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Food inflation at 11-year high, Govt to step up imports
With the country’s annual food inflation rate climbing to 19.95 per cent for the week ended December 5, according to figures released by the commerce and industry ministry, a worried government indicated that it was stepping up imports to shore up supplies. Zia Haq examines...Higher and higher
Food prices are rising faster than in the past 11 years.
With the country’s annual food inflation rate climbing to 19.95 per cent for the week ended December 5, according to figures released by the commerce and industry ministry on Thursday, a worried government indicated that it was stepping up imports to shore up supplies.
The spike has comes just after what has been dubbed India’s worst drought in 37 years, which sharply trimmed production of grain and other farm goods.
“Food prices are an area of concern,” finance minister Pranab Mukherjee said. “We have to take appropriate measures to see what best can be done by augmenting the supply through imports.”
The government is still keeping options of importing rice open, as the drought is set to trim summer (kharif) rice crop. Agriculture secretary T. Nanda Kumar said the government has revised its estimate for rice output this season to 71.65 million tonnes, up 2.2 million tonnes from its earlier forecast.
Kumar said if the shortfall from last year narrows, the government need not import, given that state-run warehouses already hold more than 14 million tonnes of rice in stocks.
Still, rice prices are rising steadily, averaging a 16 per cent spike in the past one year.
The trend is much the same for other food items. That is why the food price index has been rising: from 13.68 per cent as on October 31 to 19.05 per cent at the end of November to nearly 20 per cent now.
Prices of non-staples have surged. Potato prices have increased 42 per cent in the past year, pulses 19 per cent, while onion prices have risen 39 per cent.
India is more vulnerable than others to food price swings. For example, a 20 per cent rise in rice price would translate to a 2.2 percentage-point rise in the consumer price index, because of the relatively large part of the consumption basket of most Indians that food comprises.
While production of many items remains below demand, imports have also suffered due to high international prices.
Sugarcane production for 2009-10 is expected to be 16 million tonnes against a demand of 23 million tonnes. With carry-over stocks of 2.4 million tonnes, India hopes to import 5 million tonnes to meet demand.
The demand for pulses — about 18 million tonnes a year — outstrips production, which has declined to 14.66 million tonnes from last year’s 14.76 million tonnes.
The government has signed deals to import 4.8 lakh tonnes of pulses of different varieties to augment availability, of which 2.97 lakh tonnes have landed. The remaining 3.89 lakh tonnes will come in phases, which means prices will remain under pressure.
(Mahua Venkatesh contributed to this story)
