Is India’s food inflation being measured correctly? EAC-PM member Nilesh Shah weighs in
Nilesh Shah, managing director and CEO of Kotak Mutual Fund, shared his views on the complexities surrounding food inflation and its role in economic policy during a recent event. Shah, also a part-time member of the Economic Advisory Council to the Prime Minister, questioned the way food inflation is being calculated and included in policymaking.
Shah raised concerns about whether the free food distributed to over 80 crore Indians under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) is accounted for when measuring food inflation. The program, which provides free or subsidised food grains to a vast segment of the population, could impact the headline food inflation number, Shah suggested. «My only submission will be are we measuring food inflation correctly? For example, 80 crore Indians are provided free food. That cost is more than our fiscal deficit. Is the credit taken in food inflation?» said Shah while speaking at a Kotak MF event.
The Complex Issue of Food Inflation
Shah explained that the issue of food inflation is not straightforward and requires further scrutiny. He emphasised that the provision of free food could result in a lower inflation figure, which might not reflect the actual impact on households. While the government’s effort to provide free food to the poor is crucial, Shah questioned whether this is properly factored into the inflation data used for policymaking.
While the Economic Advisory Council (EAC-PM) has not yet deliberated on this matter, Shah’s comments are in line with ongoing
