Daily Current Affairs 21.12.2022 (Three more sites added to tentative list of UNESCO, A new global biodiversity framework, How the great gamble on the price cap on Russian oil might just fumble, Upholding the autonomy of the Election Commission, The new normal in the Indo-Pacific contestation, Fluid boundaries, Vegetable prices in India are on a rollercoaster ride)

Daily Current Affairs 21.12.2022 (Three more sites added to tentative list of UNESCO, A new global biodiversity framework, How the great gamble on the price cap on Russian oil might just fumble, Upholding the autonomy of the Election Commission, The new normal in the Indo-Pacific contestation, Fluid boundaries, Vegetable prices in India are on a rollercoaster ride)


1. Three more sites added to tentative list of UNESCO

Gujarat’s Vadnagar town, the iconic Sun Temple at Modhera, and the rock cut sculptures of Unakoti in Tripura have been added to the tentative list of UNCESO World Heritage Sites.

The UNESCO tentative list is an “inventory of those properties which each State Party intends to consider for nomination”.

“With this, India now has 52 sites on UNESCO Tentative List. The list indicates rich cultural and natural wealth of India and shows huge diversity of our heritage,” Union Culture Minister G. Kishan Reddy tweeted.

“I congratulate ASI [Archaeological Survey of India] for their role in identifying more monuments and places for the world heritage nomination,” he said. The ASI said that the step will provide a big boost to India’s cultural heritage.

The Sun Temple at Modhera which is dedicated to the sun god, is the earliest of such temples which set trends in architectural and decorative details, representing the Solanki style at its best.

Vadnagar is a municipality in Mehsana district of Gujarat. A multi-layered historic town, Vadnagar has a recorded past stretching back to nearly 8th century BC. The town still retains a large number of historic buildings that are primarily religious and residential in nature.

Unakoti is an ancient holy place associated with Shaiva worship. The site is a massive gallery set in a forested area displaying a number of towering low-relief images in a unique style, making it a masterpiece of human creative genius.

2. A new global biodiversity framework

What is the Kunming-Montreal agreement adopted by 188 of the 196 member nations during the Convention on Biological Diversity? What is the Global Environment Facility? Why should GDP be re-evaluated as the chief determinant of development?

The Convention on Biological Diversity (CBD), the United Nations agreement to conserve and sustainably use earth’s biodiversity, got a boost at a conference held in Montreal recently, when 188 of 196 member governments agreed on a new framework to halt the sharp and steady loss of biological species. These governments, supported by the U.S. and the Vatican, who are not party to the Convention, adopted the Kunming-Montreal Global Biodiversity Framework (GBF) that sets out four goals for 2050, and 23 targets for 2030, to save existing biodiversity and ensure that 30% of degraded terrestrial, inland water, coastal and marine ecosystems come under effective restoration.

Why is biodiversity important?

Often called the web of life, biodiversity signifies the variety of species on earth, which are all connected and sustain the balance of ecosystems, enabling humans to coexist. They interact with the environment to perform a host of functions. The CBD states that only about 1.75 million species have so far been identified, including numerous insects, while there may be some 13 million species.

Some familiar ecosystem services rendered by diverse living forms, of which plants and animals are the most visible, include providing humans with food, fuel, fibre, shelter, building materials, air and water purification, stabilisation of climate, pollination of plants including those used in agriculture, and moderating the effects of flood, drought, extreme temperatures and wind. A disruption of these produces severe impacts such as failed agriculture, aberrant climate patterns and cascading losses of species that accelerate the degradation of earth.

According to the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), a quarter of the plants and animals it assessed for the 2019 Global Biodiversity Outlook are threatened, which translates to about one million species facing extinction. Similarly, a review on the economics of biodiversity by Cambridge professor Partha Dasgupta commissioned by the U. K. government reported that the current model of economic growth would require 1.6 earths to maintain current lifestyles.

What does the Kunming-Montreal pact aim to achieve?

