India's food price surge forces government measures to improve supplies
India driven by uneven and scanty rain is forcing the government into a series of measures to boost supplies and ease inflationary pressures.
While annual retail inflation was at a 15-month high of 7.44% in July, food price inflation rose to 11.5%, its highest in more than 3 1/2 years, pushing Prime Minister Narendra Modi's government to act quickly to avert any backlash from voters in upcoming state and national elections.
To ease the hardship for low-income consumers, the government is considering expanding a free food programme which is due to end in December, according to two government sources who declined to be named as they are not authorised to speak to the media.
Food subsidies are estimated to cost the government 1.97 trillion Indian rupees($23.83 billion) in 2023/24 and an expansion of the free food scheme could raise the bill.
The government has stepped up sales of subsidised vegetables, particularly onions and tomatoes, through its distribution network, while releasing stocks of wheat and sugar into the market to cool prices.
The measures could cumulatively cost the government over $12 billion, the government sources said.
Additionally, the government is set to ban sugar exports for the first time in 7 years, having banned exports of key categories of rice last month.
Reuters has reported that the government is also considering importing wheat for the first time in years.
The government is more concerned about cereals and pulses, which have the largest weight in the consumer food basket, than perishables, said another government source who also declined to be named.
While the government will avoid knee-jerk actions, it will be proactive in curtailing inflation, the source said.
Neither the Finance Ministry
