Why inflation targeting works

In absence of a specific mandate, monetary policy was often used to achieve targets unrelated to price stability

The Reserve Bank of India (RBI) officially adopted inflation targeting (IT) as a monetary policy strategy in February 2015. A few days ago, the government notified a consumer inflation target of 4% to be followed till March 2021. Some economists have expressed fresh concerns about the wisdom of adopting IT. These concerns are misplaced. Inflation hurts everyone in the country from households to firms. Even moderately high inflation is bad for growth as is inflation volatility. The primary objective of monetary policy should be to ensure low and stable inflation. IT offers a framework to achieve this objective in a credible and sustainable manner. The adoption of IT by the RBI is a significant step in the right direction. The RBI should stick to this framework and put in place the operating procedure needed to implement IT.

Central banks have the power to print “fiat” money. Unlike money backed by metals such as silver or gold in the pre-World War II era, fiat money gets its value from a legal decree. Every fiat money needs a nominal anchor to tie down the price level. A nominal anchor can take various forms such as money supply, nominal gross domestic product (GDP), value of domestic currency relative to a foreign currency or a price measure such as the consumer price index (CPI). Since the collapse of the gold standard, central banks have tried all kinds of nominal anchors but with limited success. The world has increasingly moved towards inflation targeting where the nominal anchor is the CPI.

IT requires a central bank to adjust its monetary policy instruments in response to the gap between the forecast inflation rate and a pre-announced target rate. Most countries today follow a “flexible IT” framework. This gives the central bank discretion to respond to shocks such as a growth slowdown in the short run and meet the inflation target in the medium run. This is the kind of IT framework that has been adopted by the RBI. The objective is to pin down the value of the rupee to the price of the CPI basket.

IT anchors the inflation expectations of the private sector. It imposes discipline on monetary policy. Before the adoption of IT, monetary policy in India was conducted in an ad hoc manner. The RBI would target multiple indicators ranging from inflation and growth to exchange rate and trade balance. There was no clarity about the primary objective of monetary policy. The lack of accountability, clarity and transparency in monetary policy introduced uncertainty. Uncertainty about the central bank’s monetary policy objective is a risk factor for the economy.

In the absence of a specific mandate to target inflation, monetary policy in India was often used to achieve objectives unrelated to price stability. For example, during 2004-07, in response to a surge in foreign capital inflows, the RBI lowered the nominal interest rate. This was done to prevent the rupee from appreciating. This meant interest rates were kept low at a time when the economy was growing at a very high rate fuelled by a credit boom. A pro-cyclical monetary policy triggered inflationary pressures. CPI inflation began exceeding 5% from February 2006 onward. Post 2008, in response to double-digit inflation, the RBI pursued successive rounds of monetary tightening at a time when growth had begun slowing down. IT acts as a guard against this kind of a discretionary monetary policy.

IT was first adopted by the Reserve Bank of New Zealand in 1989. Since then, the number of countries using IT as a framework to conduct their monetary policy has steadily gone up. As of now, 36 countries, including India, have officially adopted IT (see table). In addition, all 19 countries in the euro zone are bound by the inflation target chosen by the European Central Bank. This takes the total count of IT countries to 55.

Click here for enlarge

Since the 2008 financial crisis, questions have been raised about the effectiveness of monetary policy to boost demand in developed countries where interest rates are close to zero. Yet, IT has stood the test of time through shocks, including the 2008 crisis. No country has moved away from IT as a framework and newer countries have adopted it after the crisis. What has changed is not the overarching framework of IT but the instruments used to meet the inflation target. Under conventional IT, short-term interest rates are the instruments of monetary policy. In the post-crisis period, several developed countries started using unconventional measures such as quantitative easing to achieve the inflation target. IT has continued to be the framework used to anchor inflation expectations. A broad consensus supported by empirical evidence has emerged that IT is effective in delivering low and stable inflation and anchoring inflation expectations in developed and emerging countries.

