Inflation, macroeconomic policy and hunger: a variation on a theme by C. Rangarajan

Vol: 
2010/22
Author name: 
Raghbendra Jha
Year: 
2010
Abstract: 

This paper re-emphasizes the importance of price stability as a tool for macroeconomic policy and make it more specific by considering a typically (unanticipated) advantage of stabilizing the Consumer Price Index (CPI). I briefly review the recent economic growth performance of the Indian economy and recount the sluggish response of poverty to high economic growth. Further, hunger (calorie deficiency) has actually increased during the post-reform period. Using household level National Sample Survey (NSS) data for 1993–94 and 2004–05 the paper shows that calorie intakes in both rural and urban areas are sensitive to commodity (in particular foodgrain) prices. Hence, reducing consumer price inflation is likely to yield a rich dividend by reducing hunger. Indeed rising per capita incomes are not likely to be sufficient to reduce hunger. The paper also reviews some policy challenges to stabilizing consumer prices.

Publication file: 

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