Is India, the world’s second most populous nation, facing a food crisis, asks Paranjoy Guha Thakurta
Is India, the world’s second most populous nation, facing a food crisis?

This question is vexing policy makers and analysts alike even as creeping inflation - around 7% now - is sending jitters through the Congress party-led ruling coalition.

To be sure, India has not yet experienced riots over rising food prices that have hit other countries like Zimbabwe or Argentina.

But what is worrying everybody is that the current rise in inflation is driven by high food prices.

In the capital, Delhi, milk costs 11% more than last year. Edible oil prices have climbed by a whopping 40% over the same period.

More crucially, rice prices have risen by 20% and prices of certain lentils by 18%. Rice and lentils comprise the staple diet for many Indians.

Inflation, economists say, is akin to a tax on the poor since food accounts for a relatively high proportion of their expenses.
All of which is bad news for ruling politicians because the poor in India vote in much larger numbers than the affluent.
Roughly one out of four Indians lives on less than $1 a day and three out of four earn $2 or less.

The rise in food prices, the government says, is an international phenomenon.
But this argument is unlikely to cut much ice with the people.
At the crux of the crisis is the tardy pace at which farm output has been growing in recent years.
The Indian economy has been growing rapidly at an average of 8.5% over the last five years.
This growth has been mainly confined to manufacturing industry and the burgeoning services sector. Agriculture, on the other hand, has grown by barely 2.5% over the last five years and the trend rate of growth is even lower if the past decade and a half is considered.

Consequ-ently, per capita output of cereals (wheat and rice) at present is more or less at the level that prevailed in the 1970s.
The problem acquires a serious dimension since farming provides livelihood to around 60% of India’s 1.1 billion people even though farm produce comprises only 18% of the country’s current gross domestic product (GDP).
On the other hand, the services sector - that includes the fast-growing computer software and business process outsourcing industries - constitutes over 55% of GDP with the remainder being taken up by industry.
The crisis in farms is exemplified by the state of the country’s cereal stocks.

Six years ago, the stocks were at record levels.
Nobel laureate economist Amartya Sen had said if all the bags of wheat and rice with the state-owned Food Corpora-tion of India were placed end to end, they would go all the way to the moon and back.
Stocks have come down over the past three years because of low production and exports.
The problem has been compounded by the fact that whenever India has imported wheat in recent months, world prices of wheat have shot up.

There is also considerable resentment over the fact that the price of wheat that the government imports is often twice as high as the minimum price the government pay its own farmers for domestically grown wheat.
Indian farmers are particularly vulnerable since 60% per cent of the country’s total cropped area is not irrigated.
They are also dependent on the four-month-long monsoon during which period 80% of the year’s total rainfall takes place.
The crisis in agriculture has been manifest in the growing incidence of farmers taking their own lives.
At least 10,000 farmers have committed suicide each year over the last decade because of their inability of repay loans taken at usurious rates of interest from local moneylenders.
There has never been an acute shortage of food in India, not even during the infamous famine in Bengal in 1943 in which more than 1.5 million people are estimated to have died of starvation.
The problem then - and now - is entitlement or access to food at affordable prices.
Given the low purchasing power of India’s poor, even a small increase in food prices contributes to a sharp fall in real incomes.

The current crisis in Indian agriculture is a consequence of many factors - low rise in farm productivity, unremunerative prices for cultivators, poor food storage facilities resulting in high levels of wastage.
Fragmentation of land holdings and a fall in public investments in rural areas, especially in irrigation facilities, are also to blame.

The government has announced a $15bn waiver of farmer loans and extended a jobs scheme - ensuring 100 days of work in a year entailing manual labour to every family demanding such work at the official minimum wage - to all over the country.
Asian countries have been struggling to cope as the cost of rice has reached record levels.

The price of the staple crop has risen by as much as 70% during the last year, according to the UN Food and Agriculture Organisation (FAO).
Shortages have begun to hit some importing countries.
Factors contributing to the price rise include:
Poor harvests resulting from extreme weather
A rise in demand in some rice-importing countries, where populations and incomes are growing
The expectation of further price increases - resulting in hoarding
Low stockpiles and a long term lack of agricultural investment
The spike is also part of a general surge in food costs worldwide, so the option of switching to cheaper foods is often not available.

Producers including India, China and Vietnam have restricted exports as they try to protect their stocks and limit inflation.
Importers such as Bangladesh, the Philippines, and Afghanistan have been hit hard.
India is the second largest rice grower in the world behind China. With rice the staple food for 65% of the country’s one billion plus people, much is consumed domestically.

But prices have been soaring - a shopkeeper in Delhi told the BBC that the cost of one variety had increased by a third in the last two months, rising from 12 rupees (29 US cents) per kilogram to 16 rupees (39 cents).
The price of most other varieties, including long-grained aromatic basmati rice, has gone up by eight-to-10 rupees a kilo, he said.

The government has announced a total ban on exports of non-basmati rice, in a bit to curb rising food prices, which have helped push inflation to a 13-month high.

The price for basmati rice, meanwhile, has been raised to $1,200 per tonne to discourage exports.
Officials say as yet there is no crisis - India has more than enough reserves to feed its population.

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