Excerpts from CNBC-TV18's exclusive interview with Yiping Huang

Q: How stubborn is this variety of food inflation likely to be this year and do you expect it to persist over the next 3-6 months globally?

A: It does look like the food prices will stay at relatively high levels. Normally the supply and demand would have responded to the high food prices in the market but unfortunately when we talk about the demand and supply of food the response is much slower, much more limited, so I suspect we are going to see food prices stay at elevated levels in the coming year.

Q:  How do you think emerging markets generally will combat that sort of food inflation particularly by way of policy measures or interest rate hikes?

A: I don’t think that the interest rate hikes will be very helpful or effective in bringing down food prices but rate hikes, currency appreciation and other quantitative  measures in emerging markets will be very important in controlling inflation expectation, and by limiting the spreading of inflation from the food sector to other parts of the economy.

The important thing is to control food inflation, and some specific measures in the food sectors such as providing subsidies to farmers, increasing imports, and probably, use more from the grain stocks should be taken. These direct measures would be much more effective in dealing with imbalance problem.

Q: From a trading prospective, do you sense that there is a lot more money interest going into a lot of these soft commodities right now? People have been talking about crude and its rocket ship performance but do you see that happening for the soft commodities as well globally?

A: As an economist I probably would not be the best person to comment on this subject but I wouldn’t be surprised with the kind of price movements.   I wouldn’t be surprised, there is lot of money moving around.

Q: Coming to India specifically how do you rate our food shortage and food inflation problem? Do you think a good monsoon can alleviate some of our woes or do you see agriculture prices remaining fairly sticky through the year in India?

A: I think the prices probably will be sticky but India being an agricultural economy and if India has good monsoon it will be relatively easy.  Even if you look at the food prices, at the moment the food inflation is certainly much more modest as compared to some other Asian economies like China, Vietnam and Indonesia. So there is some sense of comfort there but I think the situation can evolve depending on the dynamics of the supply and demand in the coming year.

So the bottom line is, I think, we are going to see relatively high food inflation throughout the year.

Q: When was the last time you saw such a big global inflation scare stoked by hard and soft commodities in recent memory? What are the last relevant parallels that one can draw globally?

A: If we are talking about global experience then probably we are talking about the first time in the early 1970’s and later in the 1980’s when oil prices spiked up quite significantly and we saw inflation everywhere but I think this time unfortunately the food prices and energy prices are coming together. This remains one mystery for most investors that, at a time when the  global economic growth is slowing down, the commodity markets remain stronger and stronger.

Q: For some of these globally benchmarked commodities like wheat and sugar, how much more acceleration do you see in prices?

A: The prices can certainly rise quite sharply, potentially it could rise steadily. I am not an expert to comment on specific commodities and how much the prices can rise in terms of sugar and wheat but if you look at the food situation globally, the overall grain stock is down quite substantially from about 115 days consumption 7-8 years ago, today its only 54-55 days consumption, so there is an imbalance in the food market generally speaking.