The agreement to implement the GBF was pushed through on December 18 by the Chinese conference presidency and host Canada in the face of objections from some African countries such as the Democratic Republic of Congo, Cameroon and Uganda. It sets out targets for 2030 on protection for degraded areas, resource mobilisation for conservation, compensation for countries that preserve biodiversity, halting human activity linked to species extinction, reducing by half the spread of invasive alien species (introduced plants and animals that affect endemic biodiversity), cutting pollution to non-harmful levels and minimising climate change impact and ocean acidification, among others.

The GBF goals and targets do not prohibit the use of biodiversity, but call for sustainable use, and a sharing of benefits from genetic resources. Target five specifically states that the use, harvesting and trade in wild species should be “sustainable, safe and legal, preventing overexploitation, minimising impacts on non-target species and ecosystems…and reducing the risk of pathogen spillover…” The GBF emphasises respect for the rights of indigenous communities that traditionally protect forests and biodiversity, and their involvement in conservation efforts. It advocates similar roles for women and local communities.

Agricultural practices also find a strong focus. Besides emphasising sustainable practices in agriculture, aquaculture, fisheries and forestry, the agreement calls upon members to adopt biodiversity-supporting methods such as agroecology and sustainable intensification. This acquires significance, since growing Genetically Modified (GM) crops is not favoured by agroecologists as they could contaminate nearby wild species of the same plants.

One target also looks at turning cities into hosts of biodiversity, by expanding the area of and improving the quality and access to urban green and blue spaces. Urban planning should also be biodiversity-inclusive, “enhancing native biodiversity, ecological connectivity and integrity, and improving human health and well-being and connection to nature.”

Earlier, the CBD had launched the Aichi biodiversity targets for 2020, which included safeguarding of all ecosystems that provide services for humanity’s survival, and the Nagoya Protocol which went into effect in 2014 to ensure sharing of biodiversity access and benefits.

What is the roadmap to 2030 and 2050?

The key aspects of the four GBF goals for 2050 deal with maintaining ecosystem integrity and health to halt extinctions, measuring and valuing ecosystem services provided by biodiversity, sharing monetary and non-monetary gains from genetic resources and digital sequencing of genetic resources with indigenous people and local communities, and raising resources for all countries to close a biodiversity finance gap of an estimated $700 billion.

Recognising the challenging nature of the goals and targets, the GBF has specific provisions on implementing and monitoring. Member nations need to submit a revised and updated national biodiversity strategy and action plan in the conference to be held in 2024. Further, the parties to the CBD should submit national reports in 2026 and 2029 to help prepare global reviews. High level discussions on the progress reviews should be held in 2024 and 2026.

Countries would have to review existing laws relating to not just the environment, but areas such as industry, agriculture and land use, to ensure that the national strategy and action plan adequately protects biodiversity. For instance, business and industry, including transnational corporations would have to assess, monitor and report the risks and impacts of their operations and portfolios. They must provide information for sustainable consumption and comply with the rules on benefit-sharing. Perverse incentives that affect biodiversity should be eliminated.

Indigenous people, local communities, sub-national governments, cities and local authorities, intergovernmental organisations, multilateral environmental agreements, non-governmental organisations, women, youth, research organisations and the business and finance community have been invited to voluntarily participate in national biodiversity protection plans. There are specific indicators for countries to report their progress, as part of a transparency and reporting arrangement.

What funding arrangements are planned?

By 2030, the GBF hopes to see at least $200 billion raised per year from all sources — domestic, international, public and private — towards implementation of the national action plans. In terms of international funding, developing countries should get at least $20 billion a year by 2025 and at least $30 billion by 2030 through contributions from developed countries. The Global Environment Facility (GEF), a multilateral body that partners countries and agencies, has been asked to establish in 2023, and until 2030, a Special Trust Fund to support the implementation of the GBF. Complementing this, the GBF envisages that there will be access to justice and information related to biodiversity for indigenous peoples and local communities, respecting their cultures and rights over lands, territories, resources, and traditional knowledge, as well as by women, children and youth, and persons with disabilities, and ensure the full protection of environmental human rights defenders. The GBF is aligned with UN Sustainable Development Goals, three of which directly deal with the environment and thus with biodiversity: Goal 13 on climate action, Goal 14 on life below water and Goal 15 on life on land.

