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Fighting inflation

delhi Updated: Feb 28, 2011 23:38 IST
HT Correspondent
HT Correspondent
Hindustan Times
Highlight Story

The Budget on Monday unveiled a bunch of farm schemes worth Rs1,500 crore just to fight rising food costs in Asia’s third largest economy. Each of these is aimed at easing supply deficits by raising output in a clutch of food items, where food inflation seems entrenched.

Food prices in India, according to economists, have undergone a “structural shift” — as incomes rise, demand tends to shift towards vegetable, dairy and protein-rich items.

Four new schemes announced by finance minister Pranab Mukherjee are designed to tackle this demand swing. Each plan would get R300 crore. Since “the number 3 happens to be my lucky number!” Mukherjee read from his Budget speech.

The government’s annual economic survey, released last Friday, points to a break-point: rising demand and slowing supplies has been stoking inflation. “However, the efficiency we show in collecting food does not carry over to our ability to release food. Hence, high production does not always translate to lower prices,” chief economic adviser Kaushik Basu told HT.

The food price rise has been driven by fruits, vegetables, milk, meat, poultry and fish, which account for over 70% of the WPI basket for primary food items. Removing production and distribution bottlenecks will “be the focus of my attention this year”, Mukherjee said.

The first of the new schemes, the National Mission for Protein Supplements, will promote animal-based protein production through livestock development, dairy farming, piggery, goat rearing and fisheries. “The consumption of foods rich in animal protein and other nutrients has risen of late, with demand growing faster than production,” he said.

Nutri-cereals, a scheme covering 25,000 villages for multi-grains was also announced. To increase milk output, an “Accelerated Fodder Development Programme” aims to improve cattle nutrition. The Budget also has a palm-oil scheme for 60,000 hectares and a plan to build vegetable clusters around major cities. A fifth scheme, continuing from last year, aims at boosting pulses output.

food schemes

Nutri-cereals scheme for multi-grain farms

Fodder development plan to improve cattle nutrition, thereby improving milk yield

National Mission for Protein Supplements

Palm-oil scheme for 60,000 hectares