Centre plans series of interventions to cool prices of food
Central govt plans to regulate markets to control high food prices by increasing procurement of essential commodities like tur, urad, & masur pulses.
The central government is preparing to play a bigger role in regulating markets, both as a buyer and seller, to hold down high food prices that have hurt households, kept retail inflation above the central bank’s target of 4% and prevented a cut in the benchmark interest rate.
Many of the measures being planned are aimed at boosting supplies of everyday essentials, while expanding the government’s procurement of commodities, an official said.
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For instance, agriculture minister Shivraj Singh Chouhan in a virtual discussion this past week with his counterparts from various states urged state governments to get pulses farmers to enrol for the Centre’s programme to buy 100% of tur (pigeon pea), urad (black gram) and masur (lentil) at support prices.
Food prices, which account for half of the consumer price basket, have been sticky in a handful of items like vegetables, cereals, pulses and onion. High food prices hurt poorer households more, who tend to spend more on what they eat as a proportion of their monthly budget.
Anticipating a scarcity, the consumer affairs ministry is scrambling to restock a 500,000 tonne onion reserve by buying the bulb from the open market so that it can sell to consumers at cheaper rates.
Onion output dropped 20% in 2023 due to irregular rainfall. A patchy monsoon last year crimped production of winter onions in 2024 by another 20% to 19 million tonne, compared to 23.7 million tonne in the previous year.
Winter onion is crucial because it supplies up to 75% of the country’s annual supply. Consumers are overly sensitive to onion prices because it is a base ingredient of almost all dishes.
“The pace of onion procurement so far is on course to achieve a target 500,000 tonnes for price stabilization,” the official said, declining to be named. Till June 20, the government bought 70,987 tonne of onions, which is roughly comparable with 74,071 tonne procured during the corresponding period last year. The price being paid to farmers is dynamic and linked to market price, the official said.
Vegetable supplies generally decline during the summer, but a drought last year and an ongoing heatwave in large parts of the country have significantly hit availability of greens like cabbage, okra, gourd and turnips.
Prices of pulses, the commonest source of protein for most Indians, have also been elevated, rising 17% in May. On June 21, the Centre imposed caps on the quantities of two varieties of pulses -- tur (pigeon pea) and chana (chickpeas) – that retail shops and traders can store, a measure known as stockholding limit aimed at boosting supplies and curbing prices.
India imports up to 15% of its pulses demand annually; it spent nearly $4 billion on imports in 2023-24 because domestic demand is increasing, making it a volatile group of commodities.
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The government is also considering sales of public stocks of wheat to contain prices after an interministerial committee headed by home minister Amit Shah reviewed the position of food inventories in state-owned granaries, the official said.
“Extreme weather has been the main reason for high food prices, which are unlikely to come down soon. Once inflation takes hold, it takes a long time to dissipate,” said R Mani of the Tamil Nadu Agricultural University.
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