Agflation helps poor, says study

Monday, August 25, 2008

Studies conducted by economists at the Carnegie Endowment for International Peace (CEIP) have deduced that rising global food prices can actually help improve the conditions of the majority of the poor and alleviate poverty in the country.

Ms Sandra Polaski, senior associate and director at the CEIP pointed out that analysis of data collected through surveys by the Indian government of over 2.5 lakh poor families had shown striking correlation between increasing global food prices and improved conditions of the poor, especially the rural poor.

The general equilibrium model used by CEIP to simulate the impact of different prices by using the data available through government surveys showed that a 50 per cent increase in rice prices was found to increase the real income of the poorest 30 per cent of the rural population from four to seven per cent.

The poorest 30 per cent in the cities too were found to be benefited, though to a lesser extent by a price increase in paddy.

“The poorest 30 per cent of the population which comprises mainly of SC, ST and OBCs benefits the most by any rise in the price of India?s largest crop ? rice. The rural population gets a direct benefit in the form of increased returns and increased daily wages,” said Ms Polaski.

Any reduction in the prices of paddy on the other hand were found to severely impact the incomes of this poorest 30 per cent.

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Source: Howrah News Service (link opens in a new window)