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The Political Economy of Food Price Policy: the Case Study of India

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  • Ganguly, Kavery
  • Gulati, Ashok

Abstract

India did not experience any food price spikes during 2007–08 when global food prices erupted. It was partly due to India´s ban on exports of wheat and common rice. But the fiscal stimulus that the government provided in 2009 in the wake of G8 countries´ call to avert economic recession, coupled with one of the worst droughts India experienced in that year, led to rising food prices in India since mid-2009. Food price inflation has hovered between 8–12 per cent per annum since then. The nature of food inflation, however, changed from being cereals-led to high value products (fruits and vegetables, and protein foods) during 2010–11 and 2011–12. While food inflation invited severe political protests, the situation did not escalate to any riots or violence. The government has been trying hard to cool down food prices by reining-in fiscal deficit, tightening monetary policy, releasing more grains from public stocks, and distributing subsidized grains through the public distribution system to targeted population. Yet it has not quite succeeded in containing an uncomfortably high level of food inflation. This is a cause for concern given that India continues to face food security challenges given the large number of people living below the poverty line and a significant part of them being susceptible to food price shocks.

Suggested Citation

  • Ganguly, Kavery & Gulati, Ashok, 2013. "The Political Economy of Food Price Policy: the Case Study of India," WIDER Working Paper Series 034, World Institute for Development Economic Research (UNU-WIDER).
  • Handle: RePEc:unu:wpaper:wp2013-034
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    File URL: https://www.wider.unu.edu/sites/default/files/WP2013-034.pdf
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    Cited by:

    1. Anand, Mukesh Kumar, 2016. "Reforming fossil fuel prices in India: Dilemma of a developing economy," Energy Policy, Elsevier, vol. 92(C), pages 139-150.
    2. Weber, Regine, 2015. "Welfare Impacts of Rising Food Prices: Evidence from India," 2015 Conference, August 9-14, 2015, Milan, Italy 211901, International Association of Agricultural Economists.
    3. Anand, Mukesh, 2014. "Direct and Indirect Use of Fossil Fuels in Farming: Cost of Fuel-price Rise for Indian Agriculture," Working Papers 14/132, National Institute of Public Finance and Policy.
    4. Kozicka, Marta & Kalkuhl, Matthias & Saini, Shweta & Brockhaus, Jan, 2014. "Modeling Indian Wheat and Rice Sector Policies," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 169808, Agricultural and Applied Economics Association.
    5. Rudrani Bhattacharya & Abhijit Sen Gupta, 2015. "Food Inflation in India: Causes and Consequences," Working Papers id:7141, eSocialSciences.
    6. McKay, Andy & Tarp, Finn, 2014. "Distributional impacts of the 2008 global food price spike in Vietnam," WIDER Working Paper Series 030, World Institute for Development Economic Research (UNU-WIDER).
    7. Rudrani Bhattacharya, 2016. "How does Supply Chain Distortion affect Food Inflation in India?," Working Papers id:11261, eSocialSciences.
    8. Baltzer, Kenneth, 2013. "International to Domestic Price Transmission in Fourteen Developing Countries During the 2007-08 Food Crisis," WIDER Working Paper Series 031, World Institute for Development Economic Research (UNU-WIDER).
    9. McCorriston, Steve & MacLaren, Donald, 2016. "Parastatals as instruments of government policy: The Food Corporation of India," Food Policy, Elsevier, vol. 65(C), pages 53-62.

    More about this item

    Keywords

    Agriculture; Food security; Inflation (Finance); Macroeconomics; Prices;

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