If we reduce the middle-man chain in the supply of
food-grains farmers will get higher prices... It will incentivize farming...
INDIA still has to transform agriculture in to a technology-intensive sector to
increase productivity, output... Liberalising the FDI in the food-supply-chain-management
will help increase investment in agriculture... while domestic investors are
reluctant and slow... Without significant investment to raise farm output our
industry will face higher cost of capital... Agriculture (food) is very crucial for
economic expansion from the view-point of inflation, interest-rate and
human-capital... When we talk about
supply-side constraints in INDIA food is a major point, besides
infrastructure... The government should
not shy away from importing good food to keep prices in check... The whole
argument between the Center and the RBI is about interest-rates and food prices
are the reason for high rates... The government has set aside Rs 500 Crores as
price stabilization funds which should, as sounds, be used to tame prices, but
no doubt we will need foreign reserves for imports... The fund will help
improve supply within the economy but, again, it will stress our current
account deficit that stands low relative to inflation and high interest-rate as
a problem... Foreign trade should be used to increase internal demand and
growth... It is an opportunity... Controlling CAD at the cost of domestic consumption,
prices and interest rate seems too hawkish...
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