India’s consumer price index inflation in June 2025 stood at 2.1% year-on-year. This rate was lower than that of the United States at 2.7% and the United Kingdom at 3.6%. Food inflation showed an even wider gap with India recording a negative 1.1% compared to 3% in the US and 4.5% in the UK. This marks the lowest inflation levels for India since January 2019. The decline in inflation is largely attributed to a surplus monsoon and bumper crop production, which eased food price pressures and provided relief to the Reserve Bank of India, allowing potential monetary policy flexibility.
Monsoon Performance and Agricultural Impact
The 2024 monsoon season delivered 7.6% above average rainfall. Early onset in May 2025 continued with above-normal precipitation through June and July. This favourable weather improved soil moisture and groundwater levels. Most state of Indias received above-normal rains, boosting sowing and crop growth. The kharif crop acreage increased overall, except for some pulses and cotton, due to price and pest concerns. Maize gained popularity as a crop due to its use in fuel ethanol and animal feed.
Food Inflation and Crop Stocks
Food inflation turned negative by June 2025, driven by ample cereal supplies. Wheat stocks reached a four-year high at 358.78 lakh tonnes by July 1, 2025, up from 282.61 lakh tonnes in 2024. Rice stocks also remained abundant. These reserves enable the government to support the public distribution system and manage market prices. The surplus crop production after two consecutive good monsoons has helped stabilise food prices.
Shifts in Crop Acreage and Market Prices
Farmers shifted acreage from pulses like arhar and soyabean to maize and moong. This shift is linked to lower market prices for pulses compared to government support prices and the crop’s shorter growing period. Cotton acreage declined due to pink bollworm infestations. Despite reduced pulse production, inflationary effects are limited due to record imports of pulses and edible oils, supported by low or zero import duties.
Fertiliser Supply Challenges
Despite good rains, fertiliser availability poses risks. Opening stocks of urea, di-ammonium phosphate (DAP), and complex fertilisers are lower than last year. Import reductions, especially from China, have tightened supplies. The price of imported DAP increased from $525 to $810 per tonne between June 2024 and mid-2025. This supply squeeze could impact crop yields if not addressed.
Government Policy on Imports
The government has kept import duties low to control inflation. Pulses like arhar and urad attract zero duty until March 2026. Edible oil import duties were cut from 27.5% to 16.5% in May 2025. These measures help maintain supply and keep food prices in check amid domestic production fluctuations.
Questions for UPSC:
- Discuss in the light of India’s agricultural policies how monsoon variability affects food inflation and rural economy.
- Critically examine the impact of global supply chain disruptions on India’s fertiliser imports and agricultural productivity.
- Explain the role of public distribution systems in stabilising food prices during periods of surplus and shortage with suitable examples.
- With suitable examples, discuss the effects of crop diversification and market prices on farmers’ income and food security in India.
