The Hindu Editorial Analysis- 16th November 2023 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

Why in News?

Recently, the Nobel Prize in Economics for 2023 has been awarded to Claudia Goldin, a Harvard University professor, for research that has advanced the understanding of the Gender Gap in the Labor Market.

• Goldin is only the third woman to win this honor. In 2009, Elinor Ostrom got the award along with Oliver E Williamson, while in 2019, Esther Duflo shared it with Abhijit Banerjee and Michael Kremer.

What is the Nobel Prize in Economic Sciences?

• Establishment: The Nobel Prize in Economic Sciences was founded in 1968 by the Sveriges Riksbank, the central bank of Sweden, in memory of Alfred Nobel, the inventor of dynamite and the creator of the Nobel Prizes.
• Official Name: It is officially known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.
• Origins: Unlike the original Nobel Prizes in physics, chemistry, medicine, literature, and peace, which were established by Nobel's will, the Nobel Prize in Economic Sciences is not part of the original Nobel Prizes.
• Purpose: The prize was established later to honor outstanding contributions to the field of economics.
• Recognition Criteria: The Prize is awarded to individuals or organizations for their exceptional research, discoveries, or contributions that have advanced the understanding of economics and its application to real-world problems.

Why has Claudia been Chosen for the Nobel Prize in Economic Sciences?

• Claudia Goldin's Contribution:
  • Goldin, a trailblazer in examining the role of women in the economy, has authored numerous books on the subject, including Understanding the Gender Gap: An Economic History of American Women (Oxford, 1990) and Career & Family: Women’s Century-Long Journey toward Equity (Princeton University Press, 2021).
• Research Overview:
  • Goldin's work provides the first comprehensive account of women's earnings and labor market participation throughout history.
  • Her research unveils the causes of change and identifies the primary sources of the persistent gender gap.
• Impactful Insights:
  • Goldin's groundbreaking work sheds light on women's participation in the labor market over the past two centuries and delves into why the pay gap persists, even with women's higher education levels in high-income countries.
• Global Applicability:
  • Although Goldin's research primarily focuses on the U.S., her findings are applicable to many other countries.
• Historical Perspective:
  • Pre-Industrialization, women were more engaged in economic activities related to agriculture and cottage industries.
  • The advent of industrialization posed challenges for women to leave their homes for work.
• Services Sector Influence:
  • In the early 20th century, the growth of the services sector played a crucial role in providing women with higher education and employment opportunities.
• Marriage Barriers:
  • By the early 20th century, around 20% of women were employed, but the share of married women was only 5% due to "marriage bars" preventing their continued employment.
• Expectations and Career Choices:
  • Women's expectations about their careers significantly contributed to the gender pay gap, influenced by the experiences of their mothers.
• Contraceptive Pills Impact:
  • The availability of easy-to-use contraceptive pills in the late 1960s empowered women to plan their careers and motherhood, leading to increased participation in fields like law, economics, and medicine.
• Parenthood's Role in Pay Gap:
  • Despite advancements in education and employment opportunities, a substantial gender-based pay gap persisted, particularly after the arrival of the first child, impacting women's earnings and career trajectories.

Why in News?

In recent times, Consumer food prices were 9.9% higher year-on-year, with food inflation now largely limited to cereals and pulses, and the government is required to start addressing concerns of both producers and consumers in equal measure.

What is the Recent Scenario of Food Price Inflation and Disinflation in India?