The RBI has taken the first step towards stabilizing inflation by formally adopting IT as India’s monetary policy framework. A lot more remains to be done in order for RBI to actually become an inflation-targeting central bank. Equipped with the IT mandate, the RBI needs to focus its efforts on strengthening monetary policy transmission (MPT) and putting in place a comprehensive operating procedure. Unless financial market reforms are undertaken to strengthen MPT, small rate changes will not have any effect on aggregate demand and hence inflation. The RBI should consider bigger changes in the interest rate. Small rate changes of 25 or 50 basis points work well in IT countries that have strong MPT. One basis point is one-hundredth of a percentage point.

The RBI needs to build internal technical capacity to forecast inflation using sophisticated econometric models, improve the quality of publicly available macroeconomic data, publish its forecasts of inflation and related macroeconomic indicators at regular intervals, systematically track the private sector’s inflation expectations, form the monetary policy committee (MPC) that will decide the interest rate, and furnish the MPC with necessary information, including data, and models used to forecast inflation.

IT is a whole new regime in monetary policymaking in India. The policy focus should now be on understanding how the new regime works and how this framework can be used to deliver low and stable inflation on a sustainable basis.

No such thing as an economic miracle

The East Asian growth model, for all its wonders, belongs to history—slow and steady may be the only option left

One of the less heralded truths of economics is that growth miracles, while they make for good press, are overrated. It’s an insight that could help us better understand the outlook for developing countries such as China.

Most of the world’s wealthiest and best-governed countries got there without super-rapid bursts of growth. Denmark, which has a per capita income of about $52,000 and is frequently ranked as one of the happiest countries in the world, never experienced what anyone would call an economic miracle. If you Google that phrase, the main entry will be a research piece detailing how, in the 1990s, the country lowered its unemployment rate without having to dismantle its welfare state.

Denmark’s overall economic record is gloriously boring. From 1890 to 1916, per capita growth averaged about 1.9% per year, and if in 1916, you had forecast that this pace would continue for another 100 years, you would have been off by only about $200. Denmark had positive growth about 84% of the time and no deep recessions, according to a recent study by Lant Pritchett and Lawrence Summers.

Or consider the US, where per capita income surpassed Latin America in the 19th century—thanks mainly to the latter’s stagnation. US growth rates at the time were typically below 2%, and even lower up through 1860, hardly impressive by the standards of today’s China or India—or for that matter today’s US. The big advantage of the US is that it avoided major catastrophe for long periods of time, apart from the Civil War, and pushed ahead with fairly steady progress.

The 19th-century Latin American stagnation left much of the region with weaker infrastructure, poor educational systems and a more dysfunctional politics.

Slow growth doesn’t mean that the US or Denmark were failures in the 19th century. It’s hard for economies at or near the technological frontier to rapidly improve living standards, because invention is usually slower than playing catch-up by borrowing technologies from wealthier nations. Such borrowing of know-how, along with exports and rapid investments in education and infrastructure, is what later allowed the Asian tigers of Japan, South Korea, Taiwan, Hong Kong, Singapore and China to achieve growth rates of 8% to 10% a year.

If you are an investor, the experience of Denmark and other “no drama” growth stories provides some clues to the future of developing economies.

The East Asian growth model, for all its wonders, belongs to history. Slow and steady may be the only option left. For whatever reasons, few countries have been able to scale up their educational successes as rapidly as the East Asian tigers. Trade growth, which exceeded overall output growth in the late 20th century, now seems stagnant. Many export industries are automated and hence don’t create as many middle-class jobs as they used to.

In other words, today’s world may resemble the 19th century more than the past few decades. That could mean fairly low measured growth rates, a premium on stability, few if any “break out of the box” alternatives and a time to invest in institutional quality. American democracy arguably was working better by the early 20th century than it was during the presidency of Andrew Jackson, and that helped America cope with later crises.

What’s also striking about the 19th century is that some countries, such as China and India, didn’t keep up. They had some bad luck, pursued bad policies and suffered under colonial and imperial oppression. Foreign rulers often were more interested in control than in producing public goods for the citizenry.

In the next generation, the emerging economies may return to these 19th century patterns. Either they will learn to build slowly and steadily, or quite possibly they will go into reverse.

