Home / Politics / Policy /  The mystery behind the spurt in prices of pulses

New Delhi: Why are the prices of pulses rising? Will they stabilize anytime soon?

The prices have been rising steadily over the last few months. Inflation in lentils stood at 46% in November, after hitting 42% in October, according to the Consumer Price Index (CPI) numbers released by the ministry of statistics and programme implementation on Monday.

In fact, it has been consistently on the rise for the past few months, forcing the government to announce a number of measures to check hoarding of pulses. During April-November, pulses inflation stood at 27%, as against 7% in the year-ago period.

The price shock in pulses happens every couple of years and is likely to exert pressure on CPI inflation in the coming months, said Madan Sabnavis, chief economist at Care Ratings.

“The price shock is seen mainly in the kharif crops of tur, urad and moong (different varieties of pulses) as we import around 20% of our domestic requirements. Even when the imports come into the Indian market, the prices do not come down to the earlier low levels," he said.

“Absolute prices of pulses will come down in the next few months to around 140 per kg from 180 per kg. But in terms of percentage, the number will remain high on account of the low base (of around 80 per kg)," he added.

Kotak Institutional Equities, in a report dated 14 November, said that pulses inflation returns every few years both on account of higher demand and mismatch in supply.

“Prices rise when either demand rises or supply fails to keep pace: in the case of pulses in India, both factors have played out in tandem. Demand for pulses has been increasing as the per-capita incomes rise in India and people improve their dietary pattern. Supply remains constrained at 17-19 million tonnes annually over the past few years as yields stagnate and acreage remains stable," the report said.

Two consecutive droughts have also adversely impacted pulses production, thereby exerting pressure on the prices.

The report pointed out that only around 12% of the area under cultivation of pulses is irrigated, with the remaining 88% of the land dependent on rainfall, thus exposing pulses to the vagaries of nature. Pulses are a moisture-sensitive crop and better irrigation helps improve yields.

“Raising the irrigated area under pulses is an imperative, as is making available high-yielding variety seeds and nutrients at a reasonable cost. Both of these will help to raise productivity," rating agency Crisil said in a note dated 14 December.

It added that implementation of steps announced by the government to boost supply of pulses will remain the key.

Earlier this month, the government had announced a number of steps to boost supply of pulses including import of pulses, creation of buffer stocks and procurement under the price support scheme at minimum support prices (MSPs) and increase in the MSP for the rabi crop.

The area under cultivation of pulses has come down to 23.1 million hectares in 2015, from 25.2 million hectares in 2014. Consequently, production of pulses has also come down to 17.2 million tonnes in 2015 from 19.3 million tonnes in 2014.

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