Respite from food inflation in 4 months likely; agri will grow at 5% in FY25: Ramesh Chand of NITI Aayog

India’s food inflation surged to 10.9 percent in October

India’s food inflation, which recently surged to 10.9 percent — its highest in 15 months — is expected to ease around March-April 2025 with the arrival of fresh onion, potato, and other vegetable crops, Ramesh Chand, Member, NITI Aayog said. He highlighted that the current inflation is largely due to soaring vegetable prices, particularly onions and potatoes, compounded by high international food prices, but ruled out imports or an export ban on onions for now.

Seasonal crop arrivals to ease inflationary pressures

“Food inflation is a worry and concern. Around March-April, food inflation should start easing. Much of the inflation is from the vegetable side, and in March-April we get a new crop of onion and potato. Winter is good for vegetable production, and pulses also start arriving in the market,” the NITI Aayog Member told Moneycontrol in an interview. He added that international prices for staples remain high, limiting options for import-based inflation relief, particularly with onions.

The government is likely to hold off on an export ban on onions for now, waiting for the new crop to stabilise prices, he added. The FAO’s (Food and Agriculture Organisation) food price index recently hit a two-year high, mirroring global inflationary pressures that are also impacting India.

Agriculture sees 5 percent growth in FY25

After a slump to 1.4 percent in FY24, India’s agricultural growth is projected to rebound to 5 percent in FY25, according to Chand. The growth rate reflects a correction in agricultural cyclicality following a sustained period of high growth up to FY23. “If things remain normal, the growth rate of agriculture should be 5 percent in FY25. Indian agriculture has been moving on the trend growth rate of 3.5-4 percent per annum,” Chand explained, describing this as a positive sign of stability in the sector.

Low pulses production in kharif season

Chand noted a concerning dip in the production of urad, a key kharif pulse, which is estimated to fall to a 10-year low in FY25. There is a serious concern on urad production falling to 12.09 lakh tonnes in kharif this year, according to the first advance estimate by the Ministry of Agriculture. This will be the lowest in the last 10 years as compared to 23.19 lakh tonne urad production in kharif Fy24.

However, for all other pulses, including arhar, production in kharif in Fy25 is expected to be better than last year. Pulses production in FY25 kharif is likely to touch 8.6 lakh tonnes, according to government estimates. In FY24, kharif pulses production was only 8 lakh tonnes.

The country’s total pulse production is around 23 million tonnes (MT), of which 7-8 MT come from the kharif season, while major pulses, including chickpeas and masoor, are produced in the rabi season.

“India imports 3 mn tonnes of pulses on an average. Trade is healthy for stabilising pulses prices. When bumper production of pulses happens, exports benefit farmers. When there is a shortage of pulses production, imports benefit consumers,” he said.

Chand outlined India’s strong push towards self-sufficiency in pulses by FY30, fuelled by increased rabi crop production and a pilot for contract farming led by the National Cooperative Consumer Federation.

“If we keep moving at the same growth rate in pulses, we will move close to self-sufficiency,” Chand said, adding that by FY30, India could meet its domestic pulse requirements entirely.

Edible oil price dynamics

India, which relies on imports for 55 percent of its edible oil needs, remains vulnerable to international price shifts. Recently, the government imposed import duties to prevent the influx of cheap oil and stabilise prices domestically. “The government will decide whether to do away with import duty after analysing edible oil prices for some time,” Chand remarked, adding that the domestic oilseed production outlook has improved, with FY24 kharif oilseed production expected to rise from 24.1 MT to 25.7 MT.

Ethanol blending advancing toward 2025-26 target
India is progressing toward its ethanol blending target of 20 percent by 2025-26, which aims to reduce dependence on crude oil imports. Currently, the blend is slightly above 13 percent, with an increase expected through the use of surplus rice and maize for ethanol production. The government recently allowed 2.3 million tonnes of rice to be allocated for ethanol, balancing food security and energy demands. “The government is not diverting sugarcane to meet the target because food security is primary,” Chand clarified, noting that the surplus in other grains would sufficiently support ethanol production.