International commodity speculation based on the expectation of increased consumption in countries such as India and China is bad news for a democratically elected government. Here, poor distribution systems and outdated legislation allows traders and hoarders to drive up prices at the retail level. This is further exacerbated by the absence of large retailers.

Consequently, the relentless rise in retail prices of basic food grain, oil, pulses and now potatoes is affecting every household in a country which already spends a disproportionately high proportion of earnings on food and basic essentials.

While speculators around the world drive up prices based on India’s overall growth numbers, they ignore the vast disparity between the top 5 per cent of the population, which has been the biggest beneficiary of the economic growth and the majority of India’s 110 crore population, which is just beginning to see financial gains percolate down to them.

The good news is that the government is sensitive to the implications of rising prices and the public distrust about commodity speculation. That is why, despite persistent lobbying by the commodity bourses, large foreign brokerage firms and banks, the government has kept foreign investment out of the commodity markets. But that is not enough; nor is it really feasible to use a policing mechanism to go after hoarders and black marketeers. The government will have to work overtime to change legislation, remove geographical restrictions to the movement of food products and encourage large format retailers. This will cut several layers of the distribution chain, offer better returns to producers and farmers while keeping retail prices in check.