World Bank, IMF responsible for food, fuel crisis: India

May 22nd, 2008 - 3:44 pm ICT by admin  

“This consumption trend has existed for more than a decade,” said Nirupam Sen, India s Ambassador to UN. Thus rejecting the contention that rising consumption in developing nations was responsible for the soaring prices.

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

He criticized the policies followed by the Bretton Woods Institutions (BWI) and their advice to countries to shift from food crops for domestic population to cash crops for exports.

The issue was sparked off after the US and EU said that growth in India and China has led to rise in consumption level and shortage.

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

According to Sen, the initial conjunction of lower food prices and high oil prices led to sale of grain to energy producers for conversion into bio-fuels.

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

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

This is not a primary cause of the crisis, “but it makes it worse,” Sen said.

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