Fruit, vegetables fuelling inflation now: Reserve Bank of India deputy governor Subir Gokarn

PUNE: Reserve Bank of India deputy governor Subir Gokarn said proteins, fruits and vegetables were fuelling inflation in the last four years while sugar and cereals were driving the numbers for four decades from the 1960s.

Gokarn was delivering the Kale Memorial lecture at the Gokhale Institute of Politics and Economics on 'Food Inflation: This Time It's Different.' “The more worrying attribute of food inflation is persistence.

In the four decades since 1960s, the drivers of food inflation were cereals and sugar with a supporting role being played by proteins and fruits and vegetables in the second half of the period,” said Gokarn. “While contribution from proteins has gone down somewhat in 2011-12, which is the basis of the declines we have seen in food inflation in the most recent date releases, the pressure from fruits and vegetables have sustained.”

Gokarn said people eat better as they get richer. But on the supply side, there were problems. Productivity of pulses has oscillated around 600 kg/hectare for the last decade and a half. “There are several states, in which pulses may constitute an important part of the typical diet, whose productivity is significantly below the national average. If overall productivity is to be improved, a strategy which focuses on the specific bottlenecks in these states is probably the best way to go about it,” he said.

He pointed out the rising wages of agricultural labour and the stocks of agricultural commodities as the two important factors exerting influence on their prices.