Vallabhbhai Patel and the making of India

Patel and his deputy V.P. Menon imparted the geographic coherence to India

India has come a long way since its independence 69 years ago. Back then, a hard-fought independence came with besetting problems—partition, communal riots and a refugee crisis. By 15 August 1947, the process of integration of princely states was almost complete but the holdouts—Hyderabad, Kashmir and Junagadh—were the toughest nuts to crack. Add to that the resource constraints, fledgling institutions if at all, and a colonial machinery ill-equipped to deal with changed realities, and the Jawaharlal Nehru government had too much on its hands.

Vallabhbhai Patel, India’s first deputy prime minister and the minister of home affairs, would not just handle these problems with dexterity but would go on to truly become—in the words of Shashi Tharoor—“the man who saved India”. By integrating more than 560 princely states, Patel and his secretary of the ministry of states V.P. Menon imparted geographic coherence to India and prevented its Balkanization, a fate which many predicted would befallthe newborn state sooner than later. Indeed, geographic coherence is far less lofty than the much talked about “idea of India”, but at the same time it is far less theoretical too.

Having made his mark in the satyagrahas of Kheda (1918) and Bardoli (1928), Patel was a strong contender for the role of president of the Indian National Congress in 1929. However, M.K. Gandhi chose Nehru. A loyal soldier of Gandhi, Patel fell in line. History would repeat itself, quite famously, in May 1946 when it was clear that the next Congress president would end up as independent India’s first prime minister. The provincial committees of the Congress favoured Patel, but Gandhi pressed for Nehru. A loyal Patel fell in line, once again.

Personal disappointments did not come in the way of higher duty. Patel would use all the tricks in the bag—including the use of force, as Hyderabad and Junagadh show—to integrate the princely states with the Indian dominion. An administrator by instinct, Patel sought to protect the privileges of the Indian Civil Service officers who were deemed to be compromised on account of their previous services to the Raj.

It is well-known that Patel had many differences with Nehru. On the economy, while Nehru was a committed socialist with a firm belief in state-led industrialization, Patel’s borrowed belief in Gandhian self-sufficiency was tempered by his personal advocacy of private capital. Patel argued against nationalization of industries and was for letting “those who have the knowledge and experience manage the industries and increase the country’s wealth”. He was a major driving force behind the liberal industrial policy resolution of 1948.

In their book Freedom at Midnight, Dominique Lapierre and Larry Collins quote one of Patel’s aides as saying: “Patel came from an industrial town, a centre for machines, factories and textiles. Nehru came from a place where they grew flowers and fruit [sic].”

Patel was among the few to see the dangers from China’s imminent takeover of Tibet. One of the foremost chroniclers of Sino-India relations, John W. Garver records: “Patel advocated a series of practical measures designed to strengthen India’s position: accelerated road building in the frontier areas, strengthening of India’s military capabilities, moves to better integrate the northeastern territories into India.” Garver goes on to say: “Had India adopted Patel’s recommendations in early 1951, history might have been very different.” On Kashmir, the realist Patel had advised Nehru against going to the UN.

These differences were natural as Nehru and Patel were two very contrasting personalities. Nehru was a visionary, abstract at times, Patel a hard-nosed realist, his clarity of thinking was matched only by Subhas Chandra Bose and B.R. Ambedkar among contemporaries. Patel was a man of few words but when he did talk, note Lapierre and Collins, “people listened”. Patel’s loyalty to Gandhi and “stoic decency”—to borrow Sarvepalli Gopal’s phrase—helped avoid an “open rupture” between him and Nehru.

The question often asked: What if Patel had become India’s first prime minister? Any attempt at answering will not just be an exercise in speculation but also unfair to both Patel and Nehru. This newspaper has said earlier that Nehru’s contribution to modern India is immense and cannot be discounted. While avoiding a comparison between the two, a tribute to Patel could be: While it is contested, sometimes bitterly, if Nehru was India’s best prime minister, it is overwhelmingly believed that Patel’s record as home minister has never been bested.

Is the Nehru-Patel comparison fair? 

