Inflation in India is due to combination of the factors – structural and less monetary. Structural ◦ High commodity(Pulses, rice, milk, egg and fish etc)price, fuel price hike. ◦ Change in Economic Structure (change in structure of economies as happened in India from Agricultural Structure to Industrialization to Services• Monetary ◦ Government regulation to maintain economic growth during slow down.
Highest Inflation rate 34.68 % in September of 1974 Lowest Inflation rate -11.31% in May 1976 Current Inflation rate in India is 7.78%. In this food price index rose to7.78 and fuel price index climbed to 12.84% (as on 30th June 2011)
Rising per capita consumption of food In 2002-03 the Per Capita Income in India was Rs 19040. In2004-05 the Per Capita Income in India was Rs 23241. In2009-10 the Per Capita Income in India was Rs 46492. Food inflation rises due to poor agricultural output Spike in the crude oil prices
Organized retail can charge lower food prices because: ◦ (1) Economies of scale in procurement (mass buying from suppliers) ◦ (2) Economies of scale in handling and logistics such as via modernized distribution centers. ◦ (3) Build regional and global food procurement networks to reduce costs, de-seasonalise offerings, and increase product diversity. The profit realization for farmers selling directly to organized retailers is about 60 per cent higher than that he would have received otherwise. The ill-practice of auctioning at the mandis will stop.