India has experienced persistent and high food inflation in the recent past. What could be the reasons?
1. Due to a gradual switchover to the cultivation of commercial crops, the area under the cultivation of food grains has steadily decreased in the last five years by about 30%.
2. As a consequence of increasing incomes, the consumption patterns of the people have undergone a significant change.
3. The food supply chain has structural constraints.
Which of the statements given above are correct?
Correct Answer: Option B
Explanation
1. Statement 1 is likely incorrect: While there might have been shifts towards commercial crops, a claim that the area under the cultivation of food grains has steadily decreased by as much as 30% in the last five years (prior to 2011) is generally considered inaccurate and too drastic. Such a large decrease is not supported by typical agricultural data for that period.
2. Statement 2 is correct: India has witnessed increasing incomes, leading to a significant change in the consumption patterns of its people. There's been a diversification away from basic cereals towards higher-value foods like fruits, vegetables, dairy products, eggs, and meat, which increases demand for these items and can contribute significantly to overall food inflation.
3. Statement 3 is correct: The food supply chain in India is known to have several structural constraints. These include inadequate storage infrastructure (especially cold storage), lack of efficient transportation, fragmented markets, multiple intermediaries, and handling losses, all of which contribute to inefficiencies, wastage, and higher prices, thus fueling persistent and high food inflation.
Therefore, the plausible reasons are changes in consumption patterns due to rising incomes and structural constraints in the food supply chain.
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