Economic laws for India

There is scant evidence that low or even negative real rates of interest channel investments into needed sectors

As the country awaits the announcement of a new governor for the Reserve Bank of India and the new monetary policy committee, I thought it would be best to apprise them of India’s uniqueness that makes raising interest rates in India unnecessary. They have to decide only on the timing and the magnitude of interest rate reductions.

1. Monetary policy cannot do anything about inflation because food inflation is not under monetary policy control.

2. In general, India’s inflation problems are deemed to arise from supply constraints, so there is no need for the central bank to tighten policy at all.

3. India’s fiscal deficit does not matter because the Indian government borrows from Indians.

4. Indian banks do not have to worry about non-performing assets because they have more than 20% in government securities.

5. India should have lower interest rates all the time because it would boost investment and alleviate supply constraints.

6. Indian real estate prices can keep rising and will never come down because India has demand all the time. Considerations like affordability ratios do not apply to India and because property prices should always be going higher, do not raise interest rates.

7. In India, higher interest rates will mean wider fiscal deficit because the government’s interest rate burden would rise, because the government will never reduce its market borrowing. Therefore, do not raise interest rates.

8. India can have a combination of lower interest rates, high inflation and cheap currency because India is unique.

9. India can simultaneously have a combination of low interest rates, high inflation, high growth and stable current account balance without any problem because India is different.

10. Savings rates stagnation does not matter for India’s growth because India is India. Therefore, there is no need to raise interest rates.

11. India can simultaneously engage in loose monetary and fiscal policy and the Indian currency would remain unaffected. Foreign direct investment will keep pouring in because the world has no option but to invest in India. Therefore, no need to raise interest rates.

12. Notwithstanding anything said above, we also believe that India is a middle-income country and it is the world’s fastest growing large economy.

13. We are Indians and we are different and hence we can simultaneously believe in all of these without any fear of contradiction or consistency of logic.

Let us get serious now and tackle some of these fantastic claims. Every developing economy would have some supply constraint or the other. In fact, it could be several supply-side constraints. In fact, if anything, it makes the case for demand restraint more urgent and important than less. Therefore, it does not make monetary policy irrelevant but more relevant.

Second, the implicit argument is that higher interest rates that are aimed at restraining demand in the face of an economy operating under supply constraints is that such a policy restrained the economy from alleviating or removing the supply bottlenecks. Unfortunately, the evidence is scant that low or even negative real rates of interest channel investments into needed sectors.

That is why I added the 12th point. We cannot argue that our consumer price index is dominated by food as is typical of a poor country and yet claim that we are one of the world’s top economies on purchasing power parity basis. We have to choose one of the two.

On (3) above, a domestically funded fiscal deficit is not immune from external shocks because of the national income identity. (S-I) + (G-TR+TP) = X-M where TR = government transfer payment and TP = tax payments to the government and G is government spending. Private sector savings - investment balance and government budget balance = external balance. The above identity follows from the basic National Income Identity.

This is particularly relevant for India with a chronic current account deficit. We have both terms on the left in deficit. So, it cannot be open-ended merely because it is internally financed. Contrary to the assumption made by Dani Rodrik and Arvind Subramanian in their paper: Why India Can Grow at 7 Percent a Year or More: Projections and Reflections (2004) that our savings rate would rise towards 40% of gross domestic product, under the old base year of 2004-05, it had gone below 30% and under the new base year is stuck at around 33%. The historical time-series of the savings rate under the new base year is not out yet. Therefore, the higher the fiscal deficit, the wider the overall internal savings deficit and dependence on external savings with all the attendant vulnerabilities to the vagaries of external capital flows.

Even China did not play by its rule for the first 20 or 25 years of its economic reforms programme. Now that they have acquired heft, they are trying to write their own rules. In contrast, a country that is prone to stagflation and external imbalances with stagnant domestic savings does not have the credibility with the market to write and play by its own rules.

Hence, calling for fiscal and monetary loosening is downright suicidal. India is a long way off from being able to pull off such things without the economy suffering real consequences via the currency and bond yields.

