Question

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?

• A. 1 and 2
• B. 2 and 3
• C. 1 and 3
• D. 1,2 and 3

Answer 1

The correct option is B 2 and 3

There has been increase in production and productivity of the cereals. So the statement 1 is wrong.

Increasing incomes has led to changes in consumption patterns, there has been switch over to processed foods, milk and milk products and so on.This increase in demand for different products has led to increase in cost of high end products. Eg Organic products Structural constraints like cold chain infrastructure, transportation (rising fuel prices) etc increases the cost of supply contributing to inflation.