by Anup Roy

India needs to adopt a sound policy on how to store perishable goods to protect the economy from frequent food price shocks, researchers at the country’s central bank said.

“The vulnerability of the economy to repeated shocks in vegetable prices, especially before and during the monsoon, is due to deteriorations covering transport networks, warehousing and storage technologies,” the Reserve Bank of India said in its monthly report. Major reforms are needed in supply chains. Economy Report Thursday.

It added that these reforms would increase efficiency and productivity and enable “stable prices for consumers, assured supply and remunerative income for farmers”.

This is not the first time that the central bank has blamed lack of cold storage and proper supply chain for rising food prices. In recent months, tomato prices – a staple food of many Indian households – have soared 400% since the start of the year as floods in some parts and scanty rains in others destroyed crops. India’s retail inflation rose to a 15-month high of 7.44% in July on rising food prices.

Last week, the RBI opted to keep rates unchanged – a drastic pause described by analysts – and ordered banks to set aside more cash to mop up excess liquidity, as it stepped up its fight against food-driven inflation. Was given

High prices are also a big issue in India, where previous governments have fallen because they could not control the prices of essential commodities. With national elections only nine months away, the government is considering taking out about $12 billion from the budget to reduce prices.

The RBI estimates that consumer price index inflation will average “above 6%” in the July-September quarter, well above the central bank’s 2%-6% target range.

The central bank warned that potentially adverse weather events such as El Niño could affect agricultural output after September, while oil output cuts “look less likely to exert downward pressure on crude prices for the rest of the year”. Is”. It said, “This is a bad sign for net energy importers like India.”

first published: 18 August 2023 | 11:49 am First

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