India says inflation pressure warrants government, central bank vigilance
Last updated on: 22 August,2023 01:42 pm
Finance ministry says price pressure in food items is expected to be transitory
NEW DELHI (Reuters) – Inflationary pressure in India caused by global uncertainty and domestic disruptions will require greater vigilance by the government and the Reserve Bank of India, the finance ministry said in its monthly economic report on Tuesday.
The ministry's comments come weeks after data showed retail inflation in July rose to its highest in 15 months, as vegetable and cereals prices skyrocketed.
"Global uncertainty and domestic disruptions may keep inflationary pressures elevated for the coming months, warranting greater vigilance by Government and the RBI," the government said.
The finance ministry expects price pressures to abate thereafter.
"The price pressure in food items is expected to be transitory, as evident in the steady performance of the agriculture sector, along with fresh arrivals in the market," it said.
Prime Minister Narendra Modi will bid for a rare third term at a national election that is due in less than nine months, and containing inflation, especially food prices, would help his chances.
India is bracing for its driest August in more than a century, with scant rainfall likely to persist across large areas, partly because of the El Nino weather pattern.
Recently, India imposed a 40 per cent export duty on onions in an attempt to improve domestic supplies, having banned exports of non-basmati white rice last month.
These are in addition to the wheat export ban imposed last year.
PARBOILED RICE EXPORTS
India is not considering imposing any restrictions on the exports of non-basmati parboiled rice, Food Secretary Sanjeev Chopra said on Tuesday.
Last month, India surprised buyers by imposing a ban on the export of widely consumed non-basmati white rice, following a ban on broken rice exports last year.
Currently, there are no restrictions on the exports of parboiled rice, which constitutes nearly a third of India's total rice exports.
Statement comes as ET Now television channel, citing agencies, reported earlier in the day that India is considering imposing an export tax on parboiled rice variety.