Explainer: When and how will food prices in India come down…?

Explainer: When and how will food prices in India come down…?


New Delhi:

Food inflation in India remains at around 8% year-on-year through November 2023, with no signs of relief in the near future due to supply-side factors such as the impact of adverse weather on crops, the early arrival of the monsoon, and the possibility of above-normal rainfall. Now the debate has gained momentum as to when the prices will come down or when the prices of food items will come down.

As news agency Reuters reported, core inflation remained above the Reserve Bank of India’s (RBI) target of 4 percent due to rising food prices, which represent nearly half of the overall consumer price basket, leaving the central bank unable to cut interest rates.

Even the early arrival of monsoon did not help

India’s agricultural production is largely dependent on rainfall, and although this time the monsoon reached the southern tip of the country a little earlier, and was set to cover the state of Maharashtra on the west coast earlier than expected, this initial momentum soon slowed down, resulting in the The season has received 18 percent less rainfall so far.

This weak monsoon also brought heat waves and delayed the harvesting of summer crops, which grow fully only when there is sufficient rainfall. However, despite sporadic rains in June, the Indian Meteorological Department has predicted above average rainfall for the rest of the monsoon season.

Why is food inflation increasing continuously?

The drought in many parts of the country last year and the ongoing heatwave this year have reduced the supply of food items such as pulses, vegetables and grains. The effect of government curbing food exports and reducing duty on imports is also said to be negligible.

Although the supply of vegetables is usually low in summer, the decline is more pronounced this year. Almost half of the country has seen temperatures rise by 4 to 9 degrees Celsius above normal, causing not only the spoilage of harvested and stored vegetables, but also halting the sowing of onions, tomatoes, brinjal and other crops. Palak is also being disrupted.

Generally, farmers in the country prepare vegetable seedlings before the monsoon rains that arrive between June-September, which are then planted in the fields. But this year due to excessive heat and lack of water there was a hurdle in preparing and planting the seedlings due to which the scarcity of vegetables increased.

When will the prices of vegetables come down…?

It is reported that if the monsoon resumes, and potentially spreads across the country as per the normal schedule, vegetable prices are expected to drop from August onwards. However, it should also be kept in mind that if there are floods in July and August or prolonged drought conditions, crop production may be disrupted.

Prices of milk, cereals, rice, pulses and sugar do not fall…

So, it is very clear that due to shortage in supply, prices of milk, grains and pulses are not likely to come down in the near future. The supply of wheat is also decreasing and on the other hand the government has not announced any plan to import the grain and due to this the price of wheat may increase.

Apart from this, rice prices may also rise, as the government has hiked the minimum support price of paddy by 5.4 percent on Wednesday itself. Last year’s drought badly affected the supply of pulses like arhar, black urad and gram and will not improve until the new season’s crop is harvested.

On the other hand, sugar prices are also expected to remain high, as production is expected to be lower in the coming season due to under-sowing.

Will government intervention reduce prices…?

If the government bans exports and takes steps to facilitate imports, it will definitely help in reducing prices. However, even the measures taken by the government may not be effective in raising the prices of vegetables, as vegetables spoil very quickly, and their import is also very difficult.

However, the government also took several measures to reduce the prices of food items, under which exports of sugar, rice, onion and wheat were banned, but such measures angered farmers, and the 2024 Lok Sabha elections. During this period, the ruling Bharatiya Janata Party (BJP) at the center has also suffered losses in rural areas.

Assembly elections are soon to be held in the states of Maharashtra and Haryana, where the large population of farmers heavily influences the results. The central government is trying to get farmers back on board, and instead of taking drastic measures ahead of October’s assembly elections, it may allow some crop prices to rise.


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