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UPSC 2024 GS-III · 10 marks · 150 words

What are the causes of persistent high food inflation in India? Comment on the effectiveness of the monetary policy of the RBI to control this type of inflation.

भारत में खाद्य मुद्रास्फीति के निरंतर उच्च बने रहने के क्या कारण हैं? इस प्रकार की मुद्रास्फीति को नियंत्रित करने में आरबीआई की मौद्रिक नीति की प्रभावशीलता पर टिप्पणी कीजिए।

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  • Causes: supply shocks (monsoon variability, El Niño 2023-24), protein-vegetable demand shift, fragmented cold chains and ~6-15% post-harvest losses, MSP-procurement cereal bias, global price pass-through (edible oils)
  • Evidence: food inflation ~8-10% through 2024 while core fell below 4%; TOP vegetables' volatility
  • Monetary policy limits: repo rate cannot grow onions — food is supply-driven and interest-inelastic; RBI's own bulletins concede this
  • What it can do: anchor second-round effects and expectations (flexible inflation targeting, 4±2%); household inflation-expectation surveys
  • Effective mix: buffer-stock operations, trade-policy calibration, cold-chain investment — fiscal-supply tools beside the MPC

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