Food prices to be under control, critical imports mired in uncertainty: Nirmala Sitharaman

Union Finance Minister Nirmala Sitharaman speaks in the Rajya Sabha during the Budget session of Parliament, in New Delhi, Thursday, Feb. 13, 2025.
| Photo Credit: PTI

Food prices are expected to be under control in the coming year, going by advance estimates of crop output, but the government will keep monitoring prices and act to ensure that ordinary citizens are not burdened by inflation, Union Finance Minister Nirmala Sitharaman told the Rajya Sabha on Thursday.

Responding to members’s concerns about high inflation during the discussion in the House on the Union Budget 2025-26, Ms. Sitharaman said the latest Consumer Price Index (CPI) showed price rise eased to 4.31% in January from 5.22% in December and is now close to the Reserve Bank of India (RBI) target of 4%.

“So there’s a steep correction, particularly in potato, onion, and tomato prices, which are key components in the CPI food basket, and additionally, the decline in pulses inflation, supported by tariff-free imports for the pulses we don’t adequately produce domestically for our consumption. As per the RBI’s report of February 7, CPI inflation for 2025-26 is projected to average only 4.2%,” she said.

Before outlining the Budget’s steps to boost output in the farm sector, including targeted interventions for pulses, vegetables, fruits, and high-yielding seeds, Ms. Sitharaman said that food inflation gets triggered “when you have an adverse weather condition and supply chain disruptions”. A Group of Ministers (GoM) is overseeing the situation so that timely imports happen when there is a supply shortfall.

“With the first advance estimates of agricultural production of 2024-25 being what it is, kharif food grain production is expected to rise 5.7% and the production of rice and tur dal is expected to increase by 5.9% and 2.5%, respectively, compared to 2023-24. So the prices of food will be well under the inflation radar, with the kind of advance estimates which we are getting, but despite that, the GoM will be keenly monitoring,” the Minister said.

With the economy expected to grow 6.4% this year, the Budget aims to accelerate growth, secure inclusive development, invigorate private sector investments, uplift household sentiments, and also directly or indirectly enhance the spending power of the rising middle class, Ms. Sitharaman said.

Stressing that the Budget has been made during a “very difficult time” when external challenges are “very severe” and beyond the realm of projections or predictions, the Minister cautioned that this immense uncertainty is still playing out and many Indian imports critical for the economy are also going to be mired in uncertainty.

The world’s economic order is seeing a major change from what used to be the mantras of recent decades, she said, pointing to globalisation being marred by fragmentation, fiscal prudence being hit by the rising debts of countries, and multilateral bodies getting diluted and not exerting themselves while bilateral and regional forums are calling the shots. “Everybody wants a global free market situation but you have aggressive tariff and non-tariff barriers, when it comes to their interests,” she underlined.

“But despite that, we have tried keeping the assessments as close as possible to what can develop, keeping India’s interests topmost… we are trying to make sure that the Budget somewhat at least foresees all this, and is ready for such eventualities,” she said. Ms. Sitharaman said, thanking the more than 90 MPs who spoke in the discussion.