Economic Survey 2024: Survey notes adverse weather to be blamed for volatile food prices

Union Budget 2024: The Economic Survey 2024 noted that the pandemic and subsequent geo-political tensions presented considerable challenges to the global economy in inflation management. The survey said despite all odds the headline inflation rate is largely under control, although the inflation rate of some specific food items is elevated.

"The supply disruptions inflicted by the pandemic and increased commodity prices caused by heightened global conflicts markedly affected India. As a result, FY22 and FY23 witnessed price pressures in core consumer goods and services. Food prices were affected by adverse weather conditions in the last two years. The net impact of these developments was elevated inflationary pressures in FY23 and FY24," the survey stated.

In June 2024, food inflation, which accounts for around half the overall CPI basket, increased to 9.55 per cent from 8.69 per cent in May and 4.55 per cent in June 2023. 
Vegetable prices had risen 27.33 per cent in the previous month. Food prices have been increasing by over 8% year-on-year since November 2023.

The survey, which was tabled on Monday a day before the Union Budget 2024, further noted:  

> The production prospects of vegetables and pulses were particularly impacted by unfavourable weather conditions. The increase in tomato prices in July 2023 was caused by seasonal changes in crop production, region-specific crop diseases such as white fly infestation, and the early arrival of monsoon rains in the northern part of the country. 

> There were also logistics disruptions in isolated areas due to heavy rains. The spike in onion prices was due to several factors, including rainfall during the last harvesting season affecting the quality of rabi onions, delays in sowing during the kharif season, prolonged dry spells impacting kharif production, and trade-related measures taken by other countries.

> The prices of pulses, particularly of tur, increased due to low production over the past two years, caused by adverse weather conditions. Urad production was affected by slow sowing progress in the rabi season coupled with climatic disturbances in the southern states. The area and output of gram was also lower compared to the previous rabi season.

> Since the beginning of 2023, there has been an increase in the price of milk. This is due to a decrease in artificial inseminations during the peak days of the pandemic, as well as higher costs for animal feed. The milk cooperatives increased the price of milk and milk products to account for increased costs. The milk price increase moderated by the end of FY24.

> It noted the government took prompt actions, including open market sales, retailing in specified outlets, and timely imports, to ensure an adequate supply of essential food items.

> Additionally, to ensure food security for the poor, the Pradhan Mantri Garib Kalyan Anna Yojana, which provides free food grains to more than 81 crore beneficiaries, was extended for a period of five years starting from January 2024.