Elasticities of Demand for Food in India Ravindra H Dholakia 2016
Financial Analysis
Elasticities of Demand for Food in India By R. H. Dholakia, N. Rao, D. H. Gupta, and L. G. Singh Abstract: The study of elasticities, a fundamental tool of macroeconomic analysis, in this case the elasticity of demand for food (EDF) in India was conducted. The EDF is an important indicator of macroeconomic development, which is directly linked to the availability and affordability of food in the country. This research study aims at
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India is the largest country in South Asia. It is also home to a large population, about 1.3 billion people. This population’s consumption of food is growing rapidly. The consumption of food accounts for about 20-25% of GDP, which is equivalent to about 75% of the country’s GDP if it were measured by the GDP per capita. But the government has been working on improving the efficiency of the food system. A large-scale reform started by the Indian government a few years ago is called ‘
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In this text, I have mentioned the paper ‘Elasticities of Demand for Food in India’ by Ravindra H. Dholakia published in 2016 in the Journal of Agricultural and Food Industry Research. Elasticity of Demand for Food (EDM) is the degree to which quantity demanded changes proportionally with changes in the price of food. It is the change in the quantity demanded for a fixed price of food (‘elasticity’). The EDM in food industry measures the sensitivity of demand to price changes
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Elasticities of Demand (sometimes referred to as the elasticity of substitution, the elasticity of price, or the elasticity of consumption) is the slope of the demand curve (slopes are called elasticities) when the quantity demanded is increased by one unit. The elasticity is the inverse of the ratio of change in quantity demanded (Δ) to the change in price (ΔP). This ratio is called the ratio of elasticity to change (slope) and is a measure of how responsive the demand curve is to
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As India’s GDP growth rate is expected to be around 7.5% in the next five years, the foodgrain prices are likely to rise at an average rate of 4% to 7%. This should not surprise any one. Rise in food grain prices has been one of the most significant challenges for the Indian food grain market and has remained a major contributor to food inflation in the country. go now Inflation is already on its way up. Food inflation will continue to be a major worry for the central and state governments in
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Demand curves for food in India are shown in Figure 3 above. The supply curve is also shown for comparison purposes. The vertical axis represents units of demand, and the horizontal axis represents the price level. The demand curve has been normalized to a single demand curve with a slope of 1.5, which was observed in Japan and in the developed countries, but not in India. If the elasticity of demand is 1.5, then the quantity demanded is proportional to the price level. In India, elasticity of demand for food has been found
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Elasticities of demand for food in India are very high, and there is a need to understand this concept because this can affect government policies, such as price interventions and subsidies. This paper considers two types of elasticities: first-order (e.g., price elasticity of 10 percent) and second-order (e.g., elasticity of demand with time, or time-varying elasticities). First-order elasticity: The basic supply is fixed, while demand is variable. At the highest