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Thu, 12 Dec 2019

Northeast Today

First challenge for next govt: Food inflation set to return

First challenge for next govt: Food inflation set to return
May 13
13:42 2019

NET Bureau

THE BJP-LED NDA government’s tenure has been marked by benign food prices. Consumer food inflation has ruled below general retail inflation for 31 months running, from September 2016 to March 2019, while averaging a mere 1.3 per cent year-on-year during this period, as against 3.6 per cent for the latter.

But food inflation could well be the next government’s first challenge, regardless of who heads it. The past couple of months have seen prices of a host of farm commodities surge, mainly on the back of drought in large parts of western and southern India, coupled with an early and harsher-than-usual summer.

On Friday, the average traded price of maize at Davangere (Karnataka) was Rs 2,010 per quintal, compared to Rs 1,120 a year ago. Jowar and bajra were, likewise, selling for Rs 2,750 per quintal (Rs 1,600) at Jalgaon (Maharashtra) and Rs 1,900 per quintal (Rs 1,100) at Chomu (Rajasthan), respectively.

A lower crop — 31.5 million bales in 2018-19, down from 36.5 million bales last year — has led to kapas (raw un-ginned cotton), too, quoting at Rs 5,800 per quintal in Rajkot (Gujarat), from Rs 5,250 at this time last year.

According to Vipul Mittal, head (fruits & vegetables) at the online grocery bigbasket.com, the average cost price of horticultural produce has gone up 13-15 per cent year-on-year since March. Thus, tomato prices at Karnataka’s Kolar market are currently averaging Rs 2,000 per quintal, from Rs 580 a year ago, while increasing from Rs 655 to Rs 850 for onion at Lasalgaon (Maharashtra). Even summer season vegetables such as okra, bottle gourd and bitter gourd are wholesaling 36-39 per cent higher than last year; so is radish.

The real problems, though, are in milk. Most cattlefeed ingredients are costing much more now relative to last year. That includes not just maize, but also de-oiled rice bran (up from about Rs 8,950 to Rs 14,350 a tonne), fine rice polish (Rs 16,750 to Rs 20,350), molasses (Rs 3,950 to Rs 7,200) and guar churi/meal (Rs 20,200 to Rs 23,650).

When the NDA government took over in May 2014, annual consumer food inflation was in near double-digits. By end-2016, that was brought down to low single digits by end-2016. Given the associated farm stress caused, it is unlikely that if food inflation returns, the next government — even if headed by Prime Minister Narendra Modi — would be inclined to adopt an overly hawkish approach.

Source: The Indian Express

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