Government’s Role in Controlling Food Inflation

Hiranya Lahiri () and Ambar Nath Ghosh ()
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Hiranya Lahiri: Jadavpur University
Ambar Nath Ghosh: Jadavpur University

Chapter 16 in Analytical Issues in Trade, Development and Finance, 2014, pp 251-271 from Springer

Abstract: 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.

Keywords: Food inflation; Buffering; Open-market sale (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1007/978-81-322-1650-6_16

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