High inflation a major challenge in SA: UNESCAP

FE Report Higher food prices exert an upward pressure on inflation in South Asia (SA) where such prices account for a major proportion of the inflation basket, UNESCAP report said Saturday. The United Nations Economic and Social Commission for Asia and Pacific (UNESCAP) report said, "High inflation is a major challenge in SA where inflation has been in double digits in recent years". "Consumers Price Index (CPI) weightings for food account for 58.8 per cent in Bangladesh, 46.2 per cent in India, 46.8 per cent in Nepal, 40.3 per cent in Pakistan and 41 per cent in Sri Lanka," the report noted. Referring to the 2010-11 FY food price the report said, "rising food prices had exceeded headline CPI in Bangladesh by 2.5 percentage point, Nepal by 4.9 percentage point, Pakistan by 4 percentage point and Sri Lanka by 3.3 percentage points representing a key factor in the rise in overall CPI". The reports pointed out that this inflation is leaving an adverse impact on poverty. The report was released at a session of the Fourth South Asian Summit (SAES 4) titled "Global Recovery: New Risks and Sustainable Growth and Repositioning South Asia," organised by the Centre for Policy Dialogue (CPD). The Summit ends today (Sunday). Executive director of Sustainable Development Policy Institute (SDPI) of Pakistan Dr Abid Suleri chaired the session where the report was presented. Dr Aynul Hasan, Dr Hussain Malik and Mr Clovis Freire of UNESCAP conducted the study. It said, "Based on $1.25 per capita poverty line, additional 19.4 million people in ESCAP region remained in poverty due to increased food and energy prices in 2010." "Out of these, high prices prevented 15.6 million people to get out of poverty and pushed 3.7 million people below the poverty line." The session was addressed by renowned development economists and policy makers of the SAARC countries. Brac executive director Dr Mahabub Hossain presented a paper titled "Food Security in South Asia: What should be the Policy Initiatives in View of Supply Uncertainty and Price Volatility" recommending self sufficiency in food to ensure food security. It said, "Achieving food security requires coordinated action like food availability by increasing production of rice, wheat and minor cereals along with vegetables, fruits, pulses, fish and other livestock products." Dr Hossain's paper also emphasised on efficient and well targeted safety-net programmes for the poor and combating social and gender exclusion. "We have to reduce volatility from external shock by building resilience of household against natural disaster. The government should intervene in the market to reduce price volatility," it said. President of Mahbub ul Alam Human Development Centre of Pakistan Ms Khadija Haq while stressing the importance of water in agriculture called for proper water sharing and management in the region. She said, "Rivers that flow through SA are the lifeline of the region's food security. But it has become a bone of contention among a few countries." "Increasing drought and flood and huge water wastage have the potential to cerate a major water crisis in the region," she said. "We should take bold initiative to resolve water sharing between South Asian states," she concluded. Dr Uttam Kumar Dev of CPD, director of the Indira Gandhi Institute of Development Research of India Prof S Mahendra Dev, chairman of Nepal Economic Association Prof Dr Bishwambher Pyakuryal, programme specialist on Poverty in UNDP Dr Biplove Chowdhury, among others, also addressed the programme. All the SA development economists emphasised the need for setting up a common food bank to ensure food security for the people of SAARC countries.