Food for thought.

"The Finance Ministry on Tuesday (yesterday) said the combination of rapid reversal of rate hike expectations in the US, the slide in the 10-year US Treasury yield and the decline in oil prices is 'good news' for India," "But downside risks from price pressure still persist, keeping both the Indian government and the central bank on high alert." ET. Increasing consumption is driving manufacturing and services growth, Central government will achieve its fiscal deficit target of 5.9% of GDP, declining unemployment and the wealth effect from rising real estate prices will propel growth of the economy. The yield on US 10-year Treasury may have dropped to 4.418% after rising to nearly 5% (CNBC), but the yield on 10-year government bonds in India is 7.260%. Investing.com. "After hitting a near three-year high last week, the average cost on states' borrowing has eased a tad in this week's auction by 4 bps (0,04%) to 7.67% amid lower-than-indicated issuance." ET. Clearly, bond dealers expect inflation to remain high in the longer term. "Male workers in India saw wages increase by 7.2% on average in 2022 compared with 7% for women," while "Globally, the paycheck increase was 6.7% on average compared with 6% for women." ET. Although, global factors, corporate pricing and core inflation affect consumer price index (CPI) inflation, the prices of agricultural goods are most important in India, wrote Prof Pulapre Balakrishnan & M Parameswaran. "The results indicate that the relative price of agriculture not only has the greatest impact on inflation, it is close to six times that of the real repo rate. That implies that while the real repo rate matters for inflation, monetary policy cannot control it in the presence of an increase in relative prices."  The solution is to increase food production. But how? India's population is predicted to peak at 1.6 billion by 2048, following which it will decline to 1.09 billion by 2100. HT. The total area of arable land in India is fixed at 18 million hectares. pib.gov.in. A burgeoning population, erratic weather due to climate change, and increased demand on land from industries and residential housing can only help in raising prices of agricultural products. "Food inflation is making a comeback in the Indian economy, primarily driven by higher vegetable and food grain inflation during the September quarter, says a new Crisil report." ET. "Drought-like conditions in Maharashtra could squeeze the supply of key kitchen staples such as onions, pulses, sugar, and fruits and vegetables, pushing up their prices and threatening an inflationary spike." "Reservoir  levels in the state are currently 20% lower than they were last year at this time with the rain having been patchy." ET. If the government and the RBI do nothing to bring prices down in the weird belief that uncontrolled inflation leads to increased growth, people will demand more money to manage their budgets. "Voters have learnt to look for jam today, not jam tomorrow, and seem to choose parties that offer the most generous packages - which encourages a rush to raid the treasury. The Print. They can keep washing their hands, but they will be solely responsible for the suffering of people. No excuses then.