LPG price cut, subsidised tomato rates: How Centre is tackling inflation

The Central government has cut cooking gas prices for households by Rs 200 in an effort to protect consumers from soaring inflation. The government has been taking various steps to rein in the high prices of tomatoes, onions and some other kitchen staples. This comes as food inflation surged to 11.5 per cent in July, the highest in over three years. Also, retail inflation in India climbed to a 15-month high of 7.44 per cent last month. Let’s take a look at how the Centre has been trying to take the sting out of biting inflation as crucial state and general elections near. ‘Rakhi gift’ Union minister Anurag Thakur told reporters on Tuesday (29 August) that the government has slashed Rs 200 on a 14.2-kilogramme LPG cylinder sold to households. The price cut will increase the subsidy to Rs 400 per LPG cylinder provided under the ‘Ujjwala scheme’ to Below Poverty Line (BPL) families. Hailing the announcement, Prime Minister Narendra Modi said, “This is a gift to millions of my sisters of the country”. He added that his government “will always do everything possible that improves people’s quality of life and benefits the poor and middle class.” The move comes amid the cost of domestic LPG cylinders touching over Rs 1,000 in several cities across India. As per Reuters, the latest decision will benefit 10 crore low-income families, a key voter base that has been the most affected by the hike in prices of essential items. Controlling tomato, onion prices The Centre sprung to action as tomato prices skyrocketed in several cities in July. The government intervened to provide the staple to consumers in some major cities, including the Delhi-NCR region, at subsidised rates. Despite the relief, the prices flared up again in early August , retailing at Rs 200 per kilogramme and above at several places. The prices of the kitchen staple, which was earlier being sold at subsidised rates of Rs 90 per kilo, were further brought to Rs 40 per kg from 20 August. On Tuesday, the average price of tomatoes was Rs 58.84 per kg and the maximum rate was Rs 150 per kilo in Uttar Pradesh’s Firozabad. Tomatoes were available at Rs 43 per kg in Delhi. One of the reasons for the reduced prices can be attributed to the National Cooperative Consumers’ Federation of India Ltd (NCCF) importing tomatoes from Nepal. As the demand from northern states for the vegetable fell due to this, the soaring tomato prices also tumbled, noted Times of India (TOI).  As concerns about another kitchen staple making people cry rose, the Centre started selling onions at subsidised prices. According to a News18 report, the NCCF started selling onions at a subsidised rate of Rs 25 per kg to consumers on 21 August. [caption id=“attachment_13057382” align=“alignnone” width=“640”] The Centre has taken steps to rein in domestic onion prices. Reuters File Photo[/caption] Onion prices had witnessed a 20 per cent surge this month. The step was taken within days of the government imposing a 40 per cent export duty on onions. However, exporters and traders were sceptical of the move’s success in controlling the rising domestic prices owing to a fall in production of the bulb, reported Indian Express. The government also decided to raise its buffer stock of onions from 300,000 metric tonnes to 500,000 metric tonnes. The Centre also directed the NCCF and the National Agricultural Cooperative Marketing Federation of India Ltd (NAFED) to buy 1 lakh metric tonnes of onions “to achieve the additional procurement target alongside calibrated disposal of the procured stocks in major consumption areas”. Rice export curbs In July, the Bharatiya Janata Party (BJP)-led Central government banned the export of non-basmati white rice in a bid to control domestic prices. The step was taken as there were fears of a supply shortage in the country due to heavy rains damaging paddy crops in Punjab and Haryana. Less rainfall in major rice-growing states such as Karnataka, West Bengal, Andhra Pradesh, Chhattisgarh and Tamil Nadu also hit paddy sowing. Speaking to Economic Times (ET) at the time, Pushan Sharma, director-research, Crisil Market Intelligence and Analytics (CRISIL) said, “To boot, as of 1 July 2023, rice stock with the Food Corporation of India is down a fifth on-year. The consequent tight supplies meant domestic prices rose 14-15 per cent last fiscal”. He said he expected the ban would reduce India’s rice exports by 4-5 billion tonnes this fiscal. “That should improve domestic supplies and have a moderating effect on retail prices.” India, the world’s biggest rice exporter, accounts for more than 40 per cent of the global rice trade. Recently, the government announced a 20 per cent export duty on parboiled rice and imposed a minimum export price (MEP) of $1,200 a tonne on basmati rice shipments to tame local prices. [caption id=“attachment_13057392” align=“alignnone” width=“640”] The export of some rice varieties has been curbed in India. Reuters File Photo[/caption] This move to fix the MEP has received criticism from exporters of agricultural commodities who believe it would hit their business if the price is over $850 per tonne, reported Indian Express.  Last September, India had stopped the shipments of broken rice, along with imposing a 20 per cent duty on exports of various grades of the grain. Sugar, pulses on the radar India is reportedly planning to ban sugar exports for the next season starting October, the first such move in seven years. According to a Reuters report, this comes as scanty rainfall has slashed cane yields in the top sugar crop-growing states. Previously, the Centre capped the exports to 6.1 million tonnes of sugar for the current season ending 30 September, down from 11 million tonnes the year before. “We’ve allowed mills to export large volumes of sugar during the past two years,” a government source told Reuters previously_._ “But we also have to ensure sufficient supplies and stable prices.” Meanwhile, the Indian government has been trying to improve pulse supplies through imports as well as domestic production to control elevated local prices. With inputs from agencies