• Inflation in Food Staples:
  • Recent estimates indicate a surge in food inflation, predominantly attributed to two items: Cereals (11.9%) and pulses (13%) in July and August respectively.
  • Annual retail price increases in vegetables were even more pronounced, reaching 37.4% and 26.1% during the same period.
  • Notably, the inflation in tomatoes stood at 202.1% and 180.3% in the corresponding months
• Government's Disinflation Strategy:
  • Governments typically prioritize consumers over producers, driven by political considerations favoring numerical strength.
  • In the current context, there is a need for the government to shift focus towards listening to producers, particularly concerning two vital agricultural/food commodities.
• Vegetable Oils Production:
  • The harvesting and marketing of soybeans have commenced, but the oilseed is trading below the government's minimum support price (MSP).
  • Weak demand for both oil and meal is influenced by the bearish market sentiment, largely attributed to record imports of edible oil, projected to reach 17 million tonnes in 2022-23.
• Milk Production Challenges:
  • Little activity in the purchase of powder, butter, or ghee is observed, and this is expected to worsen post the festival season.
  • The industry faces additional issues with reported sales of ghee adulterated with vegetable fat, fueled by the decline in prices of imported oils, particularly palm.
• Wheat and Rice as Essential Commodities:
  • Overproduction Challenge: Farmers in India often respond to Minimum Support Prices (MSPs) by increasing production of supported crops like wheat and rice, leading to market gluts and prices falling below MSPs.
    
    
  • Inadequate Procurement and Distribution: While the government establishes MSPs and procures crops, inefficient procurement infrastructure and distribution systems can result in delays and insufficient grain distribution, causing market prices to decline due to oversupply.
    
    

What is Consumer Food Price Inflation (CFPI)?

• Consumer Food Price Inflation, (CFPI) , is a specific measure of inflation that focuses exclusively on the price changes of food items in a consumer's basket of goods and services.
  • It calculates the rate at which the prices of food products consumed by the average household are increasing over time.
  • CFPI is a sub-component of the broader Consumer Price Index (CPI), where the Reserve Bank Of India (RBI) uses CPI-Combined (CPI-C) for this purpose.
  • CFPI tracks the price changes of a specific basket of food items that are commonly consumed by households, such as cereals, vegetables, fruits, dairy products, meat, and other food staples.

What are the Causes Behind Food Price Inflation?

• Supply and Demand Imbalances: When there is an imbalance between the supply of food and the demand for it, prices tend to rise.
  • Factors such as extreme weather events, crop failures, or pest infestations can reduce the supply of agricultural products, driving up prices.
  • Conversely, a surge in demand, perhaps due to population growth or changes in consumer preferences, can also lead to higher prices if supply cannot keep up.
• Production Costs: Rising production costs for farmers can lead to higher food prices. This includes expenses such as fuel, fertilizer, and labor costs.
• Energy Prices: The cost of energy, especially fuel, is a significant factor in the food supply chain. Increases in oil prices can lead to higher transportation costs for getting food products from farms to stores, which can result in higher prices for consumers.
• Currency Exchange Rates: Fluctuations in exchange rates can impact food prices, especially for countries that rely heavily on imported food. A weaker domestic currency can make imported food more expensive, contributing to inflation.
• Trade Policies: Trade policies and tariffs can affect the prices of imported and domestically produced food. Restrictions on imports can limit the variety of available food products and potentially drive up prices.
• Government Policies: Government interventions in the form of subsidies, price controls, or regulations can influence food prices. Subsidies may reduce the cost of production, while price controls can limit price increases.
• Global Events: Global events such as geopolitical conflicts, pandemics, and trade disruptions can disrupt food supply chains and lead to food price spikes. The COVID-19 pandemic, for example, disrupted food production and distribution in many parts of the world.
• Climate Change: Long-term changes in climate patterns can have a significant impact on food production. More frequent and severe weather events, such as droughts or floods, can damage crops and reduce yields, leading to higher prices.

Way Forward

• Increase Agricultural Productivity:
  • Invest in agricultural research and technology to improve crop yields and livestock production.
  • Promote sustainable farming practices to enhance efficiency and reduce production costs.
• Strengthen Food Supply Chains:
  • Invest in transportation and storage infrastructure to reduce food wastage and spoilage.
  • Improve distribution networks to ensure that food reaches consumers efficiently.
• Promote Trade and Market Integration:
  • Facilitate international trade to ensure a steady supply of food products.
  • Remove trade barriers and tariffs on essential food items.
• Promote Competition and Reduce Monopoly Power:
  • Enforce antitrust laws to prevent market concentration and price manipulation by large agribusinesses.
  • Encourage competition in the food sector to keep prices competitive.