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Government’s Role in Controlling Food Inflation

In: Analytical Issues in Trade, Development and Finance

Author

Listed:
  • Hiranya Lahiri

    (Jadavpur University)

  • Ambar Nath Ghosh

    (Jadavpur University)

Abstract

In India, the major driver of recent food inflation has been vegetables, pulses, and oilseeds for which there is no public procurement. This chapter aims to model the behavior of big retailers or middlemen who hoard such perishable commodities and add to food inflation by creating artificial shortages due to speculative hoarding. The chapter shows the adverse impact of speculative buffering on average price. Lastly, the chapter argues that the import of food items will help to reduce inflation not only by bridging the supply gap but also by reducing speculative buffering. Further, the chapter also shows how the operation of the Public Distribution System (PDS) will not only bring down food inflation in the case of a supply shock but also regulate the behavior of middlemen.

Suggested Citation

  • Hiranya Lahiri & Ambar Nath Ghosh, 2014. "Government’s Role in Controlling Food Inflation," India Studies in Business and Economics, in: Ambar Nath Ghosh & Asim K. Karmakar (ed.), Analytical Issues in Trade, Development and Finance, edition 127, chapter 16, pages 251-271, Springer.
    • Handle: RePEc:spr:isbchp:978-81-322-1650-6_16
    DOI: 10.1007/978-81-322-1650-6_16
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    Cited by:

    1. Bhattacharya, Rudrani & Chowdhury, Sabarni, 2021. "How effective is e-NAM in integrating food commodity prices in India? Evidence from Onion Market," Working Papers 21/336, National Institute of Public Finance and Policy.

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