Food for thought! - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Food for thought!

Aug 20, 2003

The day today is being celebrated as Janmashtmi round the country, and most devout of Hindus will be on a fast till the time the divine hour comes at midnight. Well, this seems to be the right day to think about food! And this article proceeds in that direction - towards some food, but for thought! The graph below shows the inverse relationship between GDP per capita and percentage of disposable income spent on food. Is this based on Engel's Law, which states that as incomes rise, food quantity consumed cannot increase much? No! Simply not! Take a closer look and the underlying picture becomes clearer. This graph does not mention rise in income (or disposable income) levels of one country. Rather, it is indicative of different levels of disposable income spent on food in different countries.

The graph above shows that while an average US citizen spends around 11% of his disposable income on food, the same figure for an Indian stands substantially higher at 51%! Does this mean that we Indians eat too much! Or, does that mean the US citizens are sacrificing food for nukes? A resounding 'No' for the former, but we have doubts about the latter! Anyway, while the cause of this divergence lies in the fact that there is a huge difference between per capita disposable incomes in these two nations (assuming from the difference in GDP per capita), the effect is graver still (for India).

A high percentage of disposable income spent on food leaves little for spending on clothes, automobiles, houses, etc. The non-ownership of these assets by majority of Indians (not even clothes) presents a 'poor' picture of people of our country, and of our relatively lower standards of living.

The solution, thus, lies not in reducing our food intake (after all, Indians are not probably the strongest of all), but in improving the standards of living of people in this country. This would require a big initiative from the public sector, the private sector and the government. Doing that will involve, first of all, creation of more jobs and providing higher average disposable income in the hands of people. This can be primarily achieved by encouraging higher levels of investments in to the economy. Post 1991, while the economy has opened up, there is still a long way to go. Even now the level of FDI investments entering the country remain abysmally low. The requirement of the hour is formulation of more progressive economic policies, with a view on the long term and not on election objectives.

Importantly, this initiative needs to be directed towards people living not only in the metros, but more importantly in small towns and villages. After all, more than 70% of our population is inhabiting these lesser-known places. Any improvement in lives of our rural folks would be dependent on improvements on the agricultural front. Apart from benefiting the Indian farmer, this would have an effect on the development of the entire economy, helping us improve our standard of living as then, we would have more in our pockets to spend on houses, cars, and clothes.

Equitymaster requests your view! Post a comment on "Food for thought!". Click here!

  

More Views on News

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

ONGC to NMDC: Here are 5 Stocks Value Investors Should Closely Track (Views On News)

Nov 26, 2021

Before investing in value stocks, research the company and gain insight into why the market is discounting it.

Top 5 Stocks FIIs Bought and Sold Recently (Views On News)

Nov 25, 2021

FIIs have largely stayed on sidelines for the past few months, withdrawing money across emerging markets.

Everything to Know About the Upcoming Tega Industries IPO (Views On News)

Nov 27, 2021

Are you looking to apply for the Tega Industries IPO? You must ensure that you know specific details.

3 Charts on Why the Indian Bull Looks Tired podcast (Views On News)

Nov 27, 2021

Rahul Shah explains the key reasons behind his pessimistic outlook on the stock market.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

How to Hit Rs 100 Crore Wealth in Your Lifetime (Equitymaster Wealth)

Nov 15, 2021

This is how you can achieve the ambitious goal of a net worth of Rs 100 crore.

Don't Sell these Stocks if the Market Falls (Profit Hunter)

Nov 17, 2021

These are the 3 types of stocks that you should not sell in a market crash.

MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing. (Views On News)

Nov 20, 2021

The Rs 19 bn issue is set to hit the market soon.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE SENSEX


Nov 26, 2021 (Close)

MARKET STATS