The finance ministry’s latest economic review has underscored the optimistic outlook for food prices in India, as a consequence of the above-normal monsoon forecasted by the India Meteorological Department (IMD). The report suggests that the anticipated rise in rainfall is likely to lead to increased crop production, thereby contributing to the expected reduction in food prices.
Based on the economic review conducted in March 2024, it has been observed that food inflation in India experienced a decrease from 8.7% in February to 8.5% in March. The main factors contributing to the rise in food inflation were identified as the elevated costs of vegetables and pulses. In order to address this issue, the government has taken several measures to stabilize prices. These measures include the imposition of stock limits to discourage hoarding, the reinforcement of food item buffers, and the facilitation of imports for essential food items through specific retail outlets.
The government is actively engaged in securing long-term agreements for pulse imports from emerging markets such as Brazil and Argentina. Progress is being made in finalizing deals to import urad from Brazil and arhar from Argentina, in addition to the current contracts in place with nations like Mozambique, Tanzania, and Myanmar for pulse imports.
The CRISIL report on vegetables indicates a possible decrease in vegetable prices after June, as per IMD’s forecast of an above-average southwest monsoon in 2024. Nevertheless, the report emphasizes the significance of the monsoon’s distribution in determining favourable price trends. In March, there was a 28.3% inflation rate for vegetables, showing a slight decline from February but notably higher than the deflation recorded a year ago.
Although there is optimism regarding the potential stabilization of prices due to these advancements, the Reserve Bank of India (RBI) has raised apprehensions regarding the rising costs of food. The RBI recognizes the favourable influence of a remarkable rabi crop on cereal prices, but it also draws attention to the possible hazards arising from weather disturbances and geopolitical tensions that could impact oil prices. On a global scale, significant economies continue to grapple with high food inflation, underscoring the persistent requirement for collaborative endeavours to tackle the pressures exerted by food prices.
