High food inflation could exacerbate inequality: Kaushik Basu

New Delhi: Former World Bank chief economist Kaushik Basu on Saturday said India needs to tame inflation that disproportionately affects people who spend a large chunk of their income on food and could exacerbate inequality.

"Even if inflation is at 5.1%, food inflation is at 30%. For someone spending 50% of their income on food, that 30% food inflation is hitting them significantly harder despite government programmes like PM Gareeb Kalyan Yojana providing some relief," Basu said at a Delhi School of Economics event to mark its 75 years of existence.

Basu, who served as the chief economic advisor to the central government under the United Progressive Alliance regime, also underscored the importance of the next 10-15 years for lower middle-income category countries such as India to unleash the demand for labour.


"If the policy is done right - and it will require revisiting India's labour laws - India can unleash the demand for labour," he said.

AI-driven advancements, while promising, pose significant challenges to traditional labour markets, he said. "If we don't act intelligently, AI and digital advances will drive out a lot of traditional labour," Basu said. He cautioned that education alone won't solve issues such as poverty and unemployment, especially as technological advancements like AI begin to encroach on traditional jobs.