India, Dec. 28 -- In a typical market economy, demand and supply determine prices, with limited or no government interventions. Therefore, going by the first principles of microeconomic theory, if the demand is more than supply, prices would rise and vice versa. Sudden spikes in demand and supply shortages are especially felt during calamities such as wars or earthquakes. India, though more of a mixed economy, has had its share of woes with unprecedented price hikes due to demand and supply shocks.

Take tomato prices in India. Some months ago, the price of tomatoes shot up to Rs.200 per kg. This price hike happened due to the low production of tomatoes, which was attributed to scarce rainfall and extreme heat conditions. Shortage of rain...