The rising prices of commodities, such as food grains and natural resources has led to a sharp cut in real income. The Governments, all over the Globe, are in a panic situation and they are desperately trying to find a break through in the rise in prices. In India, investors have started to benefit in terms of global diversification. HSBC Agri and Natural Resources, ING Global Resources and Tata Natural Resources Funds are some natural resources funds that are set to hit the market in the near future.
Due to increase in population and shrinking area under cultivation, food and agricultural products like wheat, rice, corn , cotton, including processed foods have risen steadily in recent years. India consumes approximately $200 billion worth of food every year. There is a great demand for food due to our changing lifestyles, growing disposable incomes and rapid growth in organized retail sectors. In India, there is a huge infrastructure boom in emerging economies. This has led to higher demand for base metals like iron, copper, zinc and aluminum. India is the lowest cost producers of steel and aluminum in the world, due to factors such as low labour and energy costs and high plant efficiency.
In India there is a severe rise in prices due to sufficient amounts of basic commodities and since there is a rise in domestic and global demand for these basic commodities. This trend is likely to continue. In India, we have precious metals like gold and silver which have traditionally been used for jewelery. The surging income levels and increasing purchasing poor in India and else where have led to rising jewelery consumption. Even Gold and silver are now inflation has led to higher prices of precious metals. Further, with gold being a good hedge against the US dollar, any depreciation in the US recession is likely to boost gold prices.