GS Paper III — Q2
What are the causes of persistent high food inflation in India? Comment on the effectiveness of the monetary policy of the RBI to…
What are the causes of persistent high food inflation in India? Comment on the effectiveness of the monetary policy of the RBI to control this type of inflation. (Answer in 150 words) 10 marks
हिंदी में प्रश्न पढ़ें
भारत में निरंतर उच्च खाद्य मुद्रास्फीति के कारण क्या हैं? इस प्रकार की मुद्रास्फीति को नियंत्रित करने में आर० बी० आई० की मौद्रिक नीति की प्रभावशीलता पर टिप्पणी कीजिए। (उत्तर 150 शब्दों में दीजिए)
Model answer
Drafted with AI by UPSC Answer Check against this question's marking rubric, to the 150-word length. UPSC does not publish answers for Mains — this is one way to score well, not an official key. How we build rubrics and answers.
Food inflation is mainly supply-driven, making RBI’s monetary policy only partially effective. Persistent high food inflation stems from MSP hikes, crop failures, supply-chain bottlenecks, hoarding and global commodity price shocks. Structural rigidities—APMC restrictions, inadequate cold storage, middlemen dominance and rising input costs such as fertilizers and fuel—further raise prices. Because food prices are largely inelastic to interest rates, being driven by supply constraints rather than demand, repo-rate adjustments under RBI’s 4±2% inflation-targeting framework have limited traction. In 2022-23, food inflation peaked at 8.6% in September 2022, with cereal inflation double-digit, despite the repo rate rising from 4% to 6.5%; overall CPI food inflation crossed double digits in July 2023. Conversely, when food prices fell sharply in 2025, headline CPI dropped below 2% and the RBI cut the repo rate to 5.5% by June 2025, showing how food drives the headline number; the Economic Survey 2023-24 even suggested targeting inflation excluding food. Monetary policy still matters for anchoring expectations and preventing second-round effects on wages and core inflation. Hence, it is necessary but insufficient. Controlling food inflation requires complementary fiscal and administrative measures: better buffer-stock management, calibrated export-import policy, and supply-side reforms to reduce wastage and market frictions.
How this answer will be evaluated
Framework: GS3 Economy: Situation > Analysis > Measures > Assessment
What earns full marks: Clearly separates supply/demand causes and correctly identifies the structural mismatch between monetary policy and food inflation.
Evaluation rubric
Each sub-part is marked on its own, against the marks and word limit printed on the paper.
- The answer Explain the causes of persistently high food inflation in India and comment on how effective RBI monetary policy is against it. 10 marks · 150 words
comment— context → arguments both sides → judgment → close
Must cover
- Supply-side causes: weather shocks and heatwaves, vegetables/pulses volatility (TOP crops), storage and logistics gaps, hoarding, input costs, global prices
- Structural/demand causes: rising incomes shifting diets to protein, MSP increases, fragmented markets and intermediaries
- Monetary policy limits: repo rate acts on demand with lags; food prices are supply-driven; large food weight in CPI (~46%) makes headline hostage to food
- Where monetary policy still matters: anchoring expectations and preventing second-round effects on wages and core inflation; balanced verdict with supply-side remedies
Loses marks
- Claiming monetary policy is useless
- Only listing causes without evaluation
- No data
Earns more
- Data: CFPI 8.6% (Sept 2022), double-digit July 2023; repo 4% → 6.5% (2022–23)
- Economic Survey 2023-24 suggestion to target inflation excluding food
- Fiscal/administrative tools: buffer stocks, OMSS, stock limits, trade policy
Extra mark
- 2025 episode: falling food prices pulled CPI below 2% and allowed repo cuts
What "Comment" is asking you to do
Take a position on the statement and support it. Comment usually attaches to a quoted line in the short slots, so the reasoning must be compressed — an opening view, a few load-bearing reasons, and the limit of the claim.
Structure that answers it
Unpack what the statement asserts → your stance → two or three supporting reasons → the qualification that limits it
Where marks are lost
Neutral summary; a comment without a stance has not answered. Equally costly is accepting the quoted line wholesale and never testing where it fails.
Practice this exact question
Write your answer and it is marked point by point against the model answer above — what you covered, what you missed, what you got wrong.
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