India to Sell Rice To Curb Inflation
New Delhi — India will offload about a quarter of its rice stockpiles and ease restrictions on selling fruits and vegetables to stem Asia’s second-fastest inflation as a weak monsoon threatens to curb crop output.
Prime Minister Narendra Modi’s administration will sell 5 million tons of rice from central reserves at subsidized rates as soon as possible, Food Minister Ram Vilas Paswan told reporters in New Delhi this week. It will also help states import pulses and cooking oils if needed, and fix minimum export prices for potatoes to discourage overseas sales, Finance Minister Arun Jaitley said separately.
“In light of the forecast of a below-normal monsoon, some hoarding seems to have started,” Jaitley told reporters Tuesday after a meeting to discuss ways to curb inflation. “We will ask states to crack down on hoarders firmly. The steps are being taken in anticipation of further price rises.”
Modi’s government faces pressure to curb quickening inflation several weeks after taking power in a nation where about 70 percent of the population lives on less than $2 a day. Wholesale price inflation accelerated to the fastest pace in five months in May and consumer prices rose 8.28 percent.
“As a first step, this looks very sensible,” Shubhada Rao, an economist at Yes Bank in Mumbai, said by phone. “The government taking steps to manage all of this will have a much more calming impact on inflation.”
More than half of India’s farmlands get water from the June-September rainfall, which has been 49 percent below normal so far. Food Corp. of India, the nation’s procuring agency, has been instructed not to retain grains for more than 18 months, Paswan said.
Jaitley said farmers will be permitted to sell fruits and vegetables anywhere they wish rather than only in state- controlled markets. The government this week imposed a minimum export price of $300 per ton for onions.
Food costs have boosted the inflation rate in the last couple of months and “the hope is that with appropriate food management these prices will come down,” Reserve Bank of India Governor Raghuram Rajan said in Mumbai Tuesday. He said further tightening won’t be warranted if consumer-price inflation stays on course.