- supply constraints that are structural, but have triggered monetary responses leading to reduced consumer spending and dampened business investment, slowing GDP growth to 7.9 per cent in April-June 2008 (perhaps heading as low as 7 per cent for 2008-09?),
- the shoddy and worsening state of our roads and highways, despite considerable effort and vast expenditure, or
- the misrepresentation by naysayers of nuclear power as an adjunct to other methods of power generation.
I’ll address aspects of the first issue below, and the others subsequently.
Food Supply & Demand
Repressed Food Prices
Policies From A Solutions Mindset
Additionally, as a consequence of inflation in the market price of food grains, oil and metals, the government has adopted a policy stance to slow the economy to repress demand. This actually results in depriving some people of food, i.e. the effect is the opposite of what the policies should be aiming for in the case of food.
The answer, therefore, lies elsewhere: in (a) addressing supply, while (b) providing price relief for food to those who need it, whether by directed subsidies to some consumers depending on their needs, or even in combination with general subsidies (limited pass throughs). Above all, we have to try to figure out and do whatever needs doing to increase supply — with research, applied research, effective extension in the field including better practices, organising the logistics, i.e. better facilities for transport and storage/warehousing, the pricing of farm-to-market and to poorer consumers. Along with this, there is also the need to organise timely and appropriately designed and delivered credit, insurance and inputs.
Given the shortfall, we may have to actively pursue augmenting domestic production by making strategic investments, as in the case of oil, with buy-back arrangements from abroad, e.g. Myanmar for pulses, Canada for wheat and edible oil.