The recent increase in support price of key crops for the forthcoming agriculture season will help in controlling inflation. It looks the BJP Government has not been able cope up with price rise as promised ahead of Parliamentary polls to bring down the prices of essential goods. The quantum of increase as announced by the Centre is in sync with the monetary policy which should give some respite and space for the Govt on price front. The decaying public distribution system or the ration depot operations should be done with some better food grain distribution management. Poor management was responsible for cereal inflation during UPA II, a period when surplus food production and overflowing granary could not check the rising prices. Some of the evasive steps did bring relief but could not sustain in the long run and the short term gains were overtaken by the rising prices once again. The trend prevailing at present is that there is an uptrend in the prices of vegetables. Govt needs to come out with effective long term measures and an Agri policy which can withstand the beatings of market forces. Traditionally farmer is under the debt taken from village financer because of the proximity and availability but the end result has been that most of the growers end up selling their produce to the financer at a lower price and the trader-financer nexus leads to hoarding of the gains thus creating a shortage in the market thereby increasing the prices which we experience everyday. It is also startling that the quantity of food grain damaged in the last two years stands at a staggering 40,000 tonnes due to poor storage and handling facilities. Despite so many financing avenues Govt has not been able to break this chain effect as food inflation has a domino effect and can undo the gains in strengthening the economic fundamentals.
