Wednesday, January 13, 2010

Price Rise - Steps to beat it

Yesterday, I had a discussion turn into arguement with a friend. His view was that the price rise was a global phenomenon and that I was being unfair to the government. He challenged me if I could think of some steps which can help beat price rise currently and on a longer run as well. So here I take up the challenge. I will humbly say that I am no economist and I am no expert on these matters. So whatever I am writing is based on my reading and some common sense having been in business.

Take strict urgent action against hoarders - MP government on 11th Jan cracked down heavily on hoarders. This crackdown yeilded nearly 10,000 crore worth of sugar. Same has been the case with Gujarat government. Both these governments have cracked down hard on hoarders and brought out in market a huge supply of essential items. Just imagine if all state governments can follow this. It could result in a huge amount of foodgrains, sugar, pulses being recovered and for market consumption.

Put a gag on Commodity Trading for some time - The trading in commodity market specially the future trading results in traders holding on to the food stock without releasing it for consumption. This creates an artificial scarcity and pushes the price up. While commodity trading is here to stay, one can surely put a temporary stop to it.

Ask the ministers to shut up - Our Minsiters, specially Mr. Sharad Pawar needs to be told to shut his mouth when it comes to food stocks in India. He passed a comment about India facing sugar shortage and next day the price of sugar in international market zooms up. He has to understand that with China and India being 2 major consumers in the world, any shortage in any of the country can push international rates up.

Improve food logistics - Why is it so tough for the government to have an efficient food logistic system? A network of cold storages and other warehouses with a good network of transport is enough to ensure that no area in the country faces food shortage. It's a shame that even after 6 decades of independence, we can provide food security to our people. Since this is a long term plan, immediately what can be done is to involve private players with warehouses, cold storages, transport facilities to ensure faster time to market.

These are just four basic steps that came to mind. There surely will be more like a more conservative approach to food exports, strengthening of PDS, bringing labour balance to NREGS so that argriculture labour is not made costly and is available. But all these need just 2 things - One is the will to really ensure that India actually grows and has no pockets of underdevelopment and second is to ensure a clean, unbiased approach to food and agriculture without lobby pressure and temptations. As of now, the government seems to lack both.

1 comment:

  1. It's a very good post to know the details. Really online future trading helps people to move forward the items such as food items to as it is a item which will get spoiled very soon. Online future trading helps people to know the changes in the market as and when it occurs and even people can purchase or sell the commodities then and there only.