Protect rural incomes to tackle the current food security threat

livemint.com:

Retail inflation data released by the National Statistical Office this week shows a moderate rise in inflation to 4.81% in June from 4.3% last month. Despite this increase, the rate is within India’s tolerance band. But it is food inflation that is worrying, having climbed to 4.49% from 2.96%.

This is a big challenge for the government. A deep-dive into consumer price index (CPI) data shows that its foodgrain group contributed the most to the rise in food inflation. Overall cereal inflation is at 13%, with both rice and wheat posting 12% inflation.

Arhar (tur), the dominant pulse item, shows inflation of 27% with a clear rising trend over the months. While there has been an uproar lately over vegetable inflation, the June CPI data has a negative 0.9% reading; so recent price increases are likely to show in July data. But the real worry is the rise in foodgrain inflation, with price pressures building up for both cereals and pulses.

Inflation in wheat has been in double digits for more than a year now. Though the government’s estimate of 112.7 million tonnes suggests wheat production this year will be satisfactory, market estimates indicate that the figure will be much lower. The government being able to procure only 26 million tonnes of wheat as against a target of 34 million tonnes gives credence to market signals.

That wheat prices remained high despite massive open market operations by the government before the procurement season also confirms the fear that wheat supply may not be as high as projected. As a result of low procurement this year and the last, wheat stocks are barely sufficient to meet the needs of the Public Distribution System (PDS) and thus leaves little scope for further market intervention. The