The reason always cannot be assigned to a political ploy or to a demand and supply discrepancy but whatever it is, common people are the most affected.

One never tires of finding a government connect in the rising food prices terming it a political pork barrel even though there could be an error of odds of a demand and supply curve or some other reason as well. It doesn’t matter who takes the accountability but what matters is that millions of people bear the brunt especially when it happens in a country like India, the second fastest economy in the developing world. Well, at such a time, all that we can do is rethink and reconsider changes in our life style to get control of food prices, otherwise we will be ruled by the basic business economics of profit wherein we will get adulterated milk, low protein vegetable and cheap food grains.

Indian wholesale price index is formatted on the output of cultivated crop and production from mills registered in the books of government run economic statistics departments. Insufficient data that does not take considerations of farmers and mills that don’t register their growth or give fake reports and add to that wastages and losses due to preservation and transportation. This will make upto 35 % of the total cost. So what is the basic formula to have real wholesale price indications where we have no control on numbers and stocks?

Indian business economics of food prices should be kept out of the mindset of political economists to get better result; practically business economics can only save this high rate of inflation. Take example of mobile talk time price war that took place sometime back. Though food prices are not technologically driven but still India has immense cheap manpower that can change into technology. Sounds optimistic, does it? But it is true and has been done already in Germany by increasing the size of usual cultivation land, less taxation and low transport cost for food items. Let’s make this formula simple; China also did it with toys and battery operated light bulbs and fans.

Coming back to the subject, Indian food cultivation, processing, warehousing and distribution system has been messed up so many times that left with no choice, we have to now follow the basic rules-To produce in large numbers with increased manpower and technology to lower production cost. Warehouse properly and distribute largely.

When we take price hike in simple terms, we can find it’s easy solutions, especially where food grains, fresh vegetables and milk are concerned. Demand and supply curve decide the price; moreover, it also depends to a large extent on a particular location or country. Theories can be formulated in a country where policies are needed to be mended and implemented in real terms and which is above public distribution system. So bureaucracy, policy and availability affects much more than demand and supply in our nation. Preservation, storage, transportation and distribution are the problems in a country like ours, where we still need to get our data checked for WHOLESALE PRICE INDEX and inflation calculations. Debating advisors and economists only aggravate the problems when we  can simply do with a simple formula of more tax relief and subsidy to all food item’s supply and distribution. Reality is that we have more fertile land than other nations in the world but we cannot produce and preserve our food grains and vegetables for normal human consumption.

When distribution and retailing of fresh food grains, milk and vegetables are not done with new advanced technology and strategically, 20 to 35% of all perishable items get damaged in warehousing and transportation. Transportation cost is very high so we have to get it subsidized and organized.

Repeatedly, I mention that retailing is an art in business, whether you are selling a Porsche or a bank deposit scheme or a toilet soap. Placement of products and availability of products or services to make it saleable is a process of retailing, which originated from wholesale. Here, theories and tabulation of statistics work simply if followed in MS excel sheets.

Take simple example of west where most of the countries levy less transport cost for transportation of food items and products meant for basic need rather than on the demand of normal citizen of a particular nation. Public distribution system PDS, failed almost every time it was made in 63 years of Indian independence. We must not forget that change incorporated without a proper follow up will always fail.

Another category, single malt is more hit by inflation. These days, there is availability and flexibility of buying from market and bars. Red wine, single malt whisky, mozzarella, parmesan cheese and beer sell like hot cakes showing a growth of 25% annually on records (I am sure, off records it must be 40%).

So what has inflation done to these products? We should learn from this through social economics and not through business economics. We cannot increase prices of food items as on items of luxury addictive drinks and food. Food is a necessity for human race; Indians need a bigger reservoir of more protein rich food items for the coming generation.