Protect rural incomes to address the current food security threat

A closer look at the Consumer Price Index (CPI) data reveals that its food grains group contributed the most to the rise in food inflation. Overall cereals inflation stands at 13%, with both rice and wheat recording 12% inflation. Inflation in major pulses product Arhar (tur) stands at 27% with a clear rising trend in the last few months. While there has been an uproar over vegetable inflation recently, the June CPI data has a negative 0.9% reading; Hence the recent price hike is likely to be reflected in the July figures. But the real concern is the rise in food inflation, with price pressures mounting for both cereals and pulses.

Wheat inflation has been in double digits for more than a year now. While the government’s estimate of 112.7 million tonnes suggests that wheat production this year will be satisfactory, market estimates suggest that the figure will be much lower. The government has been able to procure only 26 million tonnes of wheat against a target of 34 million tonnes, which gives credibility to the market signals. Wheat prices remained high despite massive open market operations by the government ahead of the procurement season, also confirming fears that wheat supplies may not be as anticipated. As a result of low procurement this year and last year, the stock of wheat is barely sufficient to meet the needs of the Public Distribution System (PDS).public distribution system) and thus leaves little scope for further market intervention.

The condition of rice is also not better. Though the government has enough stocks, uncertainty over the monsoon season looms large. Overall rainfall has been above normal so far this season. But it is the regional spread of the monsoon that should worry the government. The above-normal monsoon is largely the result of 62% excess rainfall over northwest India. The rest of the country has a shortfall – 23% in the southern peninsula and 19% in the eastern region. Given that a large part of northwestern India is irrigated anyway, the region is not short of monsoons. But the rice crop could be affected by excess rainfall and consequent floods. In contrast, a large part of eastern and peninsular India is predominantly rice producing and also rainfed. This is the reason that due to the effect of less rains, the production in the Kharif season may be less. As of 10 July, rice planting was already down 13% from the previous year. While the losses are likely to be small, a deficient monsoon could affect yields. The condition of pulses, mainly Arhar, is also not better. Sowing this year is about 10 per cent less. Even the sowing of oilseeds has decreased by more than 10%, sowing of soybean has decreased by 14%.

While the weather is causing problems, inflationary pressures in food grains are likely to remain elevated. The challenge for the government is to protect Indian consumers, especially those at the bottom of the income distribution, from high inflation.

Due to the increase in the price of fodder, the inflation of food grains is likely to affect other food items like milk. Inflation in milk remained at a high level of 9% in June. Given their disproportionately large weight in the consumption basket, demand for other goods will decline.

But low production due to floods and scanty monsoon rains also means that the government will have to act to protect farmers’ income. There is ample evidence to show that the crisis remains a challenge in rural parts of the country. While wages have held steady in real terms, even employment data points to a decline in income from other sources. Fortunately, government stocks are sufficient to meet the requirements of the PDS, but not sufficient for open market operations for the government to bring down market prices.

Food security interventions through PDS would definitely help in reducing this trauma. But it also needs a comprehensive strategy to protect it. rural economy from the negative consequences of inflation and deflation Agriculture Income. This will require the government to increase public spending to generate demand in the economy, raise income and generate non-farm employment. Food security is not only about providing food grains, but also about increasing the income of the poor so that they can benefit from a diverse and nutritious consumption basket.

Himanshu is Associate Professor at Jawaharlal Nehru University and Visiting Fellow at the Center de Sciences Humane, New Delhi

UPDATE: July 14, 2023, 12:26 AM IST