Ahead of state elections, govt takes steps to control food inflation

Ahead of state elections, govt takes steps to control food inflation

Ahead of the upcoming state elections, the central government is taking several steps to control food inflation due to erratic monsoon and uncertainty over kharif harvests.

After imposition of stock limits in pulses, the central government has now increased the import window for pulses and soymeal, allowing imports to arrive not later than January 31, 2022.

Pulses and oilseeds have been on the government’s inflation control radar since May as both the commodities had exhibited bullish trends. So earlier this year, the central government allowed the import of 4 lakh tonnes of tur, 4 lakh tonnes of urad and 1.5 lakh tonnes of moong. On May 5, the government allowed free import of pulses. But the real shocker to the industry came on May 14, when the central government imposed stock limits on how much pulses processors, wholesalers and retailers could hold.

Similarly, in case of edible oil, the central government started cracking the whip when prices saw a sharp rise over the past few months. After reducing import duty on edible oils (both crude and refined soybean and sunflower oil), the government has now invoked the Essential Commodities Act to ask traders, millers and other stockholders to declare their stocks. This, the industry said, was the final step before stock limits are imposed on them to stop price escalation.

Concerns from the poultry industry over the highest ever prices of deoiled soycake (the protein rich solid left after oil is extracted from the seed), had seen the government allowing import of 12 lakh tonnes of the substance. The central government had allowed imports of genetically modifed (GM) soyacake as non-GM material (which is produced in India) is not easily available.

Previously, the deadline for arrival of pulses and that of soymeal was October 31. But over the last few days, the central government has increased the import window.

So, for pulses the deadline for imports under the Open General Licence has been extended till December 31 with last shipments to arrive by January 31.

Bimal Kothari, vice chairman of India Pulses and Grains Association (IPGA), welcomed this move. “The disruption in monsoon for three weeks between June and July compounded by excessive rainfall is expected to hamper the production of tur, urad and moong, which could result in severe shortage in domestic production. The government of India, taking early cognizance of this, has taken a proactive step by extending the import window, which will ensure adequate imports of these pulses to tide over the ongoing festive season, till the new domestic crop arrives in the market. This will also help stabilise prices during the festival season,” he said.

For soymeal, the government has similarly extended the last date of arrival till January 31.

Behind both these measures lies the uncertainty felt at the policymaker level about availability of essentials due to an erratic monsoon. With a six per cent deficit (the country has received 749.6 mm of rains as against the normal of 795.5 mm), the fate of some kharif crops, especially moong and urad, is now uncertain. Even tur, which is mainly harvested in the rabi season, has seen moisture stress in the main growing states of Karnataka, Madhya Pradesh and Rajasthan.

The Wholesale Price Index (WPI) for August had shown both pulses and oilseed higher than other commodities. With elections in five states, including Uttar Pradesh, round the corner, food inflation would be the last thing any government would want to contend with.

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