With the onion prices burning a BIG hole in the pockets, India's aam admis are finding sheer survival as a gigantic struggle. With food inflation a tad closer to 15% and no signs of softening soon what with unseasonal rains acting as a spoilsport now, the mandarins in the government are moving around with a poker face. Of course they have an excuse to flaunt - unseasonal rains - for yet again eating the crow with their prediction of the likely movement of food prices.
Nobody, however, is talking of the obvious and making ammends. That of arresting the trand of continuous under investment in the agriculture sector. For the past two decades, India's foodgrain production has lagged behind the population growth rate. In the decade of the 1980s, the population grew at a compounded annual growth rate (CAGR) of 2.1%, while foodgrain production rose by 3.1% CAGR. Thereafter, the growth rate of foodgrain production slowed down considerably, so much so that during the current decade (till financial year 2009-2010), the growth rate of foodgrain production was way below that of population increase.
According to RBI data, while CAGR of foodgrain (kg/hectare) productivity peaked at 4.41% in the 1980s, it started to slide ominously thereafter. The growth rate fell to 2.36% in the 1990s, and to 1.06% during the first eight years of the current decade.
Given this situaiton, its but pipedream that food inflation in India will be contained at a low single digit level.