The European Central Bank (ECB), in their first quarter 2008 report released in December 2007, even at that time not only stressed the need to keep a close eye on the turbulent financial markets of Europe and the US, but also warned about the danger of high food and energy prices that can result in abnormally high inflationary trends in March/April 2008. The report specifically pointed to a list of countries by name (Pakistan included), which housed high percentages of world's poorest of the poor where the situation can assume rather grave proportions resulting in possible grain shortages and food riots - Malawi, parts of Philippines and Indonesia, Egypt and closer home Bangladesh are already witnessing this phenomenon. Pakistan itself is going through one of the worst inflationary cycles of its 60 years history as we continuously witness the weekly inflation measured through the SPI (Sensitive Price Index) to be in the mid twenties (percentage) since March onwards. Ironically, amidst this serious crisis, all our new economic managers are doing is to talk about are the ills of the previous government rather than giving vision and hope to the people. Experts believe that selfish attitude of the developed and grain rich countries coupled with the unmet demand from emerging markets is to be blamed for the rising food prices worldwide to levels unseen in the last hundred years. Also, the current surge in commodity prices, including food more recently, reminds us that globalisation can lead to upside risks in world inflation. Worryingly, high commodity prices seem to have a long term trend as the growth of leading economies is in turn leading to a surge in the demand for natural resources, food and energy, which logically has a strong and permanent impact on inflation. Pakistan is currently caught in a policymaking dilemma. High inflation, the factor of imminent food shortage and not just the price issue, and a high percentage of less than dollar a day poverty level, leaves it with little option to boldly pursue the free market model where the forces of supply and demand themselves determine the ultimate true equilibrium of price and availability. In such a situation, the government needs to be concerned both about the current inflationary outlook and the medium term upside risks. Shortages in supply of essentials can lead to civil unrest and even the prospects of a weaker or curtailed growth rate are not sufficient reason to expect a dampening of inflationary pressures in the foreseeable future. However, one thing is for sure that something needs to be done and some sort of action is a necessity - No-action is not an option any more. Much that we may disagree with it, let's for a moment analyse what steps our neighbour India has undertaken to boost local supplies and control the price of rice, a food item considered as the number one essential in the Indian dietary habits. On February 28, 2008, India, the world's biggest rice producer, increased the minimum price for overseas shipments of rice and restricted export outlets to boost local supplies and curb inflation. Companies can only export non-basmati rice for a minimum of Indian Rs26,000 or $650 a metric tonne, not including freight costs, compared with $500 a tonne earlier. The government plans to take more concrete steps to curb inflation as the winter crop of wheat, rice and pulses is likely to decline this year when compared to 2007. Winter rice output is forecast to drop to 12.60 million tones from 13.20 million tones. The new minimum export price effectively shuts the door on exports of non-basmati rice from India. The port restriction, however, is going to hurt Indian rice exporters even more. Exporters can ship rice only through ports in Kandla, Kakinada, Kolkata and Mumbai out of a dozen or so major ports that India has. The government has also set a minimum export price for the first time on the shipments of aromatic basmati rice grown in the foothills of the Himalayas. Of these, only the basmati variety priced at Indian Rs36,000 or $900 a tonne can be exported. This means that while basmati rice from India will continue without any trouble as the international prices are way above the minimum price set by the government, the abundant availability of the other varieties in the domestic markets will help ensure an adequate supply level and at the same time will keep the price in check. It is noteworthy that India also resorted to an outright ban on rice exports in October 2007 to make sure that at no time a situation takes such a turn that the poor are driven to streets for want of rice. Now one is not advocating that we exactly copy the Indian model to deal with the looming wheat crisis and mounting inflationary issues relating to essential food items. However, what one is suggesting is that time is running out fast and we need to address the difficulties being faced by the poorest of the poor in the next few days, let alone months. The government can chalk out its own model of either an 'import based' or 'export curtailed' supply base, food subsidies, ration card, food stamps, NAFTA's South American (Chile) style household cash grants, etc., but it must act quickly. Moreover, the government must remain exceptionally alert and flexible to encounter adverse dynamics that may threaten supply and price mechanisms through emerging global challenges, because failure to act effectively at this juncture will see protesters of a different kind. They may not be wearing black coats or for that matter any coats or shirts, but their anger and frustration will know no bounds