Post-reform India produced too many (unemployable) engineers, too few doctors The doctor-engineer ratio has been worsening among young Indians

Post-reform India produced too many (unemployable) engineers, too few doctors

Economic reforms have been blamed by some critics for widening the gap between the rich and the poor in India. They have also created another divide: between doctors and engineers. According to the 2011 census, India has 35 doctors for every 100 engineers in the 60-plus age-group. The doctor- engineer ratio keeps declining among younger people and falls to 15.7 for the 20-24 year age-group. It is commonly believed that more women opt for medicine while men go for engineering. The data confirms this as the doctor-engineer ratio is higher for women across all age-groups. However, the fall in this ratio from the oldest to youngest age-cohorts has been much sharper among women.

To be sure, the ratio was skewed in favour of engineers in the 2001 census as well. However, this gap increased further between the 2001 and 2011 census. In 2001, there were 29.7 doctors per 100 engineers, which fell to 20.7 in 2011. The data also suggests that women became more open to careers in engineering after the 1950s. There were more women doctors than engineers in the 60-plus age-group in the 2001 census. This trend reversed itself in the 2011 census. But as mentioned above, the fall in this ratio from the oldest to youngest age-cohorts is also sharpest among women -- perhaps a function of a rapid strides the IT services business has made in India. Women account for almost a third of the employees in Indian IT services companies

Does this mean the post-reform generation has shunned the medical profession for engineering? Mint has reportedthat there are currently 28000 seats in government medical colleges in India. According to the AICTE website, the sanctioned intake for under graduate course in government engineering and technology colleges for 2015-16 was 67,571. So, it is more difficult to get into a government medical college than an engineering college. To be sure, one can always get into a private college where capitation fees can be paid to get admission. Even through this route, medical college capitation fees are much higher than for engineering colleges, making it difficult to get admission in the latter.

What explains the deterioration in the doctor-engineer ratio? Growth in medical college seats has been a fraction of the growth in the number of engineering college seats. In 1985, 57,888 seats were on offer in engineering colleges in India. By 2016-17, the number had increased almost 27 times to 1,553,711. The 1985 numbers are from a 1989 paper published in the Indian Journal of History of Science, while the 2016-17 numbers are taken from the All India Council for Technical Education’s website. Contrast this with the number of seats in medical colleges. They have risen less than three times from 19,745 in 1985 to 52,205 by 2016, shows data available on the Medical Council of India (MCI) website. To put it differently, India added more than 48,000 seats per year to its engineering colleges in these 31 years. For medical colleges, the increase was just above 1,000 per year. In fact, the medical college seats available in India have only increased by 14 times since independence.

India’s scarcity of doctors is a big problem. The World Health Organisation (WHO) recommends one doctor per thousand people in a country. The latest figures for India are below this benchmark, and much behind that for countries such as China and Brazil. The rapid growth in the number of engineering graduates suggests that India should be ahead of its peers in cutting edge research in technology. Even that does not seem to be true. World Bank data suggests that India’s progress in increasing the number of researchers (in R&D) has been insignificant compared to that made by China and Brazil.

These findings seem to be in keeping with many surveys which describe the bulk of Indian engineers as unemployable. The Hindustan Times reported in January 2016 that more than 80% of Indian engineers remained unemployable. These figures also underline the challenge of maintaining even a minimum standard of education with increasing privatisation. The Medical Council of India (MCI) has been accused of being miserly in granting affiliation to medical colleges; yet, it is scary even to contemplate what the situation may have been in the event of a rapid increase in the number of medical schools, were it to produce results similar to that in engineering. To be sure, a check on increasing private medical colleges has not helped us create a commendable medical education set-up. A Reuters report published last year exposed fraudulent practices in India’s private medical colleges. AWashington Post story published by NDTV showed that more than half of India’s medical schools had not produced a peer-reviewed research paper in a decade.

The government think tank NITI Aayog recently released adraft bill to overhaul the state of medical education in the country. The bill calls for radical reforms including scrapping of the MCI, allowing for-profit medical colleges after doing away with capitation and other hidden fees, and tapping the pool of qualified doctors to meet a shortage of faculty . While there is bound to be a debate on the effectiveness of such regulation in ensuring quality private medical education, there can be little argument over the fact that all such strategies should ultimately keep in mind the inability of a majority of poor people to pay for healthcare.

