Thursday, December 17, 2009

Food Inflation hits 19.95%

Is it good news or Bad news? Its bad news for all the consumers but may not be that bad for the producers. I think the biggest beneficiaries of the food inflation are the farmers. With eChaupal and the modern communication (cell phones), they can find out the prevailing rates for various produces across markets (local and global). This gives them an opportunity to negotiate the rates better. The biggest losers though are the urban people. They are at the mercy of wholesalers. From a purely political pov, it may not have the severe backlash in an agrarian society such as India. If there are severe side supply side constraints, then perhaps the govt can allow import of vegies and pulses. We have enough Foreign Currency reserves to cushion the imports.