Near record crops likely to make dent in India's record food inflation
Inflation hit a three-year high last month, at 18%, as vegetable production was hit by heavy rain across large swathes of the country.
"Onion prices will start falling in the next 10 to 15 days due to the arrival of the crop and imports by some organisations," said Sharad Pawar, India’s farm minister, who is more accustomed to giving a conservative view of crop production.
"I'm sure farmers will soon start complaining of falling prices."
A good monsoon has also meant that the country’s grain production this summer has fallen just shy of an all-time record, which will mean India can indulge its newfound taste for exports. It will also help boost growth in the agriculture segment and is expected to make an impact on inflation.
“The growth in agriculture was lower last year due to relatively weak monsoon, but it will rebound this year because rains are good," said Pawar.
"Today's estimates are the first projections for 2013/14 and invariably we have seen that final estimates are 5-10 percent higher than the first estimate."
Total output of summer-sown grains will fall just 2m tonnes short of the 2011-12 record of 131.3m tonnes, and up 0.9% on last year, according to the agriculture ministry.
This should pave the way for increased exports of cotton, corn, rice and sugar.
Oilseed output is expected to rise by around 15%, and in turn should reduce India's reliance on edible oil imports.
Meanwhile, rice production has fallen marginally from 92.8m tonnes to 92.3m tonnes, although this shortfall will be mitigated by India’s rice stocks, which currently stand at 21m tonnes—more than double the country’s target.
The grain surplus might explain Pawar’s optimism, given that the bumper harvest will provide ample supplies to support the government’s controversial food subsidy programmes. The proposed US$20bn Food Security Bill will require the government to subsidise some 800m of India’s poorest people.