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‘State spending can spur food production'

Special Correspondent

Per capita food grain absorption in India on the decline: Patnaik

State Planning Board vice-chairman Prabhat Patnaik seeks more focus on food problem

THIRUVANANTHAPURAM: State Planning Board Vice-Chairman Prabhat Patnaik has said that larger State expenditure, financed by enlarged fiscal deficits, would be inevitable for generating higher demand for food grains and higher food production.

Delivering the P.K. Gopalakrishnan memorial lecture on world food crisis, organised as part of the Kerala Science Congress, here on Sunday, Prof. Patnaik pointed out that neither the seriousness of the world food problem nor the intimate relationship between the world food problem and the world financial arrangements had received the attention it deserved.

Over the last two decades, there had been an absolute decline in the per capita cereal output for the world as a whole. For the period 1980-85, the average annual per capita world cereal output, according to the Food and Agriculture Organisation (FAO), was 335 kg. This declined to 310 for 2000-05. This decline in per capita output was certainly accompanied by a decline in world per capita consumption, which meant that the world, on an average, is hungrier today than it was two decades ago.

Focusing specifically on India and China, he pointed out that the per capita food grain absorption in India was on the decline currently as compared to the late 1980s and that even in the case of China, per capita absorption of cereals for food and feed had shown a steady and sharp decline between 1996 and 2003. This had got reversed thereafter, but the level in 2005 was still lower than that in 1996. Given the decline in the rate of growth of population in both these economies, the reason for lower food grain absorption per capita must lie in an even more rapid decline in the rate of growth of the supply of food grains.

The very process of undertaking expenditures for increasing food grain production, which would have to focus on Third World countries, would put purchasing power in the Third World countryside. Even if only a part of the enlarged world fiscal deficit was devoted to expenditures for increasing world food grains production, the process of recovery from the crisis would simultaneously entail larger food grain production. There would be a time-lag between the expenditure devoted to increasing food production and the actual increase, during which there may be food price inflation, but as world food grain stocks were fairly comfortable at the moment, such inflation could be kept in check.

It was not often recognised that ‘income deflation' played a role similar to inflation in compressing demand. The primary means of income deflation in the era of globalisation — with respect to Third World economies — were relative reduction in the scale of government expenditure, the destruction of domestic productive activities under the impact of global competition and long-term shift in the terms of trade against petty producers of primary commodities, particularly the peasantry. The most disturbing aspect of income deflation was that, unlike profit inflation, which created an incentive to increase output, it did not have a supply augmenting effect, which invariably resulted in lower food production and absorption, he said.

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