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High prices leave April 26: High prices leave us all feeling a little poorer, but the high food prices of recent months may have pushed millions of Indians into poverty again. The Asian Development bank (ADB) says that a 10 per cent increase in food prices can send 30 million Indians — almost three fourths of them from rural areas — into poverty.
“A 10 per cent rise in domestic food prices in developing Asia (home to 3.3 billion people) could push an additional 64.4 million into poverty, or lead to a 1.9 percentage point

increase in poverty incidence based on the $1.25-aday poverty line,” said the ‘Global Food Price Inflation and Developing Asia’report by ADB.
Domestic food inflation in many regional economies in Asia has averaged 10 per cent in early 2011. In India food inflation was at 8.3 per cent for the week ending on 2 April. Economists don’t see inflation falling to 5 per cent in the next few months.

Food inflation in India had shot up to 17.05 per cent for the week ended on January 22, due to high onion prices. The report estimates that in case food prices rise by 20 per cent in India the number of poor in rural area

could rise by 45.6 million and in the urban by 13.36 million. It says that inflation erodes the purchasing power of households, especially those with low incomes, and can undermine poverty reduction development gains achieved in the last decade.
“Many who were poor before the price rise may now be on the verge of malnutrition, and those who were barely above the poverty line may have slipped back into poverty.

In this context, it is important to examine the impact of rising food prices on poverty,” the report said.

In many of the poorer households, up to 60 percent of the income is spent on purchasing food, and high food prices may result in reduced consumption or consumption of lower quality foodstuffs. Demand for food from emerging markets continues to rise as their economies continue to grow. The rapidly dwindling world food stock position will not support such demand over the long term unless sustainable food production and supply-augmenting measures are implemented on a war footing, says ADB. The report indicated that India is trying to fight food inflation by tightening monetary policies such actions are unlikely to succeed.


Credits: DC Chennai