What are the challenges to protecting biodiversity?

The major challenge to protecting and expanding biodiversity conservation, says Prof. Partha Dasgupta, is the use of GDP as the chief determinant of development. The economist says in the Dasgupta Review report that GDP is based on a faulty application of economics that excludes “depreciation of assets” like nature which is degraded by relentless extraction of resources. He calls for appreciation of nature, and measuring “inclusive wealth”, which captures not just financial and produced capital but also human, social and natural capital.

The UN’s effort to measure wealth more broadly through its “Inclusive Wealth” (IW) report showed in 2018 that although 135 countries did better on inclusive wealth in 2014 compared to 1990, the global GDP growth rate considerably outpaced IW: an average of 1.8% per year for IW compared to 3.4% for GDP per year during the period.

3. How the great gamble on the price cap on Russian oil might just fumble

Restricting the price at which Russia can sell its oil will inevitably affect the country’s incentive to pump oil into the market. The West’s attempt to cut Russia’s oil revenues without drastically affecting global oil supplies may be too fine a balancing act in the long run


The Group of Seven (G7) countries, the European Union and Australia have imposed a price cap on Russian sea-borne oil to make it harder for Russia to fund its war against Ukraine. Under the plan, which took effect on December 5, western companies that dominate the global oil shipping and insurance business will be banned from offering their services to ship or insure Russian oil that is purchased at more than $60 per barrel. The price cap is an attempt by the West to cut Russia’s oil revenues without affecting oil supplies.

It should be noted that since the beginning of the Russia-Ukraine war, the West has been trying to limit Russia’s energy revenues. At the same time, since Russia is a major oil producer that contributes more than 10% of overall global supplies, the West has been wary of imposing sanctions that could cause oil supply from Russia to fall steeply and send oil prices shooting up. In fact, it is estimated that crude oil prices could rise to as much as $200 per barrel if oil supply from Russia were to be disrupted by western sanctions.

Noted economists such as Janet Yellen, currently U.S. Treasury Secretary, and Mario Draghi, till recently Prime Minister of Italy, have been at the forefront of pushing the idea of a price cap, which they believe will limit Kremlin’s oil revenues without affecting global oil supplies. Even though the West has cut down its purchase of Russian oil this year, Russia has been able to sell its oil to India and China to keep its energy revenues buoyant.

The price cap could be seen as an attempt by the West to make buyers of Russian oil pay less for the oil they purchase, thus preventing the Kremlin from profiting too much from its oil sales. Russia has already had to sell its oil at discounted rates, which the West sees as a partial success in its efforts to choke Kremlin’s revenues by refusing to purchase Russian oil. It is estimated that Russia, with a cost of production of somewhere between $20 and $45 per barrel, will earn a small profit on its oil sales.

At the moment, Russian oil is trading at a price that is below the cap of $60 per barrel imposed by the West. However, the average price of Russian Urals over the last 10 years has been about $75 per barrel. So, while the price cap of $60 per barrel is unlikely to adversely affect the supply of Russian oil or Moscow’s revenue in the short run, it is likely to have adverse effects in the longer run. When the market price of Urals rises above $60, this would increase the chances of violation of the price cap by traders. The higher the market price when compared to the price cap, the higher also will be the incentive for traders to bypass the price cap and sell Russian oil at a price higher than $60 per barrel to willing buyers. This would, in effect, undermine the West’s efforts to prevent Russia from earning the market price on its oil. But even if the West somehow manages to effectively implement the $60 per barrel price cap, it cannot really hope to restrict Russia’s revenues through a price cap without also affecting oil supplies adversely at the same time.

Question of incentives

Restricting the price at which Russia can sell its oil will inevitably affect the country’s incentive to pump oil into the market. Economists backing the price cap believe that Russia would continue exporting oil as long as the price cap is above Russia’s cost of producing a barrel of oil. In particular, Russia kept up its oil production even during the COVID-19 pandemic when oil prices fell below $20 per barrel. But expecting Russia to behave the same way in the future with price caps limiting its revenues may be unrealistic. It could well be that Russia expected the fall in oil demand during the pandemic to be a temporary blip; in such a scenario, it may have been more cost-effective to keep oil wells operating instead of shutting them down to reopen them later. If price caps persist over the long run, however, this is bound to affect Russia’s incentive to keep its oil wells open.

