Union Minister of State for Finance Pankaj Chaudhary on Tuesday said the price situation of major essential commodities is being monitored by the government on a regular basis and corrective actions are taken from time to time. Recently, several supply-side measures have been taken by the Government to address inflation.
In a written reply to a query in the Rajya Sabha, Chaudhary said “the central government on May 21, 2022, cut excise duty by Rs 8 per litre on petrol and Rs 6 per litre on diesel. Further, reduction in import duties and cess on pulses, rationalisation of tariffs and imposition of stock limits on edible oils and oil seeds, maintenance of buffer stock for onion and pulses, the inclusion of soya meal as an essential commodity in the schedule of the Essential Commodities Act, 1955 up to 30th June 2022 and imposition of stock limit on soya meal up to 30th June 2022 were carried out”, according to a statement by the finance ministry.
According to the statement, the minister also said soaring commodity prices and pandemic-induced supply-demand imbalances caused a rise in inflation rates worldwide including in India. The Russia-Ukraine conflict has exacerbated the inflationary pressures in crude oil, gas, and metals. Further, the onset of summer heat waves has led to crop damage and a rise in vegetable prices, he said.
After the Russia-Ukraine war started in February-end, key commodity prices started shooting up due to the supply chain disruptions. Companies across sectors also resorted to raising prices of their products to make up for the high input cost.
The companies recently raised prices on various products due to the increase in their input costs on costlier raw material. However, now, the prices have started falling. After touching peaks this year following the Russia-Ukraine war, copper is now 21 per cent cheaper and steel is 19 per cent down and aluminium prices are 36 per cent lower from their April levels this year, according to a recent report by brokerage firm ICICI Securities. The fall in commodity prices will also increase margins for companies. The development will also help control overall inflation.
“With a correction in input prices, the need to raise prices has declined. We believe a breather was essential considering durable companies have raised prices incessantly in the past two years. The cumulative price hike was higher than 20 per cent in the past two years,” ICICI Securities added.
According to the Monetary Policy Committee’s minutes of the June 2022 meeting, “The tense global geopolitical situation and the consequently elevated commodity prices impart considerable uncertainty to the domestic inflation outlook. The restrictions on wheat exports should improve the domestic supplies but the shortfall in the rabi production due to the heat wave could be an offsetting risk. The forecast of a normal south-west monsoon augurs well for the kharif agricultural production and the food price outlook.”
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