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Minister to monitor dreaded food inflation ahead of bumper harvest

Post a commentBy RJ Whitehead , 11-Jan-2017

© iStock
© iStock

The government has made maintaining stable prices of all essential food items a priority this year in a bid to manage food inflation and temper unrest.

Food minister Ram Vilas Paswan said the government was in a position to tackle food inflation after the laboured National Food Security law began being rolled out. Moreover, Paswan said the this year’s Budget would feature a new Consumer Protection Bill to put a stop to price gouging. 

"During 2016, we were able to control the prices of pulses as well as sugar. This year, our focus will be to keep food inflation under check and protect consumers interest," Paswan told the PTI news agency. 

Retail food inflation dropped by 2.1% in November, according to the most recent figures available. Overall, India saw a modest reduction in its overall inflation rate over the last year, attributed to an extent to the government’s demonetisation policy that reduced the supply of India’s banknotes by 86% and left many without ready funds.

Food inflation can become a serious issue in India, prompting savvy lawmakers to keep a constant eye on official figures so they can act quickly in the event of price increases.

New Delhi does not forget how, in January 1980, Indira Gandhi used the drama of rising onion prices to march back into power. Never one to miss an opportunity to stir the emotions over onions, the symbol of Indian cooking and widely regarded as India’s most important cooking stable, she would wave massive strings of the roots at campaign rallies. 

A government that cannot control the cost of onions is not worthy of being in power, she professed. A generation later, 1998 witnessed both a sixfold increase in the price of onions in Delhi and the fall of the state’s ruling government as a result. 

And in 2011, wary of historical precedent, Manmohan Singh’s administration acted quickly and forcibly to ban onion exports, scrap import taxes and even send for onion supplies from Pakistan. The reason: the threat of a poor onion yield.

Most recently, there was widespread tension in 2013—among politicians and consumers—over the price of food staples. In August that year, price inflation hit a three-year high of 18% after vegetable production was hit by heavy rain across large swathes of the country. By December, onion prices were found to have doubled since the start of the year.

This time round the government has its eye on pulses, after being under siege a year ago by spiking prices of rice, wheat and lentils following a shortfall in production.

Paswan, the food minister, last week assured Indians that there would not be another pulse crisis this year due to an anticipated bumper domestic harvest that is expected to produce a record 20m-21m tonnes. 

Moreover, the government will create a 2m tonne buffer stock, which will be made available once prices begin to rise.

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