Centre Plans Stringent Steps To Rein In Sticky Food Inflation

The Centre is considering more stringent steps to control soaring food prices, as inflation in July saw a huge spike led by cereals and vegetables, Union food secretary Sanjeev Chopra has said.

- Zia Haq

Battling high prices since April 2022, triggered by Russia’s invasion of Ukraine, the Union government has taken a range of steps to cool food prices, especially cereals, using virtually all measures from its inflation-control playbook, barring some extreme decisions, such as government-to-government cereal import. But with the climate crisis increasing the frequency and intensity of extreme weather events, 2023 looks as bad, if not worse, than 2022.

Officials maintain there is no need to import grains as there are sufficient domestic stocks, pointing to possible hoarding as reason for high prices of basic grains. “The government has umpteen options (to control prices) and all options are open,” Chopra said.

Yet, retail inflation spiked to 7.44% from a year ago in July 2023, a 15-month high, breaching the Reserve Bank of India’s tolerable limit of 4% on the back of runaway food prices, official data on Monday showed. Inflation of such magnitude is bad news politically and economically, especially a year before the national election. On Thursday, Bloomberg reported, citing unnamed people, that the government is looking to reallocate almost ₹1 trillion (1 lakh crore) from various schemes to fighting food and fuel inflation. On Thursday, HT reported that the government is likely to continue the provision of free grain under the National Food Security Act beyond 31 December this year, the original deadline for this scheme.

The government can do little to boost supplies of perishables, whose supplies have been disrupted by heavy rain and flooding (engendered by the climate crisis and experts expect these shocks to become more frequent, and sharper), although it has scrambled exports fromNepal and activated supply of tomatoes at concessional rates in at least 16 cities, and is releasing a stock of onions (the only vegetable it maintains stocks of) in anticipation of a surge there.