It should also be remembered that in the long run production decisions are based not merely on the cost of production but also on the potential rate of return from other investments. If investments in oil do not offer returns at least equal to or better than other sectors, Russia may well decide to cut its oil investments, and this would affect supplies adversely. Such a tendency was obvious when oil prices dropped by about 70% from mid-2014 to early 2016, pushing West Asian oil producers such as Saudi Arabia to look at diversifying their economies away from the oil industry. The West would do well to keep these factors in mind when it imposes price caps in the belief they would have no adverse effect on oil supplies.

4. Editorial-1: Upholding the autonomy of the Election Commission

Over the course of November and December, a Constitution Bench of the Supreme Court of India heard a crucial case about the method by which the Election Commission of India (ECI) is constituted, and Election Commissioners appointed. At the time of writing, the Court has reserved its judgment, which is expected early in the new year. The issues before the Court are straightforward, but with far-reaching ramifications for Indian democracy: is complete executive control over appointments to the ECI constitutional? And if not, what manner of appointment is sufficient to preserve the independence of the ECI, and the fairness of elections?

According to the classical understanding of modern democracy, there are three “wings” of state: the legislature, the executive, and the judiciary. The task of the Constitution is to allocate powers between these three wings, and to ensure that there is an adequate degree of checks and balances between them. Traditionally, bodies that are involved with administrative and implementational issues — elections being among them — are believed to fall within the executive domain.

The erosion of a ‘classical understanding’

However, in contemporary times, that understanding is no longer dominant. It is now commonly accepted that healthy constitutional democracies need what are known as “fourth branch institutions” (or, alternatively, “integrity institutions”). The reason why a “fourth branch” — in addition to the legislature, the executive, and the judiciary — needs to exist is the following: many of the basic rights and guarantees that we enjoy cannot be effective without an infrastructure of implementation.

Let us take, for example, the right to information, a staple feature of most modern constitutional democracies. Without an infrastructure of implementation, the right to information will remain only a paper guarantee. We need, for example, an information commission, adequately staffed and funded, which will oversee the on-ground enforcement of the right to information, compel recalcitrant public institutions to release public information, adjudicate disputes, and so on. These tasks involve elements of the judicial function as well as the administrative function, and, therefore, cannot only be performed by the judiciary, but need bodies — such as commissions — to perform them on a daily basis.

Now, it logically follows from the above that “fourth branch institutions” need to be functionally independent from the political executive. This is because they are the vehicles for implementing rights against the executive. Once again, think of the right to information: primarily, citizens will attempt to invoke this right to extract public documents from government departments, in the interests of transparency. Governments, therefore, have a direct interest in such cases, and as history has shown, governments are rarely willing to be transparent of their own accord. To be effective, therefore, an Information Commission needs to be thoroughly independent of the government, against which it will be obligated to enforce the constitutional right to information. This is not an abstract point: as we have seen in recent times, extensive government control over the Central Information Commission — including control over appointments — has led to it becoming a largely toothless and ineffective body, and the eventual frustration of the right to information.

Examples from overseas

Modern constitutions all over the world have recognised this.

Thus, for example, the South African and Kenyan Constitutions have dedicated constitutional provisions for “fourth branch institutions” such as Human Rights Commissions, Election Commissions, and so on, calling these “integrity institutions”, and requiring them to be “independent.” The appointments process for such bodies normally involves multiple stakeholders from different wings of the state.

The Indian Constitution also provides for such similar fourth branch institutions. While the ECI is, obviously, an example, others include the Comptroller and Auditor General, and the Public Service Commission(s), and the National Commission for Scheduled Castes. The problem, however, is this: while the Constitution goes to some degree to protect the independence of fourth branch institutions while officials are in office (such as, for example, a high threshold on the removal of an Electoral Commissioner), the power of appointment lies exclusively with the executive (formally, the President of India acting on the aid and advice of the Council of Ministers). To put the point simply, the government decides who gets to be in charge of running fourth branch institutions.