IIT Madras develops optical system to detect and monitor algal bloom

Chlorophyll is used as a proxy for measuring the phyto- plankton biomass.

An integrated optical system capable of detecting and monitoring algal (or phytoplankton) blooms both spatially and temporally in coastal and open ocean waters has been developed by a team of researchers at the Indian Institute of Technology (IIT), Madras. Very soon, the Hyderabad-based Indian National Centre for Ocean Information Services (INCOIS) will begin using the optical system for detecting and monitoring algal blooms in ocean waters surrounding India. INCOIS is currently in the process of making the system operational.

Phytoplankton are the base of the aquatic food web, providing food and shelter for different organisms including fish. Along with other parameters, phytoplankton biomass (algal blooms) tends to behave as potential zones of fish aggregation. So identifying such algal blooms in real time using satellite data will greatly benefit the fishing community to zero in on fertile fishing locations.

The optical system provides an array of optical parameters and spatial information regarding algal bloom density (chlorophyll) and their causative algal species that are commonly seen in coastal and oceanic waters around India, particularly in the Arabian Sea. Results of the study were published recently in the Journal of Geophysical Research: Oceans.

“A few field-based techniques are available for studying algal blooms. But those techniques are limited in time and space besides being labour intensive, time-consuming and expensive, and hence they cannot be used for monitoring large water bodies. ISRO’s Oceansat-2 satellite launched in 2009 can cover larger areas and provide global ocean colour observations,” says Prof. Palanisamy Shanmugam, the senior author of the paper from the Department of Ocean Engineering, IIT Madras.

The optical-detection system developed by Prof. Shanmugam and his team uses the ocean colour satellite data, in situ measurements and underwater light field data collected from the field to provide algal species-specific information required for their monitoring and assessment.

Unlike the blooms that are found on the surface of water bodies, observing and monitoring subsurface blooms is particularly challenging. Conventional techniques fail when it comes to monitoring subsurface algal blooms. Though the optical-detection system was tested only to detect blooms from near surface waters, Prof. Shanmugam is confident that the optical system is capable of detecting and classifying blooms present under water. “We have not tested to what depth the optical system can be used. We are planning to carry out this study soon,” he says. “We have tested and validated the results of this optical system with in situ measurements of the three algal blooms collected from the ocean waters. The average accuracy of our optical system which was developed in 2015 is over 85 per cent,” he says. The uncertainty in accurately identifying the blooms was primarily due to lack of distinctive water colour, and absence of unique spectral features (in the backscattering coefficients caused by cases of less photosynthetic organisms), fluorescence and chlorophyll signatures associated with the bloom species.

The water colour is determined by particulate matter and dissolved substances in water, while fluorescence is to do with the light energy that gets absorbed by algae and reemitted as fluorescence at a longer wavelength than the absorbed light.

Chlorophyll is used as a proxy for measuring the phytoplankton biomass. The increase in biomass of phytoplankton due to their increased growth or physical aggregation leads to algal blooms. Typically one dominant or a few phytoplankton species are involved in bloom formation.

Some algal blooms including “red tides” and “blue-green blooms” are a serious concern because they can pose significant threats to water quality and risks to human and animal health.

All the major algal blooms are predominantly found to be associated with the cooler water masses off the western coast in the northern Arabian Sea. These blooms then spread into the central Arabian Sea along with a whirling motion of waters and currents. The blooms reach its peak spatial distribution between November and February and minimum in June to September. Strong upwelling along the Arabian Sea coast triggers initiation and growth of algal blooms, while enhanced cooling, vertical mixing, favourable winds, and atmospheric deposition of the mineral aerosols from surrounding deserts further aid its growth. The Bay of Bengal is relatively free of algal blooms except off the Ganges–Brahmaputra Estuarine Frontal system and estuarine and coastal regions where nutrients are abundant supply.

