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Agri Buzz: Food Inflation And Volatility In Prices Remains High In India Says RBI Research Paper

Agri Buzz: Food Inflation And Volatility In Prices Remains High In India Says RBI Research Paper

January 18, 2022 3:31 IST | capital market

A RBI research paper states that Indian agriculture scaled new heights with record production of various foodgrains, commercial and horticultural crops, exhibiting resilience and ensuring food security during the COVID period. The sector, however, confronted various challenges, mitigation of which requires a holistic policy approach. For instance, crop productivity in India is much lower than other advanced and emerging market economies due to various factors, viz., fragmented landholdings, lower farm mechanisation and lower public and private investment in agriculture.

The current over-production of crops like rice, wheat and sugarcane, has led to rapid depletion of ground water table, soil-degradation and massive air pollution raising questions about environmental sustainability of current agricultural practices in India. Further, despite surplus production in many of the commodities, food inflation and volatility in prices continue to remain high causing inconvenience to consumers and low and fluctuating income for farmers. The RBI paper reveals that supply side hindrances like low public investments, inadequate cold storage capacity, and nascent food processing industry are partly responsible for volatility in food prices in India.

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