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At a time when food inflation stands at extremely high and rising, pulses have rendered a much needed relief to Indian households. Inflation in pulses has fallen sharply to (-)4.8% between April - October this year as compared to a staggering 23% in the corresponding period previous year.
A CRISIL study forecast that the falling trend in pulses could continue to remain low for a few more quarters at least until the new rabi season estimated bumper crop hits the market. Beyond that, however, inflation in pulses will depend on demand revival and on whether farmers continue to increase production, it adds.
Food inflation in India has been on a steady uptrend this fiscal, rising to 18.2% in October. Surging prices of rice, fruits and vegetables; and animal protein (eggs/meat/fish) have been the primary drivers of inflation. While overall food inflation has averaged 13.3% during April-October, inflation in these three commodity categories alone is at 15.1%. With a weight of 79% in primary food, they have contributed 84% to food inflation in the fiscal so far.
But contrary to perception, not all food items have seen a spike in prices. Pulses, for one, have actually seen a decline. In sugar, too, prices have fallen 6.9% in October compared with the previous peak of 18.4% seen in September 2012. Edible oils prices are lower at 0.7% in October compared with around 10% inflation a year ago.
As measured by the wholesale price index, pulses prices fell 4.8% in the first seven months of this fiscal.
Increases in acreage, a marked improvement in yields and lower reliance on imports have kept a leash on pulses prices. Slowing income growth and a likely moderation in demand for pulses have helped, too.
So much so, though some increase is expected in coming months as the commodity corrects from the current bout of deflation, good monsoons, lower hikes in minimum support prices and moderate demand could well keep pulses inflation low over the next few months, too.
To be sure, several other food categories have also begun to witness a decline in inflation rates. And this demands attention. For instance, cereal inflation has declined to 12% in October after hovering around 17-19% a few months ago.
But the sustained decline in the prices of protein items offers greater relief, given that India is the world's largest producer, consumer and importer of pulses, which are also a primary source of protein for vegetarians.
Meanwhile, the National Sample Survey Office (NSSO) data suggest that household spending on pulses has risen almost 12% per year between 2004-05 and 2011-12. Over this period, inflation in pulses rose to 9.6% from 1.1% between 2001-02 and 2004-05. In 2012-13, pulses inflation again touched a high of nearly 20%.
But while per person spending on pulses doubled between 2004-05 and 2009-10, the net availability of pulses remained stagnant. This means in real terms, consumption is likely to have seen very little pick-up.
Pulses prices started falling in 2010 -11. Pulses inflation started falling in 2010-11 when prices fell for 10 consecutive months on the back of a bumper crop. Production in that year jumped to 18 million tonnes from 14.7 million tonnes in the previous year as area under acreage increased by 3 million hectares.
For 2010-11 and 2011-12, pulses inflation averaged at a low 2.9%. In 2012-13, however, some damage to the crop due to delayed and uneven pattern of southwest monsoons put pressure on prices. Prices have been on a steady downtrend thereafter.
During this period, though the increase in acreage helped raise production, the bigger push to production came from a steep improvement in yields. Rise in yields was led by high minimum support price (MSP) in pulses which incentivised farmers to shift acreage towards pulses production, and the National Food Security Mission-Pulses (implemented in 14 pulses producing states covering about 98% pulses area in the country) aimed at increasing pulses production by 2 million hectares by 2011-12.
Under the programme, the government not only promoted improved technology and crop advisories, but also distributed critical nutrient inputs free of cost and provided seeds and extended nutrient management at subsidized prices to the farmers. Yield in pulses has risen from 570 kg per ha in 2009-10 to 650 kg per ha in 2012-13.
