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Indian Express

14-October-2023

1) Cost of Dal-Roti

Context:

  • Food inflation has recently been primarily contained to cereals and pulses, and consumer food prices have increased by 9.9% year over year.
  • The article highlights how the Reserve Bank of India and the government are concerned about growing food costs in India, notably for cereals and pulses, especially in light of impending elections.

What is the issue with inflation in India?

  • Rising food prices: Food costs are rising, with a rise of 9.9% year over year in August in India. Important commodities like cereals have increased by 11.9% and pulses by 13% over the same time frame.
  • Vegetable Price Fluctuations: Price fluctuations for vegetables were particularly substantial, with tomatoes experiencing a 202.1% dramatic increase in price in July. Tomato costs, which were formerly Rs 130 per kg, have since dropped to Rs 20 per kg.
  • General Retail Inflation: The overall rate of retail inflation is significantly greater than the 6% tolerance level. Given that there will be elections in the country in six months, this increase in inflation is very worrying.

Consumer Food Price Inflation (CFPI): What Is It?

  • A specialized measure of inflation known as the Consumer Food Price Index (CFPI) focuses solely on the changes in prices of food items in a consumer’s basket of goods and services.
  • It determines the rate of inflation in the cost of the typical household’s food purchases over time.
  • The Consumer Food Price Index (CFPI) is a component of the larger Consumer Price Index (CPI), and for this reason, the Reserve Bank of India (RBI) utilizes the CPI-Combined (CPI-C).
  • The CFPI monitors changes in the cost of a certain basket of foods that are often consumed by households, including cereals, vegetables, fruits, dairy goods, meat, and other basic foods.

What are the Causes Behind Food Price Inflation?

  • Imbalances in supply and demand: Prices typically increase when there is a discrepancy between the supply and demand of food. Extreme weather conditions, crop failures, and pest infestations can all result in decreased agricultural product supply and higher costs. On the other hand, if supply cannot keep up with increased demand, which may be brought on by changes in consumer tastes or population expansion, prices may also rise.
  • Costs of Production: Farmers’ rising production costs may result in increased food prices. This covers costs for things like fuel, fertilizer, and labor.
  • Energy Costs: The price of energy, particularly fuel, plays a big role in the food supply chain. Higher transportation costs for moving food products from fields to stores can result in higher pricing for consumers if oil prices rise.
  • Currency rates: Especially for nations that rely largely on imported food, changes in currency rates can have an impact on food prices. Food import costs might increase due to a weaker home currency, which causes inflation.
  • Trade Policies: Tariffs and trade policies can have an impact on the cost of both imported and domestically produced food. Import restrictions may reduce the variety of accessible food goods and possibly increase prices.
  • Government Policies: Subsidies, price controls, and regulations are a few examples of government interventions that might affect food prices. While price regulations can prevent price hikes, subsidies may lower production costs.
  • Global Events: Global occurrences like pandemics, geopolitical wars, and trade snarls can wreak havoc on food supply networks and drive up food prices. For instance, the COVID-19 epidemic affected food delivery and production all across the world.
  • Climate Change: The production of food can be significantly impacted by long-term changes in climate patterns. Droughts and floods, which occur more frequently and with greater severity, can harm crops and lower harvests, raising costs.

Way Forward:

  • Increase in Agricultural Productivity: Invest in agricultural research and technology to increase crop yields and livestock output to increase agricultural productivity. Encourage environmentally friendly farming methods to increase productivity and cut costs.
  • Strengthen food supply chains: By making investments in the infrastructure of transportation and storage to minimize food loss and spoiling.To make sure that food reaches consumers efficiently, improve distribution networks.
  • Promote global trade and market integration: To guarantee a consistent supply of food products, eliminate trade restrictions and tariffs on basic food supplies.
  • Promote Competition and Reduce Monopoly Power: Enforce antitrust laws to stop market concentration and price manipulation by large agribusinesses. To maintain competitive prices, promote competition in the food industry.
  • Due to political considerations that favor numerical strength, most governments have a natural tendency to favor consumers over producers.

