Saturday, 3 May 2008

George Bush, food crisis and the Indian middle class

Let me start with the news item that really pushed me into starting this blog - "George Bush blames it on the Indian middle class".

I was watching the news yesterday on a Malayalam Channel (Manorama), and interestingly, the exact words that came out George Bush's mouth were not played out. What the listeners were subjected to was the interpretation of what he said. And then reactions based on that interpretation. I had to wait to see today's newspaper (Hindu) to know actually what he said. While at the same time, many local dailies cried out indignant headlines on their front pages.

Let's look at exactly what George Bush said:

If you think about it, what Bush said does sound logical. Now, I am not saying it is completely correct. Macro-economics is a wild beast, there are more theories on its behavior than there are laws, so anything anybody says needs to be taken with that in mind. Most of the time, the best we get would be a theory that sounds logical.

I am no economist, but from what little economics I know, what Bush said is one such theory that makes logical sense. When demand increases, and supply does not increase proportionally, prices will increase. Whether demand for food has actually increased in India, and whether supply has failed to keep up, I do not know for sure, hopefully somebody will sooner or later come up with the numbers. But it is logical to assume it has, after all we have one of the fastest growing economies in Asia, and the fastest growing population in the world.

Of course, there are factors which George Bush has intentionally downplayed - like the bio-fuel angle; which may make his statement partially wrong. If you look up the wikipedia entry for world food crisis, there are ten factors listed, and "Impact of food for fuel" and "Change in global diet" are the first two. The fact is that no one knows for sure. There is no single reason, but there are many, behind the crisis we are facing now.

The point behind all I've written: there is no reason for Indian politicians and media to have reacted the way they have. They probably have their reasons.
If people are saying that we in India are eating better than we used to a year back, then we should be proud of the progress that we have made.

Comments welcome.