Drought an important factor in food price rise: Expert | india | Hindustan Times
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Drought an important factor in food price rise: Expert

india Updated: Sep 14, 2009 19:45 IST

The principal cause for the price rise of essentials is not futures trading of agricultural commodities like food grains, but the drought in large parts of the country, according to Suman K. Bery, director general of think-tank National Council of Applied Economic Research (NCAER).

"My instinct is 'no'," Bery told reporters in Kolkata on Monday when asked whether the futures trading was leading to price rise of the domestic agricultural produces.

He said while drought is an important factor, large volumes of buffer stocks lying with the government can act as disincentive for traders.

"It is paradoxically the case that having large buffer stock can be a disincentive for private trade as they are not never sure when these stocks would be released," he said.

According to Bery, the significant increase in support prices announced in the run-up to the April-May general elections also had an impact on the escalating food prices.

Talking about the tardy growth of India's agricultural sector, he said it would be a declining sector.

"We need not be sentimental about it. Our goal should be to raise farm incomes and see that farm produce is also growing," Bery said.

"We have to see that the rural income goes up and agriculture is only a part of it."