This is undoubtedly a problem. The link between the power of appointment to a body, and its control, is both intuitive and has been empirically established in multiple contexts. As the South African constitutional court correctly noted in one of its landmark judgments, true and functional independence is effectively impossible if the power to appoint rests entirely within a single individual, office, or entity. This, then, is the foundation of the ongoing dispute before the Supreme Court.

Indeed, Indian constitutional history as well points to the problem. The collegium system for the appointment of judges — which has recently seen controversy again — arose as a response to executive abuse and attempts to control the judiciary, stemming from the constitutional text, which again gave to the President (i.e., the executive) the power to appoint judges. In the landmark Vineet Narain case, the Supreme Court likewise held that for the rule of law to prevail, the appointment of the CBI Director would have to be ratified by a three-member body that included the Prime Minister, the Leader of Opposition, and the Chief Justice of India. Thus, Indian constitutional history is no stranger to the perils of executive power over appointments to independent bodies, and the fashioning of remedies against that.

The appointments process

What, then, should the Court do in the case before it? It is important to note that almost no constitutional democracy in the world allows the political executive sole power to staff a body as important to sustaining democracy as an Election Commission. Appointment processes involve the government, the Opposition, independent experts, and judicial experts, in a manner that no one centre of power has dominance, or a veto. The problem, however, is that an appointments process is difficult to create simply by judicial decree: it is something that needs political consensus, public deliberation, and, perhaps, a carefully crafted legislation.

The Court, therefore, has its task cut out. It is obvious that the existing system where the executive has absolute power over appointments is unsatisfactory, has been historically problematic, and damages the rule of law. But the Court must be careful to avoid band aid or stop-gap solutions. One possible alternative is for the Court to hand down a suspended declaration of invalidity, i.e., a remedy where the Court puts into place certain interim guidelines, but leaves a more permanent, structural solution up to the legislature. It is for the Court to decide how best that might be achieved, but the guiding principles, at all times, must be functional and effective independence from the executive, from the moment of appointment to the retirement, and then beyond.

5. Editorial-2: The new normal in the Indo-Pacific contestation

As 2022 comes to an end, the world is embracing a ‘new normal’ where new fault lines are being reconfigured in the Indo-Pacific. The Indian Ocean and South Asian regions are at the heart of this contestation, considering their geo-political and geo-economic prominence and India’s emergence as a major power. As tensions between an aggressive China and an emerging India intensify, New Delhi’s Quad partners are also making inroads in its backyard, ushering significant changes in the region.

China’s widening outreach

The contestation for South Asia and the Indian Ocean is not new. China has long tried to mark its influence in these regions and enhance its strategic ambitions, namely, to limit Indian influence, military power, and status and to sustain its energy supply and economic growth. Beijing’s outreach in South Asia increased manifold in the early 2000s with its economic boom. It began to further its strategic ends in the region through loans, financial incentives, and mega-infrastructure projects; this became more institutionalised with the launch of the Belt and Road Initiative (BRI) in 2013. Subsequently, these investments enabled Beijing to access the Indian Ocean, promote political and security ties in the region, harbour military vessels and submarines, and take certain islands and ports on lease ( including the Hambantota port of Sri Lanka).

It is only with the Galwan clashes in 2020 that the Indian strategic thinking is deeming Beijing as a bigger threat than that of Islamabad. While the possibility of a two-front war persists, Pakistan’s strategic isolation, economic and political fallout, and border and terror challenges emanating from Afghanistan have minimised the likelihood of its aggression. On the other hand, Beijing’s larger strategic and diplomatic presence and grand ambitions have continued to trigger angst for New Delhi.

