Strong evidence is now cited by three eminent institutions — the Commission for Agricultural Costs and Prices (CACP), the Reserve Bank of India and the Prime Minister’s Economic Advisory Council — to show that most of our persistent inflation in the last three years has been on account of food inflation.
The biggest price increases have been not for cereals but for superior foods: eggs and meat, milk, fats, fruit and vegetables. The CACP finds that 98% of food inflation can be explained by three factors: the fiscal deficit, high global prices and rising farm wages. Rising real farm wages means the poorest people — landless labourers — can buy more food, including superior foods, reducing still further the rationale for a Food Security Bill based in cereals. Read More