Diagnosing and overcoming sustained food price volatility: Enabling a National Market for Food
Publication dateJul, 2018
DetailsNIPFP Working Paper No. 236
AuthorsAnirudh Burman, Ila Patnaik, Shubho Roy and Ajay Shah
The agricultural markets in India suffer from high price volatility. There may be an element of a Samuelson Cobweb Model at work, which generates a cycle of boom and bust. When food prices are high, consumers protest and in the years when food prices are low, farmers are in distress and demand loan waivers. Four policy pathways address the cobweb model: storage, national trade, international trade and futures trading. We argue that the Constitution imposes an obligation upon the Union government to achieve a national market. We work out an implementable set of steps through which the Union government can obtain a national market for agricultural produce.