Article;
http://economictimes.indiatimes.com/news/economy/policy/food-security-law-could-push-up-world-prices-widen-subsidy-bill/articleshow/9353459.cms
Comment;
The concern here is about importing food to deliver food security bill, but, that is about future. In future as far as food imports are concerned, we are in a transition period regarding the exchange rate of rupee which is expected to become stronger, exports is increasing which are good signs from the point of view of balance of payments. It is reducing. Food is among the most important thing that moves man and an economy, too. Without food security the rate of credit growth is also not possible because the central bank would increase interest rate to keep a tab on inflation. When growth is in question we compare ourselves with China which is also a big importer of food. It is common sense that an economy can not grow without food because people would not grow. The problem for INDIA is not world prices but the hunger of the domestic economy. We have to feed empty stomachs. Prices are not a problem as long as we have money to pay for it and in the international trade we value exchange-rate rather than international prices. Resorting to cash transfer schemes, successful in Brazil, without availability of food to sell will increase prices more than the economy can bear. “Too much money chasing too few goods.” Imports are a good source to accommodate for domestic demand.
http://economictimes.indiatimes.com/news/economy/policy/food-security-law-could-push-up-world-prices-widen-subsidy-bill/articleshow/9353459.cms
Comment;
The concern here is about importing food to deliver food security bill, but, that is about future. In future as far as food imports are concerned, we are in a transition period regarding the exchange rate of rupee which is expected to become stronger, exports is increasing which are good signs from the point of view of balance of payments. It is reducing. Food is among the most important thing that moves man and an economy, too. Without food security the rate of credit growth is also not possible because the central bank would increase interest rate to keep a tab on inflation. When growth is in question we compare ourselves with China which is also a big importer of food. It is common sense that an economy can not grow without food because people would not grow. The problem for INDIA is not world prices but the hunger of the domestic economy. We have to feed empty stomachs. Prices are not a problem as long as we have money to pay for it and in the international trade we value exchange-rate rather than international prices. Resorting to cash transfer schemes, successful in Brazil, without availability of food to sell will increase prices more than the economy can bear. “Too much money chasing too few goods.” Imports are a good source to accommodate for domestic demand.
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