How Modi govt fixed UPA-era food inflation mess

First Published 14, Apr 2019, 4:01 PM IST
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How Modi govt fixed UPA era food inflation mess
Highlights

Inflation has more than halved under Modi’s regime, averaging 4.8% since 2014. In 2013-14 under the UPA government, food prices had risen by more than 10% annually. 

New Delhi: Food inflation measured using the Consumer Price Index (CPI) rose by 0.1% in 2018-19. Average food prices in the country remained the same as in 2017-18, a phenomenon which happened previously in 1999.

Low food inflation has been attributed to bumper crops, low global prices and increased minimum support prices aided by the introduction of Goods and Service Tax in 2017.

DK Joshi chief economist with credit rating agency Crisil has said that food inflation has been witnessing a downward trend in the last four years due to an above the trend growth in farm produce.

In 2013-14 under the UPA government, food prices had risen by more than 10% annually. Quarterly food inflation for the year 2011-12 was at 10.16% whereas overall inflation in the country was at 6.75%.

Inflation has more than halved under Modi’s regime, averaging 4.8% since 2014.

In February 2019, the CPI-based inflation was at 2.57%, considerably lesser than RBI’s estimated 4%.

The year 2015 onwards there has been better supply management, a shift in demand, favourable global prices and more production with lower procurement prices. 
Economists say the country may have permanently become a low food inflation economy.  

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