PRICE MOVEMENTS FOR RICE AND WHEAT - A STRUCTURALIST POLICY PERSPECTIVE

Gopakumar K.U. and V. Pandit
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Gopakumar K.U.: Sri Sathya Sai Institute of Higher Learning
V. Pandit: Sri Sathya Sai Institute of Higher Learning

No 240, Working papers from Centre for Development Economics, Delhi School of Economics

Abstract: Persistent increase in food prices and its impact on society and economy have been of prime concern for the government and its policy makers in India since 2005-06. Though these rates have eased to some extent in the recent months; with expected recovery of the economy and inherent supply bottle necks, the problem of inflation remains serious. This paper examines the price movements in rice and wheat, following structuralist principles emphasizing the necessity of long term solutions in combination with short and medium term management. However, unlike completely free systems, markets for these products are characterized by government interventions, calling for a slightly different approach under which interactions of demand and supply need to incorporate government interventions by way of minimum support price and procurement. The sample for this study consists of the period, 1980-81 through 2011-12 on an annual basis. Our results confirm strong impact of demand and supply factors in determining inflation for both the products. These include the role of government interventions as well as public investment in agriculture in ensuring price stability.

Keywords: Food grain inflation; demand and supply management; procurement; minimum support prices; capital stock. (search for similar items in EconPapers)
JEL-codes: C3 E31 Q11 Q18 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2014-12
New Economics Papers: this item is included in nep-agr, nep-mac and nep-pke
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Citations: View citations in EconPapers (1)

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