Food inflation will taper, says Govt

Stresses need to increase productivity across board

“Going by an analysis of inflation data, it is reasonable to predict in the shot term that food price inflation in the coming two weeks will be substantially lower than what the inflation is right now,” Chief Economic Adviser in the Finance Ministry, Kaushik Basu told reporters here.

Analysis of data reveals that the overall food price index rose rapidly last year from June to November. It peaked in the week ending November 27, when it reached 296. The latest weekly data on food for the week ending July 3 this year stands at 296,” he said. This means that on average food inflation has been zero since the end of November 2009, Basu asserted.

Spiralling rise
However, analysts say in the face of spiraling rise in key food items like pulses, milk and vegetables the government projection that food inflation would come down in coming weeks would not cut much of the ice.

He, however, admitted that there were certain food items for which prices had risen…. nevertheless, the inflation (year-on-year) is high. He also admitted that non-food inflation was a “slow pick up” which would have an impact on the overall inflation.

Asked for a solution to rein in food inflation, he suggested the government had to work in the medium to long term to raise food productivity and food production across the board. “We also have to work in the short run to improve our food-grains release technology in those periods when food prices are high,” he suggested.

Growth scenario
On the growth scenario, he projected the Indian economy could grow faster than 8.5 per cent in the current fiscal as forecast in the past.

“We have not yet made formal calculations to revise this as yet. Numerous other forecasters have overtaken our forecast. The IMF has just projected that the Indian economy would grow this year at 9.4 per cent,” Basu said. The “remarkable” growth rate as witnessed in the capital goods and consumer durables segments indicates growing optimism for India’s overall growth prospects in the medium to long term, he said.