Biofortification: Micronutrient-built-in grains

Mahatma Gandhi was always advocating us to eat hand pound rice and hand ground wheat rather than eating polished rice. Yet we continue using machine-polished cereals because they can be stored longer. But machine-polishing removes the bran (surrounding the seed) containing the pericarp and the ‘aleurone layer’ which have small amounts of essential nutrients such as some vitamins, iron, zinc and other inorganic components. So, Gandhiji was right! Machine-polished grains are thus poorer in such “micronutrients.”

This leads to what is today termed as “hidden hunger.” You may a eat stomach full of food everyday and yet miss out on these micro-nutrients essential for the growth and health of the body. UN agencies estimate that hidden hunger affects one in every three children across the world, leading to deficiency in physical growth and development of the brain. Children missing out on vitamin A suffer from vision problems. Missing out on iron leads to blood disorders while deficiency in zinc retards growth, causes diarrhoea, hair loss, lack of appetite and other health issues.

A programme in India, started way back in the 1970s by Dr Ramalingaswami of ICMR, administering large amounts (megadose) of vitamin A every six months to children, has been found serving in helping them come out of “night blindness.” This is because a derivative of vitamin A is essential in the retina of the eye in harvesting light and converting it into electrical signals which aid the process of vision.

Dr Maharaj Kishan Bhan, earlier at the All India Institute of Medical Sciences and was the Secretary of the Department of Biotechnology of the Government of India in New Delhi has come out with a salt mixture containing some of the micronutrients including zinc and iron, to be given to children suffering from diarrhoea and dehydration. The results are strikingly positive; with micronutrient supplementation, particularly zinc, in young children with acute diarrhoea was found to be very useful indeed.

Why is zinc so important to the body? This is because over 300 enzymes in our body use zinc as an essential component in their action. Zinc is essential in supporting our immune system, in synthesising (and degrading) DNA, in wound healing and several other activities. And the amount of zinc we need is not very much. In a human body of, say, 70 kg, there is but 2 to 3 grams of zinc. But if the level falls down to below normal, growth is retarded, diarrhoea sets in, eye and skin lesions appear, and appetite is lost. Thus, addition of zinc in the daily diet becomes essential.

While downing tablets containing vitamins and some of these minerals is fine, this is no solution to billions of children, largely in the developing world. But what if, rather than supplementing these micro-nutrients separately, they become part and parcel of the rice, wheat and other cereals we eat daily? Are there rice or wheat plants which are inherently rich in some of these micronutrients? Can they be grown, cross-bred or hybridised with other conventional rice or wheat plants? This has been the dream of agricultural scientists across the country, and the group led by Dr Vemuri Ravindra Babu of the Institute of Rice Research (of the Indian council of Agricultural Research or ICAR) at Hyderabad has succeeded in doing so, after a pursuit that has lasted for over 12 years. A particular variety, termed DRR Dhan 45 (also termed IET 23832) is a zinc- rich rice plant developed by this group. It contains as much as 22.18 parts per million of zinc (the highest so far in released rice varieties) It is also moderately resistant to pests that kill rice plant by causing the leaf blast disease.

Arriving at DRR Dhan 45, the high zinc rice was not an easy task. Starting in 2004, it has involved screening several thousands of rice varieties from various parts of India, checking the zinc content in each, choosing as many as 168 of them which looked promising, analyzing the iron and zinc content in them, rigorously screening them and cross-breeding and combining the high yield plant with the high zinc one, and finally getting the variety IET 23832 or DRR Dhan 45. It has truly been a long haul and this effort of “biofortification” (meaning that the fortification or enrichment is inherent, rather than externally added, as in the Bhan method) succeeded. It is also important to note that the zinc and other mineral content are not lost upon polishing. The rice can thus be kept for long and used, and it tastes just as good as the conventional variety.

Also note that this is not a GM (genetically modified) crop, so it bypasses any unnecessary controversy. An added benefit is that DRR Dhan 45 has a low glycemic index (51 against 75 in conventional rice), so that it is good for diabetic patients. Dr Babu tells me that it also takes a little longer to digest and thus you feel sated! Their current coordination effort is to develop similar zinc and other nutrient rich varieties of wheat, maize and millets under the ICAR Biofortification. Let us wish them the very best in their endeavors!