Steps by India, the rest of the Quad

After Galwan, New Delhi has re-energised diplomatic efforts in its backyard. In the Maldives, New Delhi is reciprocating President Ibrahim Solih’s ‘India First’ policy with massive economic assistance, grants, and infrastructure projects and by also cooperating on maritime security. In Nepal, Prime Minister Deuba’s government has attempted to improve Nepal’s overall bilateral relations with India. In crisis-hit Sri Lanka, India, this year alone, has provided economic and humanitarian assistance and investments worth $4 billion. India’s leading efforts in South Asia and the Indian Ocean have also attracted other Quad members (Japan, Australia, and the United States). Close cooperation has ensued among these partners to collectively push against China and offer genuine alternatives to the BRI – they have also been assisting Sri Lanka throughout the crisis. Japan is also finalising its talks with Sri Lanka on debt restructuring. In the Maldives, Australia and the U.S. have committed to opening their embassies and new areas of cooperation. In 2020, the U.S. signed a defence and security framework with the Maldives. Earlier this year, Nepal also ratified the U.S.’s Millennium Challenge Cooperation (Nepal Compact), much to China’s displeasure.

However, the recent success of India and its partners is unlikely to deter China from furthering its presence in the region. Such an outcome is more unlikely, with tensions rising against India, and the Quad partners making inroads in South Asia. Earlier this month, the Chinese surveillance vessel Yuan Wang-5 (it had docked in Sri Lanka in August), re-entered the Indian Ocean. A similar incident occurred last month when another vessel of the Yuan Wang series entered the Indian Ocean, coinciding with the test flight of the Agni-series missile. Beijing also hosted its first-ever China-Indian Ocean Region Forum, to institutionalise its presence in the region and challenge new initiatives such as the Quad and the Colombo Security Conclave.

A balancing act is likely

Beijing will continue to leverage its financial and economic might and political influence in South Asia. But, most importantly, South Asian countries would also hesitate to completely move away from China as they hope to exercise their agency by balancing with China and India — essentially making this competition a ‘new normal’. And this trend will only increase with new players entering the region.

Such a balancing outcome is very likely with most South Asian countries now facing economic and political turmoil. The COVID-19 pandemic and Russia’s invasion of Ukraine have continued to haunt the region. Nepal, the Maldives and Bhutan are struggling with depleting forex reserves. Bangladesh has reached a bailout agreement worth $4.5 billion with the International Monetary Fund. Sri Lanka is yet to chart its way out of the economic crisis. Energy shortages, inflation, and negative or slow economic growth are also disrupting day-to-day activities in these countries. As 2023 marks an election year for a large part of South Asia, these economic grievances combined with political opportunism will likely fuel more instability in the region. Ongoing protests in Bangladesh are a mere indication of such upcoming challenges. New Delhi and its partners which have only started to make recent gains against China, should be ready to embrace these challenges.

6. Editorial-3: Fluid boundaries

Inter-State disputes resolution lies in a political culture respectful of diversity

The dispute between Karnataka and Maharashtra over areas that both States claim to be theirs has become nasty and noisy in recent weeks, even leading to violence. Karnataka Chief Minister Basavaraj Bommai and Maharashtra Deputy Chief Minister Devendra Fadnavis — both from the BJP — have crossed swords publicly. Campaigners for the merger of Karnataka’s Marathi-speaking areas with Maharashtra upped the ante this week by organising a conference in Belgaum. Maharashtra politicians wanted to attend it but were stopped by the police, leading to a flare-up, possibly as intended by the invitees and the organisers. Karnataka’s practice, since 2006, of holding the winter session of the Assembly in Belgaum, is itself an assertion of its authority over the place. Recently, Mr. Bommai reiterated Karnataka’s claim over 48 villages of Sangli in Maharashtra, drawing a sharp rebuttal. With exchanges getting increasingly provocative, Union Home Minister Amit Shah has told the Chief Ministers to dial down the rhetoric and wait for the Supreme Court to adjudicate the matter. The Court is seized of the matter, but it can only do so much as the underlying factors that originated along with the 1956 linguistic reorganisation of Indian States are not easily amenable to technical and legal solutions.

