India kept food inflation lower than many large economies: Economic Review

Highlighting that India has managed to keep its food inflation at moderate levels and lower than many large economies, the interim economic review on Monday said that the agriculture sector has performed well consistently. However, continuous innovation in farming practices, crop variety improvements, and technology adoption are essential to meet the growing demands for diversified and nutritious food baskets, it said.

“Given opportunities and an appropriate policy setting, India’s farmers have demonstrated their capability to meet food demand of the rest of the world. The potential is still huge,” it said. This 64-page review takes stock of the state of the Indian economy and its journey in the last 10 years and offers a brief sketch of the outlook for the economy in the coming years, the government said in the report.

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Farming sector

Despite challenges posed by the Covid pandemic and variability in climate conditions, the farm sector, having 18 per cent share in the GVA, has been contributing significantly to India’s economic recovery and development, it noted. The agriculture growth was at an average 3.7 per cent from FY15 to FY23, as against 3.4 per cent between FY05 and FY14. The farm sector grew at 4 per cent during FY23 from the previous year. But in FY24, it is estimated that the farm sector growth may be 1.8 per cent.

Noting that consistent increase in minimum support prices (MSPs) for 22 kharif and rabi crops was one of the important interventions, the review said, adding that it helped bolster the agriculture sector’s growth and resilience. The government in 2018 decided to fix the MSPs at minimum 50 per cent over and above the costs of production (A2+FL).

Source: MoSPI for India an OECD for other countries

It listed several schemes of the Agriculture Ministry such as Pradhan Mantri Kisan Maandhan Yojana (PM-KMY), Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) and Pradhan Mantri Fasal Bima Yojana (PMFBY) which have played a pivotal role in providing financial and income support to farmers.

As of December 12, 2023, over ₹2.8 lakh crore have been transferred to more than 11 crore beneficiaries under PM-KISAN and 23.4 lakh small and marginal farmers have enrolled so far under the PM-KMY and ₹1.5 lakh crore has been paid as claims under PMFBY since launch of these schemes. “Policy consistency and continuity that expand market and production choices for farmers, which, at the same time, keep the larger environmental and ecological considerations and natural resources availability and demand in the country, will be useful in encouraging farmers to adopt new technologies and practices,” it said.

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Timely focus

On food inflation, the review said, “India has managed to keep its food inflation at moderate levels and lower than many large economies.”

Persistence food inflation is a global challenge, even in several developed economies, it said and added that prices of specific food items in India were pressured by untimely rains, leading to crop losses and weather-driven supply chain disruptions. But the government’s timely focus on supply-side initiatives, based on meticulous price monitoring, is giving credibility to anti-inflationary policies. “Measures like strengthening buffers of key food items and making periodic open market releases, trade policy measures aimed at improving domestic availability of food, preventing hoarding through imposition and revision of stock limits and channelling supplies of select food items through designated retail outlets helped to keep inflationary pressures on the check, amidst adversities,” it said.

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