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India on Wednesday blamed the US policy of diverting food grains such as corn for producing bio-fuels for the spurt in food grain prices globally.
Finance Minister P Chidambaram also criticised lack of adequate regulations in the US sub-prime market, which has caused global financial uncertainties.
"It has been estimated that nearly 20 per cent of corn grown in the United States is diverted for producing bio-fuels. As citizens of one world, we ought to be concerned about the foolishness of growing food and converting it into fuel," Finance Minister P Chidambaram said in Singapore on Wednesday.
He said the demand for staple food was on the rise, leading to higher prices, but diverting food for fuel had also contributed to increase in food prices.
Addressing a gathering of academics, scholars, diplomats and bureaucrats at the Lew Kuan Yew School of Public Policy in this island state, the minister said this process (diversion of food grains for bio-fuels) was "a sign of the lopsided priorities of certain countries".
Referring to the current global uncertainty and the sub-prime mortgage market crisis that triggered the turbulence, Chidambaram blamed it solely on poor regulations and lax supervision.
"If this had happened in developing countries, we would have been lectured on the virtues of bankruptcy. Since this is happening in developed countries, no one pauses to ask whether all the old arguments are not being made to stand on their head," Chidambaram said to applause from the audience.
Attributing rising global food grain prices to domestic inflation, he said that prices of maize, rice and wheat, all staple items of food, had either doubled or trebled between 2004 and 2008.
The finance minister termed the rise in the price of crude oil as 'greed' overtaking the common good of the world.
The minister also noted that there is no case for raising food prices so high that many poor people could not buy food anymore. Wondering what had happened to the declaration of the Millennium Development Goals and the inspiring slogan 'Make Poverty History', Chidambaram said, "If we are serious about ending poverty, the place to start is to make food and fuel available at reasonable prices at which people can consume adequate quantities of food and at which fuel becomes not a constraint but a driver of growth."
The world must heed the voice of developing countries. In the development of these countries lies the key to putting an end to poverty and making the world a better and safer place for all of humanity, he said.
The relentless increase in commodity and food prices had put enormous burden on the developing economies such as India. He said prices of commodities like oil, urea, metals and minerals had all shot up over the past three years.
"India imports significant quantities of urea. The price of urea was $ 175 per metric ton in 2004. By April 2007, it had increased to $ 288 per MT and in January 2008, it was quoted at $ 370 per MT," he added.
Noting that there were clear signs of a slowdown in the world economy and signs of rising inflation in many countries of the world, Chidambaram said "global slow down, rising inflation and subdued interest in investment make for a combination that can have only negative consequences for developing countries."
He said New Delhi had taken steps to stimulate domestic demand in the Indian economy and added that the measures in the recent Budget should "encourage both domestic and foreign investors to continue to have faith in the India growth story."