India to take more steps to cool prices of essential commodities, says FM Sitharaman

Finance Minister Nirmala Sitharaman speaks in the Parliament on inflation and economy.

Conscious of the need to maintain affordable prices for essential commodities, the Union government will take more steps to ease the cost of key staples, Finance Minister Nirmala Sitharaman said.

"On these essential commodities we are taking steps, but more will also be taken because we are conscious people need essential items at an affordable price," Sitharaman said while speaking in Parliament on August 10.

The Finance Minister's comments comes on a day when the Reserve Bank of India (RBI) revised its inflation forecast by 30 basis points to 5.4 percent for 2023-24 driving the full-year's estimate to 6.2 percent, which is hundred basis points higher than previously hoped due to a sharp increase in vegetable prices.

After staying within the RBI's tolerance band of 2-6 percent for four straight months, inflation is now expected to have breached the upper-bound of 6 percent last month. Economists see headline retail inflation shooting past 6.5 percent in July because of a surge in prices of vegetables over the recent weeks. The Consumer Price Index (CPI) inflation had eased to a 25-month low of 4.31 percent in May before it swung back to a more-than-expected 4.81 percent in June.

Also Read: RBI Policy | FY24 inflation now seen 30 bps higher at 5.4%, big hike in Q2 forecast

FM Sitharaman also listed out the various steps taken by the government to arrest the rise in prices of key staples reinstating the government's commitment towards reducing inflation. Fresh imports of pulses such as Tur and Urad is expected to cool down prices, she said, adding that measures taken so far on tomatoes, including supply of this vegetable from Nepal by Friday is likely to help the situation.

Tomato prices in wholesale markets of Andhra Pradesh and Karnataka have already come down below 100 rupees a kg, Sitharaman said.

Not only vegetables, the government has been rolling out measures to keep a lid on prices of grains as well amid a surge in cereal inflation. While New Delhi on July 20 banned the export of non-basmati white rice, it also announced selling an additional 50 lakh tonnes of wheat and 25 lakh tonnes of rice under Open Market Sale Scheme (OMSS) to cool prices of these essential commodities.

Also Read: Government to sell more wheat, rice in open market to cool prices

A ban on wheat exports is already in place since May 2022 and last month it imposed stock limits on the grain for the first time in 15 years. However, despite these supply-side decisions, the prices of everyday staples have refused to come down so far.

Continuing on the issue of rising prices, Sitharaman hit out at states governed by opposition parties for not reducing duties on fuel which has led to high inflation in those regions.

"Opposition-ruled states have not reduced the price of fuel as a result of which inflation in those states continue be high. Rajasthan, Bihar, Kerala, Telangana are still keeping fuel prices high. Punjab has in fact raised fuel prices and therefore inflation pressures are being felt. Though the central government has reduced the price twice by cutting excise duty on fuel," she said.

In November, 2021, the central government had reduced the excise duty on per litre of petroleum by 5 rupees and on diesel by 10 rupees, while another round of cuts came in May, 2022, wherein the duty was lowered by 8 rupees on a litre of petrol and 6 rupees on diesel.