Economic Survey aligns with RBI's projection of inflation at 4.2% in FY26 and 4.8 pc in FY25

The Economic Survey underscored the role of a few essential commodities--Tomato, Onion, and Potato (TOP)--in driving food inflation.

When these three price-sensitive vegetables were excluded, the average food inflation in FY25 (April-December) stood at 6.5 per cent, which is 1.9 percentage points lower than the overall food inflation rate.

Similarly, the headline inflation rate, after excluding TOP, was 4.2 per cent, 0.7 percentage points lower than the current headline inflation.

The survey also highlighted that despite a downward trend in global food inflation, India has witnessed persistent inflationary pressures in certain food categories.

Food inflation, as measured by the Consumer Food Price Index (CFPI), has remained high primarily due to supply chain disruptions and adverse weather conditions impacting production.

The moderation in global commodity prices is expected to have a positive impact on India's domestic inflation.A normal southwest monsoon in 2024 has significantly improved water reservoir levels, ensuring sufficient irrigation for rabi crop production.

The first advanced estimates of agricultural production for 2024-25 indicate a 5.7 per cent increase in Kharif food grain production. Notably, rice and tur production are expected to rise by 5.9 per cent and 2.5 per cent, respectively, compared to 2023-24, which could contribute to easing food inflation in the coming months.

However, the survey also pointed out potential upside risks to food inflation due to rising international vegetable oil prices. Beyond immediate measures, the government is focusing on structural reforms to ensure long-term price stability in essential food commodities.

One of the key strategies is enhancing research and development in agriculture, particularly in climate-resilient crop varieties, to improve yields and reduce vulnerability to production losses.

To address India's persistent deficit in pulses and oilseeds, the government is encouraging increased cultivation in rice-fallow regions.

Another crucial aspect of price stabilization is strengthening data collection and price monitoring systems. The government is implementing robust mechanisms to track prices, stock levels, and storage facilities across different administrative tiers.

The survey pointed out that extreme weather events such as cyclones, floods, droughts, and unseasonal rainfall have exacerbated food price volatility. (ANI)