Food for Thought

By Vijaya Pushkarna




When Chief Economic Adviser Krishnamurthy V Subramanian called a  chapter on prices of food items, “Thalinomics”  in the Economic Survey 2019-20, he was not doing something economists  before him have not done. And it is not just economists who have used food as the idea and tool to make people understand something that could have been complex otherwise.

Perhaps that is why the phrase, food for thought!
The Economic Survey has looked at  food prices through the lens of the multi-dish plated meal called "thali" across India during the last 15 years. 

A few years ago, former RBI Governor Dr Raghuram Rajan used the humble and ubiquitous dosa that has gone,global to explain inflation.In the course of the C D Deshmukh lecture he was delivering at the National Council of Applied Economic Research, he called it " dosa economics". 

Rajan said he got letters from many pensioners asking him how they would  manage  their food expenses as low inflation then had resulted in the RBI slashing interest rates. They told him that the 10 % interest on their fixed deposits was now 8 % on account of low inflation.

“Say the pensioner wants to buy dosas and at the beginning of the period, they cost Rs 50 each. Let us say he has saving of Rs 100,000. He could buy 2000 dosas with the money today, but he wants to buy more by investing.

At 10 % interest, he gets Rs10,000 after one year, plus his principal. With the price of dosas having gone up by 10 % to Rs55, he can buy 182 dosas approximately with the Rs 10,000 interest.

At 8 % interest, he gets Rs 8000. With dosas having gone up by 5.5 per cent, each dosa costs Rs 52.75, so he can now buy only 152 dosas approximately. So the pensioner seems vindicated: with lower interest payments, he can now buy less.

But wait a minute. Remember, he gets his principal back also, and that too has to be adjusted for inflation. In the high inflation period, it was worth 18,18 dosas, in the low inflation period, it is worth 1896 dosas. So in the high inflation period,principal plus interest are worth 2000 dosas together, while in the low inflation period, it is worth 2048 dosas. He is about 2.5 % better off in the low inflation period in terms of dosas”, the economist said.

Simply put, the  banker was saying that low interest will not  hurt the pensioners in terms of food!

More recently, a survey ranked countries in order of how cheap they  were for international tourists.The survey was based on the price of a basic cup of coffee—from Starbucks which has outlets all over the world.

Food has also been used to describe other ideas. Remember the King who banished his youngest daughter because she said she loved him as much as she loved salt?

From food to vessel is just one short step.

The  USA and Canada, have  a "melting pot" culture—where all the immigrants who make either of the countries their home, has to melt into the local culture, sinking their distinct identities which are subsumed in the pot. 

In India, it is the ubiquitous thali culture. Each of the many little katoris have items that are delicious  if you eat them spoon by spoon. They also blend and gel well .They balance each other too. But each has a distinct colour, texture, flavor, taste, and enriches the thali.

 Back to Thalinomics.The Economic Survey presented on Friday  finds that at an all-India level, thali prices have reduced since 2015-16, even (though this year, it has gone up). The CEA  reasons that this reduction has been on account of falling prices of vegetables and dals, compared to the years before 2015-16, when these prices were increasing. Thalis have become more affordable now, he says.
The study is based on standardized thalis across different states.

Comments

  1. Thalinomics makes interesting reading but i feel the cost of the thali has been steadily going up. However, it is a good way of looking at the economic survey. You are amazing Vijaya and pick up interesting topical issues to write on. Hats off!

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