Food inflation may dip to 8 pc for March-end: Sen

NEW DELHI: In the back of good rabi crop, the country's food inflation may come down to eight per cent and the headline inflation to seven per cent by end-March, 2011, Planning Commission Member Abhijit Sen said today.

The data for the period is yet to be released. According to the latest data, food inflation was at 9.5 per cent for the week ended March 19 and the general inflation at 8.31 per cent for February.

The general inflation data is released monthly, while food inflation figures are given out on weekly basis.

"Food inflation should come down by 1.5 per cent from the current level, helped by good rabi crops," Sen told reporters on the sidelines of an event organised by Yes Bank and The Hindu Business Line here.

The headline inflation should decline to seven per cent, he added.

Sen noted the government should adopt a cautious approach while allowing export of wheat and non-basmati rice. He suggested that overseas shipments of these grains should be permitted with export duty in view of high global food prices.

"Export duty is necessary because global grain prices are very high. If unrestricted exports are allowed, domestic prices will go up, putting pressure on food inflation," he said.

Further exports should be left to the private traders and the government should stay away from it. "The government should not directly get involved in exports. Earlier, it committed mistakes," he said.

Inflationary pressures remain an area of concern for the Indian economy. In this backdrop, the Reserve Bank has followed a tight monetary policy.

Export of wheat has been banned since early 2007 and non-basmati rice since 2008.

The country is set to harvest record wheat production of 81.47 million tonnes this year. Rice production is estimated at 94.01 million tonnes.

As on January, the government had foodgrains stocks of 47.2 million tonnes, as against the buffer norm of 25 million tonnes.

Sen said while fruits and vegetables production is set to rise in the coming years, inadequate processing facilities would continue to keep pressure on prices. "Much of investment in processing of fruits is simply not there...," he said.