Wednesday, July 7, 2010

Why we need the Food Security Bill? Part1

A more compelling argument in favor of food security bill, all in numbers:

High food inflation led to higher than proportionate increase in food expenditure (assuming constant consumption), leaving lesser income for other expenditure
Total expenditure increased by ~11%, food expenditure increased by 16% and other expenditure only by 8%:

The table shows lower increase in non-essential expenditure in FY10 due to high food prices:

* Food expenditure growth assumption: constant quantity; expenditure increased by increase in prices (Food articles inflation = 14.6%) and population increase = 1.4%


In FY10 consumption of all commodities other than food may not have necessarily fallen given fall in prices and excise cut. However, going forward, a large rise in food prices would entail a larger than proportionate increase in food expenditure rendering the poor poorer.

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