Carving out political units that neatly correspond with various linguistic groups is impossible in India. As a result, almost all States have linguistic minorities that are accorded special rights. The Maharashtra-Karnataka row fundamentally arises out of a lack of appreciation of that reality. In 1957, Maharashtra claimed 814 villages and the three urban settlements of Belagavi, Karwar and Nippani in Karnataka; Karnataka not only rebuffed Maharashtra’s claims but also began to claim areas in Kolhapur, Sholapur and Sangli districts in Maharashtra. Elsewhere, Maharashtra and Telangana are caught in a dispute across their border, in Chandrapur and Asifabad districts, respectively. Reports of populations wanting to have their places shift from one State to another have emerged in recent weeks. In the Northeast, some boundary disputes between States have cost lives. It is wise to defer to the Court’s decision on any dispute, but harmony can be achieved only through embracing and promoting a political culture that is respectful of diversity that cannot be neatly demarcated. Fluid political and cultural boundaries criss-cross the landscape of India. If new fires are lit through divisive politics, the judiciary can do very little. That will be a double engine failure.

7. Editorial-4: Vegetable prices in India are on a rollercoaster ride

As there is an alternating pattern of inflation peaks and deflation troughs, vegetable prices are highly volatile

On Monday, a member of the Prime Minister’s Economic Advisory Council, Poonam Gupta, expressed her disappointment in the manner in which “monetary policy is held hostage by vegetable prices”. She termed monetary policy as a “blunt instrument” to address vegetable inflation. “Surely, our economy, which is more than $3 trillion, can manage its vegetable prices better than it has. These shocks, which hold the policymakers’ attention unduly, I would say… can be addressed better,” she said at a discussion hosted by the Ananta Centre on the upcoming Union Budget. The “shocks” that Ms. Gupta was referring to are the highly volatile retail and wholesale prices of food products, especially vegetables. These shocks jolt the Indian economy every year. During some years, vegetable prices skyrocket and burn a hole in the pockets of consumers. During others, they crash, leading farmers to dump their produce owing to negative returns.

Chart 1 depicts the overall retail inflation and vegetable retail inflation every month between January 2014 and November 2022. Compared to vegetable inflation, overall retail inflation remained steady in the period considered, oscillating between +1.4% and +8.6%. However, vegetable inflation wildly swung between -22% (deflation) and +60%.

If we examine the January 2014-November 2022 period, vegetable prices hit a peak in a month and then rapidly declined. This led to a trough a year later. This was again followed by a rapid ascent leading to a newer and much bigger peak, a year later. The gap between peak inflation and peak deflation has also widened in recent months pointing to an increase in the volatility of a commodity which was already volatile.

Chart 2 shows the retail inflation of select vegetables in the December months of each year. The graph further establishes the volatile nature of vegetable prices. Every odd year there was inflation of vegetable prices, and every even year there was deflation. This cycle was seen across all vegetables, which means that the trend is not confined only to onions, tomatoes and potatoes — the three vegetables produced and consumed widely.

Not only were the prices alternating, but the degree of inflation and deflation too recorded extreme variations. For instance, in 2015, carrot retail inflation was 7.97%; in 2017, it was over 50%. In 2018, the price of cauliflower decelerated by 4.4%; in 2020, it recorded a 22% deceleration.

Chart 3 shows how inflation varies within a year in select vegetables and in select States. Chart 3A shows the price of a kg of potato during all the months across the last seven years in Dehradun, Uttarakhand. Chart 3B shows the same for onions in Thiruvananthapuram, Kerala. Chart 3C shows the same for tomatoes in Ranchi, Jharkhand. All the three charts exhibit a common pattern. The prices of vegetables were the lowest in the summer months of March to May. They slowly began to rise in the south-west monsoon months of June to September. Then they peaked in the autumn months of October and November or sometimes in December. Prices started to cool down in the late winter months of January and February.

This pattern shows that vegetable prices are tied to the kharif and rabi harvest cycles and the resultant demand-supply gap in the markets. They also depend on the failure of crops which leads to reduced supply amid increasing demand. Also, a sudden surge in production may lead to a glut, with prices sharply decreasing due to high supply.

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