TEN CRITICAL QUESTIONS ON CURRENT GEOPLOITICAL AND NATIONAL ISSUES – 174

PRERNA FOR IAS

(ASSOCIATE OF SAMKALP)

TEN CRITICAL QUESTIONS ON CURRENT GEOPLOITICAL AND NATIONAL ISSUES – 174

1. If India's inflation is largely driven by food prices, can the RBI solve the problem simply by raising interest rates?

Answer: Not completely. Higher interest rates can reduce excess demand and prevent food-price shocks from spreading into general inflation, but they cannot produce more onions or sugar. August retail inflation increased to 4.82%, while food inflation reached 5.95%, with supply problems affecting items such as sugar and onions. Therefore, India needs a coordinated response. RBI should control inflation expectations, while the government should improve agricultural supply, storage, imports where necessary and logistics. Monetary policy can control the second-round effects of food inflation, but the original supply shock often requires agricultural and administrative solutions.

2. Why can India face food inflation even when the total area under crops has not fallen significantly?

Answer: Because agricultural production depends on much more than acreage. In 2026, kharif acreage was only around 1.4% below the previous year, but rainfall was highly uneven and all-India monsoon rainfall was substantially deficient. Falling fertiliser sales and rising prices of maize, arhar and soybean also indicate possible yield pressures. Climate change and El Niño make the timing and geographical distribution of rainfall increasingly important. A crop may be planted but still produce a poor yield if rain comes too late, too intensely or not during critical stages. Food-security policy must therefore move beyond acreage towards productivity and climate resilience.

3. Should UPI transactions remain completely free forever?