Policy options exist for combating the issue of food inflation are -

Increase farm productivity: Given limitations in expansion of agriculture acreage, improvement in yields assumes great significance. As compared to developed countries, India's crop yields are low and in some cases, less than the world average. Yield growth rates in 2001-2010 have stagnated to <1.5 per cent for rice and wheat as compared to over three per cent in the 1980s.

Lower costs of inputs: India is a significant net importer of phosphatic and complex fertilisers and large subsidies would be unsustainable in the long run leading to ballooning fiscal deficits which lead to inflation. Impact of fuel costs, which is a key input for transportation of agri-commodities to processing or consumption centres is significant and India is a net importer of crude to the extent of 70 per cent of its requirements.

Increase in share of irrigated land: Water would play an extremely important role in food security and food prices given the large dependence on monsoon and restriction of large cultivation acreage to a single crop cycle. Sixty per cent of net sown area is rain fed and this needs to increase and projects such as the river linking project can be viable long term solutions to achieve the same.

Improve storage and processing infrastructure: Inefficient and insufficient post-harvest storage infrastructure in the form of warehouses and cold storage results in loss of over 10 per cent of food grains and fruits and vegetables produced. The WADA Act passed in 2007 and notified recently will provide a fillip to creation of storage infrastructure and also