Article;
How to keep food prices down.
Comment;
In a supply constrained
economy like INDIA where employment levels are near full and people are
over-employed, production can not be increased, but in such a condition the
external economy can help reducing /increasing demand/supply and reduce prices...
This can be done in many ways, either we reduce import-duty on the items in
which prices are volatile or/and increase export duty on the same items, or
allow FDI in multi-brand-retail... The government so far has refrained from
increasing export-tariff on food-products because that might make the domestic
prices crash and cause loss to domestic investor who have invested in those
products, farmers too. The government's attempt to crack-hoarding may be
supplemented with the above measures... Decrease in import duty on selected
items which are important from the point of view of inflation is likely to
increase supply in the domestic market and prices will go down and increase in
export tariff on same selected items will also increase domestic supply and
prices will go down... Moreover, hoarders will be forced to sell their stock if
they expect or see such an action from the government to reduce inflation...
Cutting the middle man chain is equally important… FDI in multi-brand-retail will
directly affect farmers’ income by cutting the middle-man chain... The
government is concerned about domestic retail players but how we can forget
that 60% (the majority) of INDIA’s
population is dependent on agriculture for livelihood which is also good from
the point of view of votes compared to the population engaged in the
multi-brand sector... The Congress voted to power the second time because of
MGNREGS for the rural area and the present government at the center should also
seize the opportunity to increase their chances of wining next-time by allowing
FDI in multi-brand retail which is expected to boost the rural economy. Improve
in farmers income will increase demand and investment for other things and will
push the economy’s growth-rate…
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