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.

(1) Seasonality of crops & lack of cold storage infrastructure & perishability. Eg: Tomato price fluctuation (2) Decreased productivity of crop due to failure of monsoon, climate shocks. Eg: Rise in wheat price due to failure of Rabi rain (3) Increased hoarding & its release during period of shortage Eg: Onion price rise. (4) Global shocks & Disruptions. Eg: Ukraine-Russia war inflated vegetable oil price. (5) Huge import dependence of oil (>60%)

Impact on vulnerable sections:

(1) Decreased purchasing power of vulnerables reduces 3A's

(2) Resorting to other source of food with less nutrition -> Brings malnutrition -> Impacts productivity

(3) Increases Hunger & malnutrition especially among women & children.

(4) Psychological impact affecting socio-economic developments - learning outcomes, etc.

Challenges in controlling inflation:

(1) Improper implementation of government schemes like Essential Commodities Act, 1955, etc.

(2) No control over the climate related risks impacting productivity of crop.

(3) Absence of efficient policy framework to counter food inflation in India.

(4) Lack of cold storage facilities with small & marginal farmers - facilitates hoarding by middle men.