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April 03, 2008 12:21 IST
Expanding social assistance schemes that directly target poor households in the South Asian countries, including India, is necessary in the face of a dramatic increase in global food prices, a World Bank South Asia expert has said.
World Bank Chief Economist for South Asia Shanta Devarajan advised the governments to enlarge the safety nets by increasing the amount of cash-transfers and the number of people receiving low cost grains while still passing on the price increase to other domestic consumers who can better afford it.
According to the Food and Agriculture Organization, overall food prices have increased by 75 per cent in dollar terms since 2000.
"Most countries in South Asia are net importers of food and have suffered severe terms of trade shocks of one per cent of GDP," said Devarajan.
The foreign exchange earnings and international purchasing power for these countries have also decreased.
Devarajan said food prices are likely to continue to increase in the near future. He attributed this phenomenon to raising standards of living in countries like India and China, increased use of food crops for bio-fuels and animal feeds, and increased oil and fertilizer prices.
In South Asia, which has the largest concentration of poor people in the world, the increase in food prices is particularly damaging since food accounts for a substantial share of poor people's income.
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