Proposal to Exclude Food Prices from Inflation Targeting, K.G. Balakrishnan Commission of Inquiry, Zoopharmacognosy – Animal Self-Medication

(General Studies III – Economy Section – Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment. Inclusive Growth and issues arising from it.)

• The Economic Survey preceding this year’s Union Budget has proposed that the Reserve Bank of India (RBI) exclude food prices from the inflation target.
• This would mean shifting the focus from ‘headline’ inflation, which includes all items, to ‘core’ inflation, excluding food and fuel.
• However, removing food prices from the inflation target overlooks the most critical aspect of inflation for the majority of the Indian population.
• This could lead to policy measures that fail to address the real challenges facing the economy.

Reasons for the Rise in Food Prices in India –

• Persistent High Food Inflation: Since 2019, food prices in India have been on an upward trajectory, with inflation rates nearly reaching 10% year-on-year in June. This trend predates the COVID-19 pandemic and the Ukraine war, highlighting the presence of domestic factors driving food inflation.
• Supply-Side Constraints: Factors such as erratic weather patterns, inefficient supply chains, and rising input costs have contributed to the persistent rise in food prices. Limited agricultural productivity and disruptions in distribution also play significant roles.
• Structural Issues in Agriculture: The Indian agricultural sector faces several structural issues, including fragmented landholdings, inadequate irrigation infrastructure, and limited access to modern technology, which restricts productivity and contributes to higher prices.

Impact of High Food Prices on People, Especially the Poor –

• Vulnerability of Households: In India, nearly 50% of household expenditure is spent on food, a figure significantly higher than in developed countries like the U.S., where it is less than 10%. This high share indicates a direct and substantial impact on household budgets when food prices rise.
• Disproportionate Effect on the Poor: The poor are disproportionately affected by rising food prices as they spend a larger portion of their income on food. A continuous increase in food prices exacerbates poverty and food insecurity, leading to malnutrition and other related issues.
• Erosion of Living Standards: As food prices increase, the real income of households declines, leading to a reduction in overall living standards. This situation is particularly concerning in a country where a significant portion of the population is already struggling with poverty.

Link Between Core and Food Inflation –

• Interdependence of Food and Core Inflation: Food price inflation significantly influences core inflation (which excludes food and fuel). When food prices rise, wages tend to increase as workers demand higher pay to cover their basic needs, leading to higher production costs and thus contributing to core inflation.
• Ineffectiveness of Interest Rate Hikes: Attempts to control inflation through interest rate hikes by the Reserve Bank of India (RBI) have shown limited success. Higher interest rates can lead to reduced demand and higher costs for firms, which may in turn raise prices to protect profits, further driving inflation.
• The Inseparability of Food and Core Inflation: The strong link between food prices and core inflation suggests that focusing solely on core inflation without addressing food price inflation is ineffective. Food prices are a key determinant of inflation across the economy.

 Solutions to Increase Agricultural Productivity –

• Enhancing Agricultural Infrastructure: Improving irrigation systems, providing better access to quality seeds and fertilizers, and modernizing agricultural practices are essential steps to boost productivity. Investments in cold storage and transportation infrastructure can also reduce post-harvest losses and stabilize prices.
• Adopting Technology and Innovation: Encouraging the adoption of technology in farming, such as precision agriculture, digital tools for market access, and advanced farming techniques, can significantly increase yields and reduce costs.
• Policy Support and Reforms: Implementing comprehensive agricultural reforms, including land consolidation, better credit facilities, and crop diversification, can address structural issues and improve overall efficiency in the sector.
• Focus on Sustainable Practices: Promoting sustainable agricultural practices, such as organic farming and conservation agriculture, can help maintain soil health, reduce dependency on chemical inputs, and ensure long-term productivity growth.

Addressing rising food prices in India requires a multifaceted approach, including ongoing efforts to tackle supply-side constraints, boost agricultural productivity, and acknowledge the link between food and core inflation. Initiatives like Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) for irrigation, e-NAM for digital market access, and agricultural reforms aimed at efficiency are key steps. Advancing these reforms and embracing technological innovations can help stabilize food prices, control inflation, and improve living standards, particularly for the poor.

• The Food Safety and Standards Authority of India (FSSAI) has launched a project to assess microplastic contamination in food products and develop detection methods.
• Primary objectives:
• Develop and validate analytical methods for detecting micro and nano-plastics in various food products.
• Assess the prevalence and exposure levels of microplastics in India.
• Establish standard protocols for micro/nano-plastic analysis.
• Conduct intra and inter-laboratory comparisons.
• Generate critical data on consumer exposure to microplastics.
• This initiative is crucial for understanding and managing the risks associated with microplastic contamination in food.

Dig Deeper: Read about the Environmental menace of Microplastics from the human placenta to the ultimate depths of the Ocean.

• The 10th edition of Exercise Mitra Shakti is being held at the Army Training School in Maduru Oya, Sri Lanka.
• The exercise aims to enhance the joint military capability of India and Sri Lanka in counter-insurgency operations under the United Nations Mandate (Chapter VII).
• Both armies have deployed canines (K9s) for the exercise. India has fielded, a Belgian Malinois (named Zac) trained in specialised tactical operations, including cordon-and-search, search-and-destroy, jungle search, and area sanitisation.
• Assault K9s train at the Remount Veterinary Corps Centre and College, Meerut, and is considered a force multiplier in tactical operations.
• The Sri Lankan Army has also deployed two canines for the exercise.

Dig Deeper: Read about recently conducted Joint Exercises.

• The Commission of Inquiry, chaired by former Chief Justice of India K.G. Balakrishnan, was established to examine the possibility of granting Scheduled Caste (SC) status to Dalits who have converted to religions not covered by the Constitution (Scheduled Castes) Order, 1950.
• The Constitution (Scheduled Castes) Order, 1950 issued under clause (1) of Article 341 which currently includes only Hindu, Sikh, and Buddhist Dalits into Scheduled Castes List.
• The commission is racing to complete its report as its two-year term is set to expire in October 2024.
• The National Council of Dalit Christians has presented its case in Gujarat and Kerala, while scepticism persists among groups like the All-India Pasmanda Muslim Mahaz, which has yet to engage with the commission.
• The commission is analysing socio-economic data on Dalit converts and has sought input from various States and Union Territories.
• The union government has defended its stance in the Supreme Court, arguing against the inclusion of Dalit Christians and Muslims in the SC list.

Dig Deeper: Read about the recent Supreme Court verdict on the subcategorisation of Scheduled Castes and Tribes.

• Recently Article published in Nature documented a Sumatran orangutan treating a facial wound with a paste made from the local plant Fibraurea tinctoria.
• Fibraurea tinctoria is known for its anti-inflammatory properties due to the presence of berberine.
• Called ‘Akar Kunyi’ locally, the plant is used in the traditional medical. And in the southern subtropical regions, its equivalent is called Oleander and is used as a curative for jaundice.
• The term “Zoopharmacognosy refers to the behaviour of animals self-medicating with plants, soil, and insects.
• Apes, monkeys, reindeer, bears, and birds like starlings consume specific plants for health benefits.
• Dogs chew grass to induce vomiting and alleviate stomach infections.
• Pregnant lemurs eat tamarind leaves to boost milk production.
• Pregnant elephants in Kenya consume Boraginaceae leaves to induce labour.

Dig Deeper: Read about the International Aarogya 2024 Conference.