Lok Sabha Question No. 162 (UNSTARRED), answered on 2021-11-29
Subject: Inflation and its Impact on Food and Other Items
Ministry: FINANCE
Asked by: Geetha Viswanath Vanga, Kotha Prabhakar  Reddy

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA UNSTARRED QUESTION NO. 162

TO BE ANSWERED ON 29.11.2021

## INFLATION AND ITS IMPACT ON FOOD AND OTHER ITEMS

162. SHRIMATI VANGA GEETHA VISWANATH: SHRI KOTHA PRABHAKAR REDDY:

Will the Minister of FINANCE be pleased to state:

- (a)  the details of Inflation and its impact on various food and other items;
- (b)  the reasons for increase in inflation on each item/ sector and whether urban poor have been the worst hit by the high inflation that has prevailed over the past one and a half years, and the persistent uptick in fuel prices continues to pose a major threat for them; and
- (c)  if so, the details thereof and the corrective steps being taken in this regard?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

- (a): Consumer Price Index-combined (CPI-C) is the headline inflation rate for the economy. The movement of both CPI-C based inflation rate and Consumer Food Price Index (CFPI) inflation rate  computed from CPI-C during the current financial year (April 2021 to October 2021) are given in the table below. While CPI-C declined consistently from June 2021 with a moderate increase  recorded  in  October  2021,  retail  Food  inflation  based  on  CFPI  has  declined consistently from July 2021 and was very benign at 0.85 percent for October 2021.
- (b) & (c): Inflation rate based on the CPI-C is the headline inflation rate for the economy. From July 2021, retail inflation based on CPI-C is well within the targeted limit of 4% with tolerance band of +/- 2 percentage points set by the Government for the period April 1, 2021- March 31, 2026.  Inflationary  pressure  was  broadly  reported  in  the  subgroups  'oils  &  fats'  and  'fuel  and light' in the CPI-C. The uptrend in inflation has been largely led by exogenous factors viz.

| Inflation rate (%)   |   Apr-21 |   May-21 |   Jun-21 |   Jul-21 |   Aug-21 |   Sep-21 |   Oct-21 |
|----------------------|----------|----------|----------|----------|----------|----------|----------|
| CPI-C                |     4.23 |     6.3  |     6.26 |     5.59 |     5.3  |     4.35 |     4.48 |
| CFPI                 |     1.96 |     5.01 |     5.15 |     3.96 |     3.11 |     0.68 |     0.85 |

CPI-C and CFPI data for last one month is provisional

Source: M/o Statistics & Programme Implementation

increased international  prices  of  crude  oil  and  edible  oils  which  have  an  impact  on  domestic inflation due to India's import dependence on these items. Various measures have been taken by the government to mitigate the impact of price rise on the common man both in urban and rural  areas.  Some  of  the  measures  taken  by  the  Government  to  keep  inflation  under  control include the following:

Crude Oil/Petroleum Products: To  check  the  petrol  and  diesel  prices,  Central  Government has reduced Central Excise Duty on Petrol & Diesel by Rs. 5 and Rs. 10 respectively with effect from 04.11.2021. In response many states governments have also reduced Value Added Tax on petrol and diesel. Retail prices of petrol and diesel have sobered down across the country. Further, India has agreed to release 5 million barrels of crude oil from its Strategic Petroleum Reserves. This release will happen in parallel and in consultation with other major global energy consumers including the USA, People's Republic of China, Japan and the Republic of Korea.

Essential Commodities: Price situation of major essential commodities is being monitored by the Government on a regular basis and corrective action taken from time to time.

Pulses: To control price rise in pulses, some of the measures taken by the Government include: (i) A buffer stock target of 23 lakh metric tonne (LMT) has been approved for 2021-22. Stocks are subsequently utilised for cooling down prices through supply to states and disposal through Open Market sales (ii) Government has also imposed stock limits on some pulses under the Essential  Commodities  Act,  1955  in  July  2021  to  prevent  hoarding.  (iii)  Changes  have  been made in the import policy by keeping Tur and Urad under 'free' category till 31st December, 2021.  (iv)  Basic  import  duty  and Agriculture  Infrastructure  and  Development  Cess  on  Masur have been brought down to zero and 10% respectively. (v) Additionally, 5-year memorandum of understanding (MoUs) have been signed with Myanmar for annual import of 2.5 LMT of Urad and  1  LMT  of  Tur,  and  with  Malawi  for  annual  import  of  0.50  LMT  of  Tur  and  MoU  with Mozambique for annual import of 2 LMT Tur has been extended for another 5 years.

Edible  Oils: To  soften  the  prices  of  edible  oils,  the  import  duty  on  edible  oils  have  been rationalized  and  stock  limits  imposed  to  avoid  hoarding  upto  a  period  of  March  31,  2022. National  Mission  on  Edible  Oils-  Oil  Palm  has  been  approved  with  a  financial  outlay  of Rs.11,040 crore to encourage domestic production and availability of oil palm.

*****