ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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India's Foodgrain Policy: An Economic Theory Perspective

The simultaneous occurrence of high food inflation and large foodgrain stocks in our granaries has been a matter of concern. The aim of this paper is to understand the fundamentals of our foodgrain market and policy that lead to this situation and to suggest policies for rectifying this. The central argument of the paper is that it is imperative that we look at the entire system of food production, food procurement and the release and distribution of food. Trying to correct one segment of this complicated system is likely to end in failure. The paper argues that there are two different motives for foodgrain procurement by the state - to provide food security to the vulnerable and to even out foodgrain price fluctuations from one year to another. Further, how we procure the food has an impact on how we release the food, and vice versa. Inspired by the sight of foodgrain going waste, it is often made out to be that our central problem is that of poor foodgrain storage. This paper disagrees with this popular view. While we no doubt should improve our storage facilities, it is important to be clear that this in itself will not lower the price of food. To achieve that we need to redesign the mechanics of how we acquire and release food on the market.



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