As the economy has been relatively unscathed from the third wave of the virus and is projected to grow over 8.85 per cent for next fiscal, the Economic Survey 2021-22 has flagged imported inflation as a risk owing to high global energy prices. The Survey has also suggested the government to develop strategies to incentivise tomato and onion production during the lean season to check price rise. According to the survey, India’s Consumer Price Index inflation stood at 5.6 percent in December 2021, which is within the targeted tolerance band. Wholesale price inflation (WPI), however, has been running in double-digits.
“The inflation in ‘fuel and power’ group of WPI was above 20 percent reflecting higher international petroleum prices. Although the high WPI inflation is partly due to base effects that will even out, India does need to be wary of imported inflation, especially from elevated global energy prices,” the survey flagged.
Whereas factors such as surge in energy, food, non-food commodities, and input prices, supply constraints, disruption of global supply chains across the globe stoked global inflation during the year, on the domestic front, the average headline CPI inflation in India moderated to 5.2 per cent during April-December 2021-22. The domestic inflation has been down from 6.6 per cent as against the corresponding period a year ago. "Proactive measures were taken to contain the price rise in pulses and edible oils that reported high inflation reflecting the impact of imported inflation in these commodities. Notably, the edible oil prices peaked to over Rs 180-Rs 200 per litre during the year.
The survey said that the government should develop strategies to incentivise tomato and onion production during the lean season to check price rise. Seasonal and shock components contribute to the spikes of the tomato and onion prices, it added.
Besides, the government must promote investments in the processing of surplus tomato production and the processing and storage infrastructure of onion, it noted. Cutting wastage of the production and better supply chain management will also help in meeting the demand, it added.
The survey also mentioned that the seasonal components tend to put upward pressure on prices of tomato from July to November every year and upward pressure remain highest in July.