Bhubaneswar: When the price rise has been the major concern of Indian households, the Economic Survey 2024-25 tabled in Parliament Friday by Finance Minister Nirmala Sitharaman reveals big on the haunting price rise in essential commodities like dal, edible oil, tomato and onions.
Join the Whatsapp Channel to Get News updates in english
The Eco-Survey acknowledged that since India faces a persistent deficit in the production of pulses and oilseeds, along with frequent fluctuations in tomato and onion production, it lead to creating price pressures on household consumers.
DAL, TOMATO & ONION PLAYS SPOILSPORT
As per the Economic Survey 2024-25, the high food inflation scenario in India has been attributed to the following three edible commodities
- Tomato
- Onion
- Tur dal
WHY TUR TROUBLESOME?
The Eco-Survey addressed the reasons behind the three turning troublesome for common men on streets, it says:
- Deficient production of tur in 2022-23 and 2023-24 has indeed led to high price pressures in tur dal during FY24 and FY25 (April-December), despite various measures by the government to shore up the supply in consuming regions.
- Production declined by 13.6 per cent in 2022-23 and 10.8 per cent in 2023-24 compared to the last 5-year average, affecting the supply.
- The survey reasoned that over the past decade, there has been a strong negative correlation (-0.8) between the annual inflation rate and the 1-year lagged production, indicating that lower production in one year typically results in higher inflation in the following year.
- As a major Kharif pulse, tur is harvested from November to January, with its price impact mainly observed in the subsequent financial year.
- To meet the demand for tur, the country imported 7.7 lakh tonnes of tur in FY24, mainly from Mozambique, Tanzania, Malawi, and Myanmar
WHY TOMATO – ONION PRICE PLAY?
The Eco-Survey has noted the following behind the high price play these two perishable edible commodities bring in India.
The Survey revealed big – despite lower consumption than production, the two commodities hold the country’s inflation to ransom.
* Analysis of the past three years shows that domestic household consumption is lower than production for both tomatoes and onions.
- Quoting Horticultural Statistics at Glance 2021, the Survey finds that approximately 15 per cent of production is used for bulk consumption in hotels, marriages etc.
- Even while treating this as a net additionality to household consumption, the production is still higher.
WHY THEN PRICE RISE?
The Economic Survey reveals BIG – the price pressures are not fundamentally due to a shortfall in production but to post-harvest losses, seasonal production, and regional dispersion in production.
- It also blamed the spurt on exports.
- The Survey says, onion exports averaged more than 6 per cent of domestic production during FY20 to FY24.
- The survey says, tomato prices typically rise from July to September, the lean production season coinciding with the monsoon, adding to challenges related to distribution and increased transit losses.
- Onion prices tend to increase from October to December, representing a lean season for onion production.
ECO-SURVEY FAILS TO FIND INSURANCE FROM T – O SHOCKS!
According to the survey, since India is a major producer and consumer of onion and tomato, this significantly limits the potential to import during times of seasonal supply and demand imbalances.
The survey says, India and China contribute about half of the total production of onion, the import options for India during periods of demand-supply imbalances are quite limited.
The survey says the next eight major producing countries only contribute around 18 per cent of the production.
Also, the highly perishable nature of tomatoes restricts import options from neighbouring countries, which are not significant producers of tomatoes.
Consequently, India faces challenges in importing these essential commodities.
To address this, focused research is needed to develop climate-resilient crop varieties, enhancing yield and reducing crop damage. Efforts to expand the area under pulses in rice-fallow regions are likely to help
WHY TOMATO, ONION PRICES GO BERSERK IN 2024?
Analysing the reasons, the Eco-Survey has blamed heat wave and monsoonal disruptions behind the drop in production and disruption in supply side. Details given below
- Uneven monsoon-induced supply disruptions in certain regions caused price pressures, mainly in tomatoes and onions, contributing to higher inflation rates in vegetables and overall food inflation.
- The survey quoting Data published by the Centre for Science and Environment (CSE) and Down to Earth (DTE) says, the total crop area damaged in 2024 was higher compared to the last two years due to extreme weather events.
- Quoting IMD data, the Survey says, On an average, during 2022-2024, India experienced heatwaves on 18 per cent of days compared to 5 per cent of days in 2020 and 2021 (see the images below)
- Explaining the spike in tomato prices for last 2 years, the Survey says, unlike onions, tomatoes have short crop cycles and are highly perishable, creating challenges in storage and transportation and leading to supply shortages and price spikes.
- The Survey says fresh tomatoes have a shelf life of only about 1-2 weeks when stored properly.
- Tomato production is mainly concentrated in states such as Madhya Pradesh, Andhra Pradesh, Karnataka, Gujarat and Odisha.
- This regional concentration makes the supply chain vulnerable to disruptions in any of these areas.
- Similar to onions, a major portion of tomato production - more than 65 per cent - occurs in the Rabi season
- The Survey, therefore says, heat waves have a role in downing productions and monsoonal rains play a role in disrupting the supply chain.
SURVEY SOLUTION TO TUR – EDIBLE OIL SHOCK
The Eco-Survey clearly states that in order to address the Tur dal and edible oil price shocks, a focused research is needed to develop climate-resilient crop varieties, enhancing yield and reducing crop damage.
Also, efforts need to be made to expand the area under pulses in rice-fallow regions
Such step will most likely to help in combating dal inflation.
