Singh: Inflation worry
New Delhi, April 24: Prime Minister Manmohan Singh will chair a meeting of the Planning Commission next week to take stock of the economy, which is once again staring at a spurt in wholesale and retail prices given the possibility that the monsoon may be less than normal this year.
According to experts, Singh will turn his farewell meeting with plan panel members into a review of the economy and could order urgent steps to curb a price rise.
Farmers look forward to a good monsoon for their main kharif crop. However, a metereological department forecast released today said the monsoon would be weaker than normal this year, with rains expected to be 95 per cent of the long-term average. Analysts predict that a lower crop output will push up prices.
Overall inflation in the food basket, including beverages, increased to 9.1 per cent in March from 8.57 per cent in the previous month, according to data released last week.
“This year could be a below normal monsoon as there is a strong possibility of the emergence of the El Nino weather phenomenon — a warm weather system that starts in the southern Pacific and can affect weather around the world ... and that means lower food production for India .... something which we will have to worry about, regardless of who is in power,” said plan panel officials.
India has in the past stocked up on food and put in place import lines to tackle possible crop losses because of a bad monsoon.
El Nino last affected India’s monsoon in 2009 when rainfall was 23 per cent below normal.
Last year was above average in terms of rainfall, resulting in record grains production at 262 million tonnes for the 2013-14 crop from July.
Higher food prices will push up overall consumer inflation to about 8.7 per cent in April and May.
Retail inflation accelerated to 8.3 per cent in March after easing for three months, while wholesale inflation jumped to 5.7 per cent in March from a nine-month low of 4.7 per cent in February.
However, Crisil’s chief economist D.K. Joshi said, “Though the monsoon forecast is not encouraging, I won’t press panic buttons ... we need to to be concerned and prepared so that we are not taken by surprise.”
Any sustained flare-up in inflation could convince the Reserve Bank of India to start raising interest rates again.