2) India-Maldives Relations

Context:

  • Recently, President-elect Mohamed Muizzu led the “India Out” campaignand is thought to be too close to the Chinese government, which could cause alarm in India given that the two countries are geographically close, have similar security objectives, and share a common culture.
  • This article will discuss how both nations have been engaging with each other on different fronts and the challenges posed due to China’s interference.

Geography of Maldives:

  • Maldives has an area of 90,000 sq km that encompasses 99.6 per cent of the sea. The remaining land is distributed over more than 1,200 islands.
  • Coral Reefs and atolls make up the majority of the region’s physical topography, while Exclusive Economic Zones (EEZs) cover the majority of it.
  • The Maldives are predominantly an archipelago of low-lying islands, which have come under threat from sea level rise.
  • Indian Minicoy, which is a part of the Lakshadweep Islands, is separated from the Maldives by the Eight Degree Channel.

How have relations between India and the Maldives been?

Security Partnership:

  • Defense cooperation includes “Ekuverin,” “Dosti,” “Ekatha,” and “Operation Shield” (which started in 2021).
  • For the Maldivian National Defence Force (MNDF), India offers the most training possibilities, covering over 70% of their needs in this area.

Economic Cooperation:

  • The Maldivian economy is mostly driven by tourism. Some Indians now travel extensively to the nation, while others move there in search of employment.
  • The Greater Male Connectivity Project (GMCP), the largest-ever infrastructure project in the Maldives, was contracted to an Indian company named Afcons in August 2021.
  • In 2021, India became the Maldives’ third-largest trading partner.
  • On July 22, 2019, RBI and the Maldives Monetary Authority concluded a bilateral USD currency swap agreement.
  • When the Maldives signed a Free-Trade Agreement (FTA) with China in 2017, the relationship between India and the Maldives experienced a

About Greater Male Connectivity Project:

  • It will include a 6.74 km causeway and bridge connecting Male with the surrounding islands of Villingli, Gulhifalhu, and Thilafushi. It will make use of clean energy.
  • A grant of $100 million and a Line of Credit (LOC) of $400 million from India are used to support the project.
  • It is both the largest infrastructure project in the Maldives as a whole as well as the largest project that India is doing there.

Various operations in the Maldives:

  • Operation Cactus, 1988: The Indian Armed Forces assisted the Maldivian government in neutralizing the coup attempt during Operation Cactus.
  • In 2004, India helped with relief operations in the aftermath of
  • Operation Neer 2014: To address the Maldives’ drinking water shortage, India provided drinking water as part of Operation Neer.
  • Operation Sanjeevani: As part of Operation Sanjeevani, India provided 6.2 tonnes of vital medications to the Maldives to aid in the fight against COVID-19.

What is China’s Role in Relations Between India and the Maldives?

Investments in Chinese Infrastructure

  • Like many other nations in the Indian Ocean, China has made infrastructural investments in the Maldives.
  • Maldives has received significant Chinese investment and joined China’s Belt and Road Initiative (BRI).
  • As part of the “String of the Pearls” effort, China funded and constructed a number of projects in the Maldives, including the development of ports, airports, bridges, and other crucial infrastructure.

Shift in Alliances:

  • The Maldives’ conventional foreign policy, which had previously been more inclined towards India, changed as a result of the pro-China position.
  • India is concerned about the potential geopolitical repercussions of China’s expanding influence in its near area as a result of this change.

India’s Concerns:

  • China’s expanding influence in the Indian Ocean region, notably in nations like Sri Lanka, Pakistan, and the Maldives, has alarmed India.
  • India’s strategic interests and regional security have been viewed as being threatened by the expansion of Chinese-controlled ports and military infrastructure in these regions.

Strategic Importance:

  • The Maldives continues to be strategically important for both China and India due to its placement in the Indian Ocean along important maritime routes.
  • As a result, both nations will probably keep a close eye on events in the Maldives and compete for influence there.

Way Forward:

  • The internal political climate in the Maldives may cause ripples in India’s currently positive relationship with the nation if the concerns highlighted by the ‘India Out’ advocates are not handled correctly.
  • In keeping with its long-standing record of supporting a multipolar, rule-based world order with regard to its neighbors, India should take a conciliatory attitude.

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