Apologies for being critical, especially since I'm a big fan of the Daily Brief. Much of my understanding of finance and economics has come from following your work consistently, so this criticism comes from a place of respect rather than disagreement for its own sake.
That said, I found this particular article unsatisfying because it neither offers actionable insights nor, in my view, presents the complete picture. The article largely reflects the explanations provided by government institutions and policymakers, but it does not sufficiently question whether those explanations fully account for the persistence of food inflation.
For instance, the article emphasizes climate-related factors. While weather undoubtedly affects agricultural output, farmers have always operated under climatic uncertainty. Droughts, floods, delayed monsoons, and heatwaves are not new phenomena in Indian agriculture. Therefore, attributing a significant share of food inflation primarily to environmental factors risks overlooking other policy-driven contributors.
One such factor is fuel cost. Transportation, irrigation, fertilizer production, and the entire agricultural supply chain are heavily dependent on energy prices. Historically, periods of elevated fuel prices have often coincided with higher food inflation. Interestingly, as mentioned in the article itself, a reduction in fuel duties contributed to a meaningful decline in inflation. If a policy measure can reduce inflation by around 1.5 percentage points, it suggests that policymakers possess tools to influence price pressures more directly than the article acknowledges.
This raises a legitimate policy question: if such measures were available, why were they not deployed earlier or more aggressively when inflation was at its peak? Ignoring this question makes the discussion feel incomplete.
My broader concern is that the article seems to explain inflation rather than critically evaluate the policy choices that may have contributed to it. Economic journalism should certainly present the government's perspective, but it should also challenge official narratives and examine alternative interpretations. Otherwise, readers risk receiving explanations without adequate scrutiny.
A healthy debate should allow us to criticize policies without being accused of denying external factors. Climate matters, but policy decisions matter too, and both deserve equal examination.
Hey Dheeraj. Highly appreciate this comment, and you're right on certain counts. I'll try to answer this as best as I can.
I think getting into why fuel duties weren't cut earlier may require diving into the fiscal policies of the state. That wasn't something we could tackle within the length of this piece.
Another strand we genuinely could have gone deeper into is whether inflation targeting as a mechanism can ever be as effective as fiscal policies in dealing with crises. Widely, monetary policy is being scrutinized as a lever to control inflation and spur investment, and the RBI is not exempt from that. We should have taken more effort to do so.
That being said, this inflation period was specific to 2019-2024. Climate is being held as the primary driver for just these 5 years. Yes, you may indeed be right that certain policy factors may have been overlooked even then. But it is also true that 2023, the year both wheat and rice were disrupted, is well-known to be one of the worst, most volatile monsoons in all of Indian history. And I don't think one needs a state narrative to prove that. On that account, climate deserved most of the space here.
In that case, it didn't make a lot of sense to look at other policy drivers within the scope of this piece when climate was, by far, the biggest gaping hole that explained the majority of what was happening. And we usually tackle agri-policy issues in other TDB pieces. This one was almost wholly about the effectiveness of monetary policy - fuel duty cuts are a fiscal measure, not a central bank measure. But, as I said, we could have looked into the effectiveness of monetary policy as a whole deeper.
Apologies for being critical, especially since I'm a big fan of the Daily Brief. Much of my understanding of finance and economics has come from following your work consistently, so this criticism comes from a place of respect rather than disagreement for its own sake.
That said, I found this particular article unsatisfying because it neither offers actionable insights nor, in my view, presents the complete picture. The article largely reflects the explanations provided by government institutions and policymakers, but it does not sufficiently question whether those explanations fully account for the persistence of food inflation.
For instance, the article emphasizes climate-related factors. While weather undoubtedly affects agricultural output, farmers have always operated under climatic uncertainty. Droughts, floods, delayed monsoons, and heatwaves are not new phenomena in Indian agriculture. Therefore, attributing a significant share of food inflation primarily to environmental factors risks overlooking other policy-driven contributors.
One such factor is fuel cost. Transportation, irrigation, fertilizer production, and the entire agricultural supply chain are heavily dependent on energy prices. Historically, periods of elevated fuel prices have often coincided with higher food inflation. Interestingly, as mentioned in the article itself, a reduction in fuel duties contributed to a meaningful decline in inflation. If a policy measure can reduce inflation by around 1.5 percentage points, it suggests that policymakers possess tools to influence price pressures more directly than the article acknowledges.
This raises a legitimate policy question: if such measures were available, why were they not deployed earlier or more aggressively when inflation was at its peak? Ignoring this question makes the discussion feel incomplete.
My broader concern is that the article seems to explain inflation rather than critically evaluate the policy choices that may have contributed to it. Economic journalism should certainly present the government's perspective, but it should also challenge official narratives and examine alternative interpretations. Otherwise, readers risk receiving explanations without adequate scrutiny.
A healthy debate should allow us to criticize policies without being accused of denying external factors. Climate matters, but policy decisions matter too, and both deserve equal examination.
Hey Dheeraj. Highly appreciate this comment, and you're right on certain counts. I'll try to answer this as best as I can.
I think getting into why fuel duties weren't cut earlier may require diving into the fiscal policies of the state. That wasn't something we could tackle within the length of this piece.
Another strand we genuinely could have gone deeper into is whether inflation targeting as a mechanism can ever be as effective as fiscal policies in dealing with crises. Widely, monetary policy is being scrutinized as a lever to control inflation and spur investment, and the RBI is not exempt from that. We should have taken more effort to do so.
That being said, this inflation period was specific to 2019-2024. Climate is being held as the primary driver for just these 5 years. Yes, you may indeed be right that certain policy factors may have been overlooked even then. But it is also true that 2023, the year both wheat and rice were disrupted, is well-known to be one of the worst, most volatile monsoons in all of Indian history. And I don't think one needs a state narrative to prove that. On that account, climate deserved most of the space here.
In that case, it didn't make a lot of sense to look at other policy drivers within the scope of this piece when climate was, by far, the biggest gaping hole that explained the majority of what was happening. And we usually tackle agri-policy issues in other TDB pieces. This one was almost wholly about the effectiveness of monetary policy - fuel duty cuts are a fiscal measure, not a central bank measure. But, as I said, we could have looked into the effectiveness of monetary policy as a whole deeper.