Lok Sabha Question No. 2733 (UNSTARRED), answered on 2017-03-17
Subject: Food Inflation
Ministry: FINANCE
Asked by: SATYA PAL SINGH, RAHUL RAMESH SHEWALE, SANJAY SHAMRAO DHOTRE

- (a) whether the food inflation in the country is much higher than the global average;
- (b) if so, the details thereof and the reasons therefor;
- (c) whether the supply of food items has remained weak due to poor irrigation and rural infrastructure, sub-optimal use of fertilizers and conversion of agricultural land into alternative uses in the country and if so, the details thereof;
- (d) whether the Government has initiated any assessment of the impact of demonetization on inflation; and
- (e) if so, the details thereof along with the steps taken/being taken by the Government to protect common man from high food inflation in the country?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI ARJUN RAM MEGHWAL)

- (a) & (b) Food inflation as measured by the Consumer Food Price Index (CFPI) in India was comparatively lower in the last  six  months  as  compared  to  the  global  food  inflation  based  on  the  Food  Price  Index  of  Food  and  Agriculture Organization (FAO) (Table 1).
- (c) Overall supply of food items has been comfortable. As per the second advance estimates (2 nd AE) of production of food grains 2016-17 released by Department of Agriculture, Cooperation and Farmers Welfare, the production of total food grains is estimated to increase to  271.98 Million Tonnes in 2016-17 as compared to 253.16 Million Tonnes in 2015-16 (2 nd AE). Pulses production is estimated to increase to 22.14 Million Tonnes in 2016-17 as compared to 17.33 Million Tonnes in 2015-16 (2 nd AE).
- (d) & (e)  As per the 'Macroeconomic Impact of Demonetisation - A Preliminary Assessment' of the Reserve Bank of India  (RBI),  the  impact  of  demonetisation  on  inflation  in  the  near-term  stemmed  mainly  from  moderation  in  food inflation, especially perishables, as inflation excluding food and fuel remained broadly unaffected. The Government has taken  a  number  of  measures  to  control  inflation,  especially  food  inflation.  The  steps  taken,  inter  alia,  include,  (i) increased  budgetary  allocation    for  Price  Stabilization  Fund  in  the  budget  2017-18  to  check  volatility  of  prices  of essential commodities, in particular, of pulses; (ii) created buffer stock of pulses through domestic procurement and imports;  (iii)  announced  higher  Minimum  Support  Prices  so  as  to  incentivize  production;  (iv)  issued  advisory  to States/UTs to take strict action against hoarding and black marketing under the Essential Commodities Act 1955 and the Prevention of Black-marketing and Maintenance of Supplies of Essential Commodities Act, 1980; (v) imposed 20 per cent duty on export of sugar; and (vi) reduced import duty on potatoes, wheat and palm oil.

| Table 1: Food inflation based on FAO Food Price Index and CFPI (in per cent)   | Table 1: Food inflation based on FAO Food Price Index and CFPI (in per cent)   | Table 1: Food inflation based on FAO Food Price Index and CFPI (in per cent)   | Table 1: Food inflation based on FAO Food Price Index and CFPI (in per cent)   | Table 1: Food inflation based on FAO Food Price Index and CFPI (in per cent)   | Table 1: Food inflation based on FAO Food Price Index and CFPI (in per cent)   | Table 1: Food inflation based on FAO Food Price Index and CFPI (in per cent)   |
|--------------------------------------------------------------------------------|--------------------------------------------------------------------------------|--------------------------------------------------------------------------------|--------------------------------------------------------------------------------|--------------------------------------------------------------------------------|--------------------------------------------------------------------------------|--------------------------------------------------------------------------------|
|                                                                                | Sep-16                                                                         | Oct-16                                                                         | Nov-16                                                                         | Dec-16                                                                         | Jan-17                                                                         | Feb-17                                                                         |
| FAO Food Price Index                                                           | 10.1                                                                           | 8.8                                                                            | 10.8                                                                           | 11.0                                                                           | 16.9                                                                           | 17.2                                                                           |
| CFPI                                                                           | 4.0                                                                            | 3.3                                                                            | 2.0                                                                            | 1.4                                                                            | 0.6                                                                            | 2.0                                                                            |
| Source: Food and Agriculture Organization and Central Statistics Office.       | Source: Food and Agriculture Organization and Central Statistics Office.       | Source: Food and Agriculture Organization and Central Statistics Office.       | Source: Food and Agriculture Organization and Central Statistics Office.       | Source: Food and Agriculture Organization and Central Statistics Office.       | Source: Food and Agriculture Organization and Central Statistics Office.       | Source: Food and Agriculture Organization and Central Statistics Office.       |

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