UPSC Mains 2024 · GS Paper III · Q2

UPSC Mains 2024 GS3 Q2: model answer

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.

10 marks150 wordsDirective: Comment

What the question wants

Causes of sticky food inflation and why interest rates do little against it.

How to structure it

Intro: food weight in CPI and recent levels. Body: (1) supply-side causes (weather, vegetables, pulses); (2) structural causes (storage, supply chain, demand shift); (3) how monetary policy works; (4) its limits against supply shocks. Conclusion: need supply-side tools with RBI anchoring expectations.

How to structure the answer
IntroductionFood weight in CPI and recent levels
Body: comment
  1. 1(1) supply-side causes (weather, vegetables, pulses)
  2. 2(2) structural causes (storage, supply chain, demand shift)
  3. 3(3) how monetary policy works
  4. 4(4) its limits against supply shocks
ConclusionNeed supply-side tools with RBI anchoring expectations

Model answer

Food carries about 46% weight in the CPI. Food inflation stayed near or above 8% for much of 2023-24, driven by vegetables and pulses.

Why food inflation persists
  • Weather shocks and heatwaves
  • Perishables with weak cold chain
  • Pulse and edible oil shortfall
  • Protein demand rising
EffectSticky food inflation that repo rates barely touch

Causes

  • Weather shocks: heatwaves, erratic monsoon, El Niño in 2023.
  • Perishables (tomato, onion, potato) with weak cold storage.
  • Structural shortage of pulses and edible oils; import dependence.
  • Rising demand for protein foods as incomes grow.
  • Fragmented markets and many intermediaries.

Effectiveness of RBI policy

  • Repo rate changes work on demand; they cannot make rain or grow tomatoes.
  • Still, persistent food inflation feeds wage and inflation expectations, so the RBI under flexible inflation targeting (4% ± 2%) kept rates high through 2023-24.
  • Tight policy can hurt growth while food prices barely respond.

The answer lies in supply tools: buffer stocks, timely imports, storage and crop diversification. The RBI's role is to stop food shocks spreading into general inflation.

Keywords, cases and data to drop in

CPI food weight supply shocks flexible inflation targeting second-round effects buffer stocks

Where most answers lose marks

  • Claiming repo hikes directly lower vegetable prices.

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Learn the concept

Question text as printed in the official UPSC question paper: https://www.upsc.gov.in/sites/default/files/QP_CSM_2024_GenStud_III_03102024.pdf The model answer is original Battle IAS work; use it to learn structure, not to memorise.