Syllabus: GS2/ Health, Government Policies & Interventions, Issues Arising out of their Design & Implementation
- Ensuring that Indians have permanent access to a healthy diet is the most important task of economic policy today.
Data evidences of food-price inflation & Food insecurity
- India’s food-price inflation: India may be the fastest growing large economy of the world, but it is also facing accelerating food-price inflation.
- The rise in the price of food first accelerated sharply in 2019, and has climbed in most years thereafter.
- In July 2023, annual inflation exceeded 11%, the highest in a decade.
- An implication of continuing high food-price inflation is that a section of the population could be facing hardship in consuming food of adequate nutritional value.
- Reports of Food insecurity: The ‘State of Food Security and Nutrition in the World’ of the Food and Agriculture Organization (FAO) estimates the proportion of the population across countries unable to afford a healthy diet.
- The figure for India in 2021 notes that an estimated 74% of the population cannot afford a healthy diet.
- Given a population of 1,400 million, this makes for approximately one billion Indians.
- A shrinking ability of households to finance their food requirement is evident also in studies undertaken in India itself.
Causes of rise in Food inflation
- Global reasons: High levels of global food inflation are being driven by multiple reasons such as the COVID-19 pandemic-induced supply chain concerns and the ongoing Russia-Ukraine war.
- Pandemic & post-pandemic recovery: Multiple lockdowns and subsequent disruptions in the logistics of the supply accounted for a swift rise in food inflation prices.
- This was further exacerbated during the economic recovery, when demand for food and essentials rose even more.
- Localised factors: An interplay of localised factors – in recent times – has coalesced with a high degree of uncertainty in the lives and livelihoods of various economic agents across India, and this is likely to keep inflation on an incline.
- Changing weather patterns: The brewing El Nino is a looming danger and it’s feared that it could cause below normal rainfall, even a drought.
- So, it may be worth thinking about how best to keep food inflation below 4 percent in case the monsoon rainfall turns out to be below normal.
Issues & challenges
- Increased cost of preparing food: While the cost of preparing a thaali at home has risen by 65% in the last five years, in this period, the average wage of a manual worker rose by 38% and that of a salaried worker by 28%.
- The implied reduction in purchasing power is considerable, and it would be reasonable to expect that food consumption has been impacted.
- Prevalence of anaemia: This would be in line with the reported rise in the prevalence of anaemia, mostly induced by nutrient deficiency, in the latest National Family Health Survey undertaken over 2019-21.
- Over 50% of adult women were estimated to be anaemic. This suggests that the FAO’s finding, that over half of India cannot afford a healthy diet, is plausible.
- Unsound inflation targeting: Macroeconomic policy, relied upon to control inflation, hasn’t proved to be favorable in the context.
- Inflation rate is mostly higher than the target for four years by now.
- RBI’s approach of contracting output when the inflation rate rises — misleadingly termed “inflation targeting” — does nothing to manage food inflation stemming from the supply side.
- Focussing on increasing Agricultural yield: Agricultural yield is lower in India than in East Asia, pointing to the potential for an increase.
- It is necessary to intervene on the supply side to ensure that food is produced at a steady price by raising the yield on land.
- Attention is needed to extend irrigation to 100% of the net sown area, an end to restrictions on leasing of land, a quickening of agricultural research and the re-institution of extension.
- Green Revolution: Reeling under extreme food shortage following two successive droughts, the government orchestrated (by framing Green Revolution) a supply-side response by providing farmers with high-yielding seeds, cheap credit, and assured prices through procurement.
- This succeeded spectacularly. Within a few years India was no longer dependent on food imports.
- Correcting the mistakes of Green Revolution (GR): Mistakes made while implementing GR, among them the rampant use of chemical fertilizer, fuelled by subsidy, which degraded the soil.
- There was also the reliance on procurement prices rather than productivity increase to ensure farm incomes, which fuelled inflation.
- We also see that the policy was almost exclusively focused on cereals rather than pulses, the main source of protein for most Indians.
- However, rather than arguing on the errors made in an extraordinarily successful economic policy intervention, we should be correcting them now.
- Role of states: In the 1960s, the States that were chosen for the spread of the new technology worked closely with the central government.
- This would have to be replicated in order to make a difference to the country as a whole.
- At the same time, it may be asked if the States are playing their part to enhance agricultural productivity rather than relying on food allocations to their Public Distribution System from the central pool.
- Domestically, the challenge for India – right now and in the near future – would be to manage its own inflation rate against all macroeconomic factors/concerns stemming from: a collapsing rupee; a high current account and trade deficit; an eroding foreign currency reserve scenario; a capital flight in portfolio investment markets etc., all of which present a clear vulnerability on the side of its balance of payment accounts.
- One simple answer to these challenges would be to keep focus on accelerating economic growth and making it more inclusive.
|Daily Mains Question
[Q] Ensuring that Indians have permanent access to a healthy diet is the most important task of economic policy today. Discuss.