
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2013-11-25
2013-11-25
2013-11-25
2013-11-25
2013-11-25
2013-11-25