Lok Sabha Question No. 5 (STARRED), answered on 2021-11-29
Subject: Retail Inflation
Ministry: FINANCE
Asked by: Vijayakumar (alias) Vijay Vasanth, S.R. Parthiban

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA

## STARRED QUESTION NO. 5 TO BE ANSWERED ON 29.11.2021

## RETAIL INFLATION

- *5. SHRI VIJAYAKUMAR (ALIAS) VIJAY VASANTH: SHRI PARTHIBAN S.R.:

Will the Minister of FINANCE be pleased to state:

- (a) whether the Government is aware of the jump in the retail inflation as well as the Wholesale Price Index (WPI) to an all time high;
- (b) if so, the details thereof;
- (c) whether the Government has assessed the reasons for higher inflation;
- (d) if so, the details thereof and if not, the reasons therefor; and
- (e) the corrective steps, if any, being taken by the Government to curtail the spiralling inflation rates in the country?

## ANSWER

FINANCE MINISTER (SMT. NIRMALA SITHARAMAN)

- (a) to (e): A statement is laid on the Table of the House.

## STATEMENT REFERRED TO IN REPLY TO THE LOK SABHA STARRED QUESTION NO. 5 RAISED BY SHRI VIJAYAKUMAR (ALIAS) VIJAY VASANTH AND SHRI PARTHIBAN S.R FOR 29 TH  NOVEMBER, 2021 ON RETAIL INFLATION

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(a) & (b) Government regularly monitors the inflation situation in the economy. Inflation rate based  on  the  Consumer  Price  Index-combined  (CPI-C)  and  Wholesale  Price  Index  (WPI) from April 2021 to October 2021 are given in the table below.

| Inflation rate (%)            |   Apr-21 |   May-21 |   Jun-21 |   Jul-21 |   Aug-21 |   Sep-21 |   Oct-21 |
|-------------------------------|----------|----------|----------|----------|----------|----------|----------|
| CPI-C based retail Inflation  |     4.23 |     6.3  |     6.26 |     5.59 |     5.3  |     4.35 |     4.48 |
| WPI based Wholesale Inflation |    10.74 |    13.11 |    12.07 |    11.57 |    11.64 |    10.66 |    12.54 |

CPI-C data for last one month and WPI data for last two months is provisional Source: M/o Statistics & Programme Implementation and M/o Commerce and Industry

- (c) & (d) 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  'oils  &  fats'  and  'fuel  and  light' category in CPI-C. The uptrend in inflation has been largely led by exogenous factors viz. 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. The rise of WPI inflation is also mostly driven by 'fuel and power' and manufactured products inflation, once again driven by increased global prices of crude oil and increase in international commodity/input prices.
- (e)  Several  supply  side  measures  have  been  taken  by  the  Government  to  curb  the inflationary pressures. Some of these include:

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. Consequently, retail prices of petrol and diesel have sobered down.  As  an  additional  measure  to  control  prices,  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 202122.  Stocks  are  subsequently  utilised  for  stabilizing  prices  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, tariffs on edible oils have been rationalized and  stock  limits  imposed  upto  a  period  of  March  31,  2022,  to  avoid  hoarding.  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.

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