- Wealth PMS (50L+)
We’ve seen prices of dals soaring to over Rs. 200 per kg. And the only way to solve that problem is to produce more dal – or lentils, which are pulses. And that incentive – of a price rise – seems to have incentivized farmers big time. Look at the change in area sown under pulses:
With over 34% increase in the area sown for Pulses, we should see a big increase in supply. And that should bring prices down.
Inflation in Pulses is heavy, and still above 25% year on year. This is now adding 0.7% to the inflation number (which is around 6%) – or, 1/10th of our inflation comes from just pulses.
Why do people want more pulses? The move to a richer economy in general – a higher per-capital income – encourages people to move from a carb rich diet (rotis, rice) to a protein rich one (eggs, dal, milk). Prices of milk have gone up too, as have eggs, in the last few years.
The price of onions. which had risen spectacularly to over Rs. 70 per kg a few years back, is down to less than Rs. 10 per kg now due to over-supply. Tomato prices are down to less than Rs. 10 per kg too.
While this is great news for inflation in the near term, it also will bring out calls of distress from farmers. Given that there isn’t that much in terms of long-term cold storage available, the fear of rotting makes farmers demand immediate sales, no matter what price they get.
Even then, this will be a relief for millions of people who will like the extra income they get from not having to spend so much on dal anymore. And hopefully, inflation itself will come down now.