India's Food Price Inflation: Gross Neglect of the Ag Sector

Aug. 11 (EIRNS)—Food-price inflation in India surged to a four-and-half-month high of 9.9% during the week ended July 30, on the back of costlier onions, fruits, vegetables, and protein-based items.

Data released by the government on today, shows that prices of onions (a staple in India) went up by more than 36.6% year-on-year, while fruits became 16.5% more expensive. During the week under review, vegetables overall became dearer by 14.6%, and prices of eggs, meat, and fish were up by more than 13.4% on an annual basis.

The unabated food inflation is the hallmark of both the global hyperinflationary blowout, and the Manmohan Singh government's policies, which are focused on growth to attract foreign investment in areas where growth can be achieved with much less effort. Though India's economy has raced ahead at a brisk 7.5 to 9.6%, agricultural growth has foundered at 3%, at times a little above that, often below. Despite the much-touted growth achieved by New Delhi, it is disturbing that India has around the same proportion—24%—of undernourished people as it did two decades ago.

The incompetence of this government is reflected not only in its failure to get the surplus food where it's needed, and thus prevent the middle-men from jacking up the prices, but also in its unwillingness to establish the water management to secure agricultural activities. Sixty percent of agriculture is still dependent on the rains; if the rains fail, or if there are unfavorable variations in rain or other climatic factors, crops suffer.

Although irrigation is critical to sustaining food security, only 35.8% of India's cropland is irrigated; the balance relies on rain. While the $20 billion outlay on irrigation under the 10th Plan (2002-07) was used up, the potential created was only half of the proposed 16 million hectares. The same target has been set for the 11th Plan, and $25.9 billion appropriated, but even the most optimistic appraisals anticipate that no more than 12 million hectares will be added.

Author Quotes EIR: HSBC Is Dirtiest Bank

Aug. 12 (EIRNS)—Quoting extensively from EIR's authoritative book Dope, Inc., author Dave Henderson, in one of the chapters of his book, Big Oil and the Bankers, wrote that HSBC, formerly known as the Hong Kong and Shanghai Bank, has served as the world's number one drug-money laundry since its inception as a repository for British Crown opium proceeds accrued during the Chinese Opium Wars. According to Global Finance, the U.K.-headquartered HSBC Holdings is the world's third-largest bank, with $2.36 trillion in assets.

Sanity: China Opens New Nuclear Power Plant

Aug. 8 (EIRNS)—China put into operation its sixth reactor at the Ling'ao Nuclear Power Station in Dayawan, Shenzhen, yesterday—the first nuclear power reactor to become operational since the Fukushima crisis. China had instituted a countrywide safety check after the March 11 Fukushima tsunami-initiated nuclear accident.

With installed capacity totaling 6.1 million kilowatts, the Dayawan power station has become the largest nuclear power base in China. China now has 14 nuclear reactors in operation, with 27 more under construction.

The new Ling'ao reactor, designated the CPR-1000, is a new type of pressurized water reactor, based on French technology, but was constructed by China.

China Directs Credit To Support Small/Medium Industry

Aug. 12 (EIRNS)—The highest Chinese officials have called for targeted loosening of credit strictures, due to "the outbreak of global financial turmoil," according to China Daily.

On Aug. 9, Premier Wen Jiabao told a meeting of the State Council that China will improve the flexibility of its economic policies and make them more targeted and "farsighted." Zhou Xiaochuan, the governor of the People's Bank of China, also called for flexible monetary policies and urged "further optimization of the credit structure," aiming at introducing more financial support for small and medium-sized enterprises (SMEs), which have consistently been reported to be in dire trouble because of an inability to get loans. Liu Mingkang, the nation's top banking regulator, has said that the nation should implement "differential supervision" over lending quotas, and that the overall volume of loans to SMEs should increase.

Until now, further tightening of credit had been expected. The inflation rate had been increasing month by month, the recently released July numbers showing a 6.5% increase in consumer prices. Additionally, the banking system had already issued nearly 60% of its loan volume target in the first six months.