India has decided to focus on cooling inflation, driven in large measure by the Russia-Ukraine war. After imposing a ban on wheat exports, the government has now decided to ban outbound shipment of sugar from June 1. Along with that, it has also decided to exempt customs duty and agriculture infrastructure development cess on yearly imports of 20 lakh metric tonnes of crude soyabean and sunflower oil.
The move to allow duty-free import of 20 lakh MT per year for crude soyabean oil and crude sunflower oil will be applicable for this financial year and the next.
“The priority now is to contain prices and whatever measures are needed for that, will be duly taken,” Gopal Krishna Agarwal, BJP’s spokesperson for economic affairs told India Narrative.
Retail inflation in April soared to 7.79 per cent – an eight-year-high.
Food and fuel prices have surged following the Ukraine war, which has disrupted food-supply chains originating from the Black Sea region--a major grain producing and fuel transportation hub that helps fortify global food and energy security.
Hit by the spiralling price rise, the Narendra Modi government has also slashed excise duty on fuel.
While the price of petrol has been reduced by Rs 9.5 a litre, diesel is down by Rs 7. Finance Minister Nirmala Sitharaman said that the move will cost Rs 1 lakh crore to the exchequer.
‘We’ve taken a number of steps to help the poor and middle class. As result, the average inflation during our tenure has remained lower than during previous governments,” Sitharaman said in a tweet.
A report by the State Bank of India noted that the latest inflation numbers revealed that while in the rural areas, the impact has been disproportionately higher for food prices, the urban areas are hit by surge in fuel prices.
With high inflation, it is now almost certain that the Reserve Bank of India will raise rates in forthcoming June and August policy and could take to “pre-pandemic level of 5.15 per cent by August.” “However, the important challenge facing the central bank remains whether inflation will tread down meaningfully because of such rate hikes if war related disruptions do not subside quickly,” the report said.
A. Sakthivel, president, Federation of Indian Export Organisations (FIEO) said earlier in a statement that these measures will bring down the domestic prices of key inputs thereby softening inflation. This will also add to the competitiveness of the manufacturing and export sector and will further push value-added exports from the country, he said, adding that these proactive measures will also ease the logistics pressure and bring down the freight bill of the country.