The pros and cons of govt moves to tame food inflation

livemint.com:

general elections due next year, the government is wielding every weapon in its arsenal to tame food prices. The latest decisions on sugar and onion mean energy security and farm incomes rank lower in priority, at least for now. Mint explains the consequences: So far in December, the government has moved on multiple fronts.

Sugar mills were asked not to use cane juice to make ethanol, to ramp up production of sugar due to a lower anticipated crop following poor rains. This means a temporary setback to India’s target of achieving 20% blending of petrol with ethanol by 2025. It also banned onion exports till March next year—at a cost to onion growers—after an earlier decision to impose a minimum export price failed to check consumer prices.

Then it halved stock limits on wheat, pushing traders and retailers to release additional stocks in the market. Retail sugar prices have seen a moderate uptick, at 4.2% year-on-year, as of 10 December. But since sugarcane production is expected to drop by 9% in the 2023-24 sugar season (October 2023 to September 2024), it looks like the government did not want to take any chances.

According to Crisil, the rating agency, the decision to bar use of cane juice to make ethanol is expected to boost sugar production by 2.5 million tonnes and put a lid on retail prices. For onions, however, the government had strong reasons to act. Retail onion prices have close to doubled—from ₹28 per kg last year to ₹55.4 now.

Data from the consumer affairs ministry shows retail prices of rice and some pulse varieties like tur are significantly higher, about 17% and 41% respectively on-year. Cooking oil prices are significantly lower compared with last year, as prices fell by 15-27%. But vegetable prices