India blames World Bank for food, fuel crisis

Firmly rejecting the contention that rising consumption in developing nations was responsible for the soaring food and fuel prices, India has blamed the policies of World Bank and IMF and 'excessive and unsustainable' demand in developed countries for the crisis.

"This consumption trend has existed for more than a decade," said Indian UN Ambassador Nirupam Sen, pointing out that over last two years, the demand for oil has gone up 1 per cent but prices, in dollar terms, have risen by 90 per cent.

Addressing a special meeting of the United Nations Economic and Social Council to consider the issue of rising food prices, he held financial crisis leading to weakening dollar and diversion of grains to production of bio-fuels among the major causes.

Sen also blamed the policies followed by the Bretton Woods Institutions responsible and severely criticised their advice to countries to shift from food crops for domestic population to cash crops for exports.

The debate came in the backdrop of UN agencies warning that more than one billion could added to those already needing food assistance because of high prices. Finger pointing over the issue was sparked off after the United States and European Union said the growth of India and China which has led to rise in consumption level has led to the shortage.

Rejecting the BWI's prescription of eliminating restriction on food exports in the interest of market purism, Sen told the delegates that this continues the tradition of these institutions' advice which is partly responsible for the crisis in the first place.

"They seem to feel that subsidies are good for the rich but bad for the poor," Sen said such policies had "predictable negative impact" on food production.

In terms of consumption, the problem is not per capita consumption in developing countries but excessive and unsustainable consumption in developed nations, Sen said.

Decrying the "dismal" response of the international community to the crisis, he said the initial conjunction of lower food prices and high oil prices led to sale of grain to energy producers for conversion into bio-fuels.

  In several developed countries, Sen said, land for food crops shrank as it was lost to bio-fuels and supported calls for roll back.

"For the first time, there is a direct link between oil prices and food prices, oil markets and food markets, as our Prime Minister has said.

"It is this structural consequence that is disturbing and complicates policy," he added.

The financial crisis, Sen said, too has had an impact. "A consequence is that speculators, encouraged by the dollar's relative decline, 'invest' in food futures to profit from the 'commodities super cycle'," he said.

Conceding that this is not a primary cause of the crisis, he said, "but it makes it worse".

"Hopefully this bubble would also burst with at least a marginal beneficial effect on food prices," he added.

During the Green Revolution there were improved seeds and Intellectual Property Right were in the public domain, he said, adding, "now they are in the private domain, with monopolistic pricing of agricultural inputs" -- profoundly anti-market source of food price inflation.

Stating that the international community collectively can do much, he told the delegates that for various international bodies, key areas are land development, water management and seed technology.