Articles by Tulsi Lingareddy

Consumer price infl ation in rural areas has been persisting at a higher rate than that in urban areas and the gap between the two has stood at 1.5 percentage points in May 2016. Infl ation of both series slowed considerably during the last two years or so, the moderation in rural areas has been slower than in urban areas. This was partly due to compositional differences accompanied by divergent price movements and partly due to higher marketing costs and trade margins resulting from the prevailing rural-urban divide in terms of infrastructure bottlenecks, inadequate logistics support, etc.

Pulses are an indispensable part of the Indian diet, but ever increasing prices are making them unaffordable for the poor. The persistent gap between demand and supply of pulses is only expected to widen if domestic production levels are not raised substantially through necessary policy measures.

In its recent report, the expert committee on commodity futures concludes that futures trade in India has increased the price volatility of largely traded commodities (urad, chana, wheat) during periods of excess liquidity. It finds an increase in prices for commodities that have small market sizes and scarce deliverable supplies (mentha oil, wheat). In contrast, futures trading has led to a reduction in volatilities and aided better discovery for other commodities (soya oil, hessian). It appears that futures trade in agricultural commodities is beneficial for only those commodities that fulfil the basic selection criteria for futures trading accompanied by stringent and timely regulatory actions.