Friday, April 11, 2008

A Lesson from China

Mr. Chidambaram and the CoS for price of commodities are still trying to fix the cause of the explosion in the WPI inflation which has touched its highest levels in the last three years. International price hike has been the culprit so long.
The international rise in prices of commodities is a contributor I agree. But don't we realise the the root cause is a simple supply - demand imbalance. Is it not the real truth that we have a serious imbalance of domestic supply of commodities? Is it not worrisome that after 60 years of independence and with dreams of being a superpower, we have still not done away with blaming the rain gods for crop failures?
Just to take a leaf out of China's story, which seems extremely buoyant and confident when the rest of the world is worried about the rice price hike, I present here an excerpt of what the Chinese Premier Wen Jiabao says. (Read :Who is afraid of rice price rise, asks China )
“Please set your mind at rest because China has abundant supply of rice.....(Yes,) the recent 30 per cent jump in international rice prices did have an impact on China’s food prices but the country is largely self-dependent for rice. ...The volume of rice traded on the world markets is less than a tenth of that in the Chinese market. The central government has taken a series of measures to promote agricultural production such as raising farm subsidies, constructing irrigation works, and popularising the use of science and technology. China is capable of feeding itself with its own rice production.”
India sure has a lesson to learn here from its closest rival. Only a domestic abundance of supply can be a permanent solution to inflation. We sure should start working towards this long term goal.

1 comment:

Sita said...

We should also try to be self sufficient in those commodities and goods which are our strengths-rice and sugarcane for instance.That is the only way we can stand strong, without succumbing to this deadly inflation.

We should learn from China and Japan in many aspects.