The Southwest Monsoon is a much-anticipated period in India that highly influences the country’s food supply. As the monsoon season approaches, the food situation in the country has been examined meticulously. Despite having no lack of food at present, the spatial and temporal distribution of monsoon rainfall plays an essential role in maintaining this balance. The India Meteorological Department (IMD) predicts average rainfall during the southwest monsoon season from June to September. The monsoon’s impact on food supply can substantially drive the Reserve Bank of India’s monetary policy.
Current Status of India’s Food Supply
Concerning the state of wheat supply, unseasonal rain in March and April 2023 did affect standing wheat crops, yet the yield losses were not drastic as initially feared. Government agencies managed to procure around 26.2 million tonnes of wheat for the current marketing season, ensuring sufficient stocks. The stocks of wheat may appear lean; however, when combined with rice stocks, they adequately cater to public distribution system requirements and welfare programs.
The milk supply scenario has improved thanks to comparatively mild summer and favourable pre-monsoon showers. There was a significant shortage of milk in February-March 2023, but the scenario has now changed. High milk prices triggered a supply response from farmers who have made use of improved fodder supplies.
The future sugar stocks hinge on the monsoon’s effect on sugarcane as it requires abundant water during the growth phase. The closing stocks of sugar for 2023 are projected to be 5.7 million tonnes, which can meet the domestic requirement for 2.5 months.
In terms of edible oil and pulses, India is in a comfortable position due to affordable imports covering domestic crop shortfalls. The availability of chickpeas and the import of masoor red lentils contribute to a comfortable supply of pulses.
Global Position of India’s Agricultural Sector in 2022-23
India leads the world as the largest producer of milk. It ranks second after China in wheat production and rice production, while it stands first in rice exports. Furthermore, India also emerged as the largest producer and consumer of sugar and the second-largest exporter. In terms of pulses production, India takes the lead globally.
Impact of Food Supply on RBI’s Monetary Policy
Food supply directly impacts the prices of food items, contributing to the consumer price index (CPI) used to measure inflation. High food inflation can lower consumers’ purchasing power, reducing demand for other goods and services and hampering economic growth. High food inflation could also stir social and political unrest, particularly among those spending a significant chunk of their income on food.
Monetary policy involves regulating money and credit supply to attain price stability, growth, and financial stability. Changes in the repo rate substantially influence aggregate demand and supply, which in turn affect inflation and growth. The Central bank considers several factors, including inflation, growth, fiscal policy, global conditions and financial stability when adjusting the repo rate.
Government Initiatives Related to Food Security
Several initiatives have been launched by the government, such as the National Food Security Mission, the National Food Security Act (NFSA) 2013, Rashtriya Krishi Vikas Yojana (RKVY), Integrated Schemes on Oilseeds, Pulses, Palm oil and Maize (ISOPOM), eNAM Portal, Minimum Support Prices (MSP) for Agricultural products, Pradhan Mantri Fasal Bima Yojana (PMFBY), and National Horticulture Mission. These initiatives aim to ensure food security in the country through various mechanisms.
