Price Management

During the year 2003-04 the overall availability and prices of essential commodities have generally remained at a satisfactory level. Barring the increase in prices of some varieties of edible oils due to hike in international prices coupled with lower production last year, no perceptible price rise or shortages were reported for any essential commodity. The annual rate of inflation in terms of Wholesale Price Index (WPI) numbers recorded a modest increase of 4.7 per cent during the year 2003-04 as compared to 6 per cent in the corresponding period a year ago. In the case of Consumer Price Index (CPI), the annual inflation rate for the year ending 2003-04 was lower at 3.5 per cent compared 4.1 per cent in 2002-03.

In the year 2003-04, the Department of Consumer Affairs, monitored the retail prices of 12 essential commodities, namely, rice, wheat, gram, arhar, sugar, groundnut oil, mustard oil, vanaspati, salt, tea, potato and onion on a daily basis, and wholesale prices on a weekly basis covering 18 and 37 centres respectively. In addition to these commodities, two more items viz., milk and atta have been added for price monitoring from 2 July 2003. The High Powered Price Monitoring Board (HPPMB) monitored the prices and availability of essential commodities, based on reviews prepared by the Price Monitoring Cell (PMC) of the Department. The HPPMB met once in every month to review the price and availability scenario. In order to augment the availability of essential commodities, imports of commodities in short supply such as edible oils and pulses, were allowed at reduced import duties.

Movements in the Wholesale Price Index (WPI) numbers during 2003-04 indicated that while the WPI of Manufactured Products with a higher weight of 63.75 per cent in the overall index basket increased by 6.4 per cent, the index number of Fuel items with a lower weight of 14.23 per cent rose by 3.3 per cent. In the case of Primary Articles having a weight of 22.03 per cent, the increase was 1.8 per cent during the period.

Commodity-wise Price Trends

Cereals: The WPI of Cereals declined by one per cent during 2003-04 as against the increase of 4.5 per cent in the same period a year ago. Among the individual items, the WPI of wheat rose by 4.9 per cent while that of rice declined by 2.4 per cent. The production of cereals for 2003-04 is estimated to be higher at 195.89 million tonnes as compared to 163.05 million tonnes in 2002-03. In view of the estimated higher production and adequate buffer stocks, the prices of these items may continue to be satisfactory in the coming period. The off-take of rice and wheat for public distribution system (including various welfare schemes) during 2003-04 was 479.30 lakh tonnes as compared to 496.35 lakh tonnes in 2002-03.

Pulses: The production of pulses during 2003-04 was estimated to be much higher at 14.89 million tonnes as against 11.14 million tonnes in 2002-03. The gap in the demand and availability of the commodity was met to some extent by way of imports. However, due to decline in the availability in the international markets, import of pulses for the period of April 2003-January 2004 was lower at 14.99 lakh tonnes as compared to 17.77 lakh tonnes in the corresponding period last year. In terms of wholesale price index numbers, the sub-group of pulses recorded a negative growth of one per cent in 2003-04 as compared to the decline of 1.1 per cent in 2002-03. However, among individual pulses, the WPI of arhar and masur increased by 7.1 per cent and 15.6 per cent respectively.

Edible Oils:Prices of edible oils recorded a substantial increase during 2003-04 mainly due to a significant fall in the production of oil seeds in 2002-03, high international prices, high import duty, etc. During the period 2003-04, the WPI of edible oils, as a sub-group exhibited an increase of 9.3 per cent as against a sharp hike of 25.7 per cent in 2002-03. The price indices of all major edible oils have increased in the range of 6.3 per cent (vanaspati) to 26.3 per cent (coconut oil) during 2003-04 except a decline of 10.4 per cent in groundnut oil. However, during 2003-04, production of edible oilseeds has been estimated to be at a higher level of 250.08 lakh tonnes as compared to 150.58 lakh tonnes in 2002-03 and 206.62 lakh tonnes in 2001-02. Imports of edible oil during April 2003-January 2004 was 45.37 lakh tonnes as compared to 36.71 lakh tonnes during the corresponding period last year.

Sugar: Sugar prices exhibited a more or less steady trend during the year  2003-04 barring some variation in the third and fourth quarter. Prices of sugar exhibited an increase during the third and fourth quarter of 2003-04 due to increased demand coupled with anticipated fall in production of sugarcane in the coming sugar season. In terms of WPI, the prices of sugar rose by 17 per cent during 2003-04 as compared to the decline of 14.7 per cent during the identical period in 2002-03. In order to check the rising trend in prices, additional quantities of free sale sugar were released in February and March 2004. The free sale sugar and levy sugar quota for April-June 2004 quarter were also increased substantially, as a result of which sugar prices have remained steady since the third week of April 2004. The production of sugar for the sugar season 2002-03 (October-September) was 20.10 million tonnes as compared to 18.10 million tonnes a year ago. The production during the season 2003-04 is estimated to be 14.5 million tonnes. The stock of sugar at the end of 2002-03 season was at 10.89 million tonnes as against 11.38 million tonnes for the corresponding period last year.

Vegetables: Vegetable prices are subjected to variations depending on the availability and seasonal factors. The Government has kept a close watch on the prices and availability of vegetables especially onion and potato. The increase in the prices of onion observed during the third quarter of 2003-04, due to unseasonal rains in the producing areas resulting in delayed harvesting of the crop, have softened in the subsequent quarter with the arrival of fresh rabi crop in large quantities. Onion prices are now showing a steady decline at most of the centres. The WPI of vegetables as a sub-group has observed an increase of 6.3 per cent during 2003-04 as against the decline of 13.6 per cent during the corresponding period a year ago. During this period the WPI of potato declined by 3.3 per cent while that of onion increased by 57.7 per cent mainly due to seasonal fluctuations in the availability. The production of onion for 2002-03 was at 5.44 million tonnes and for 2003-04, it is likely to be around 5.46 million tonnes. During the year 2003-04, the total exports of onion from the country were 8.26 lakh tonnes. The canalisation of exports through NAFED and other State agencies and periodical review of availability continues.

Tea: Tea production is estimated to be 850.49 million kg during 2003-04 compared to 837.60 million kg in 2002-03. During 2003-04, the prices and availability of tea in the country remained satisfactory. The WPI of tea declined by 8.7 per cent as against the increase of 23.2 per cent during the last year. At the retail level the prices indicated a steady trend.