Food inflation is expected to cool off in the next two months from the current high of about 18 per cent on expectation of better Rabi (winter) crop, Prime Minister’s economic panel member said on Tuesday.
“Food inflation would come down by March-April as we are expecting a good Rabi production this year,” V.S. Vyas, member of Prime Minister’s Economic Advisory Council (PMEAC) told reporters on the sidelines of the launch of a book on agriculture ‘MillionFed’
He said wheat and boro rice harvest during the Rabi season is likely to be good and it will help in containing food prices in the coming days. Sowing for Rabi crops like wheat and pulses is almost complete and the crop will be ready by March-April.
Mr. Vyas said, “We will be able to control food inflation after the arrival of Rabi crop in the next two months.”
Pointing out that the current price surge is a result of supply side phenomenon, he said, “There is a need to bolster supply to contain food prices, which is continuously rising in the recent past. There is a danger of food inflation spreading to the general inflation.”
The overall inflation during December has risen to more than a year’s high of 7.31 per cent led by food inflation, which stood at 17.28 per cent for the week ended January 2.
To keep prices from rising, the government has taken measures to increase domestic supply of sugar, pulses and edible oil through imports.
The PMEAC member said to reduce dependence on imports and for sustaining a high growth rate of 8-9 per cent over the long term, agriculture should grow at at least 4 per cent yearly.
“To reduce the dependence on import of foodgrains in the long term, it is necessary and possible that agriculture grows at four per cent,” Mr. Vyas said, adding that in the current fiscal farm growth is expected to be negative.
“This year, the growth has fallen because of weather. In our review, we have said that agri-growth would be minus 2 per cent in the current fiscal,” he said.
In the next fiscal, he said, “It (farm growth) would depend on monsoon. Let’s hope that we overcome the deficiency.”
While on the overall economic growth, he said, “India is likely to get back to 8-9 per cent growth next year.”
He suggested sector-specific policy interventions to control food inflation. However, he was for tighter monetary policy if food prices continued to soar in the long term.
“My personal view is at the moment it is basically a sector specific-policy which is needed, but if the trend continues, then we will have to think in terms of monetary interventions,” Mr. Vyas said.