India has experienced persistent and high food inflation in the recent past. What could be the reason? 1. Due to a gradual switchover to the cultivation of commercial crops, the area under 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?

QUESTION

Medium

Economy

Prelims 2011

India has experienced persistent and high food inflation in the recent past. What could be the reason?

Due to a gradual switchover to the cultivation of commercial crops, the area under cultivation of food grains has steadily decreased in the last five years by about 30%.
As a consequence of increasing incomes, the consumption patterns of the people have undergone a significant change.
The food supply chain has structural constraints.

Which of the statements given above are correct?

Select an option to attempt

Explanation

While a shift towards commercial crops impacts the production of food grains, causing a potential decrease in supply, 30% decrease seems exaggerated and not reflective of actual trends. Therefore, statement 1 is not correct.

With rising incomes, the demand for high-value food items like fruits, vegetables, dairy, and meat has increased, outpacing the supply growth and contributing to food inflation. Therefore, statement 2 is correct.

The food supply chain in India has structural constraints, which can lead to inefficiencies in the distribution of food products. These inefficiencies can cause an increase in food prices, thereby contributing to food inflation. Therefore, statement 3 is correct.

Therefore, only statements 2 and 3 are correct.

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