India's food inflation has flared up for the sixth consecutive week amidst fears that it may spill over to broader prices. The cost of food rose by as much as 18 per cent last month and there are few signs of abating in the coming weeks. Experts say that the current rise in food inflation is fuelled by a significant flare-up in the price of items like fruits and vegetables, milk, meat, poultry, eggs and fish while the price of rice, wheat and pulses remained relatively stable. Onion prices continue to rule at a high of Rs. 70 a kg even as supplies remain erratic. Economists say that while there are some weather-induced supply constraints price rise is largely due to the widening gap between the wholesale and retail prices and also due to rising income levels. The high inflation was driven by a rise in prices of vegetables and fruits, which was more difficult to manage because these commodities were not held in public stocks.

Why is this sorry state of affairs? According to the International Monetary fund, India faces a difficult choice between diverting government money to subsidize fuel prices and rising inflation. Being a heavy importer of fuel, India is particularly vulnerable to the rise of oil prices.

A recent ASSOCHAM report points out that the current situation is due to two major reasons. The first is due to the shift in the middle-income group and the second is the widening gap between the producer and consumer prices. Obviously the difference is as high as 70 per cent. The recent onion story reveals the government’s poor price surveillance and inadequate supply chain and storage facilities.

The food inflation has become critical with the latest petrol price hike, which could further hit the vegetable and other food items. The public sector oil companies last weekend announced a Rs.2.50 litre hike in petrol making it more than Rs. 10 over the last seven months, an increase of 22 per cent. The “Aam admi” has to struggle to balance his household budget, which is already stretched to the maximum. To add to the woes, the price of the jet fuel is also likely to go up due to the hike of crude oil prices in international market. While the oil companies lose an estimated Rs. 85,000 crores, the government subsidy is a huge burden on the exchequer.

What has the government done to meet the situation? The centre has alerted the state governments. It has contracted the import of onions and plans to step up purchases of essential commodities like edible oil and pulses. The Prime Minister’s advisory council is seized of the matter. Review import and export of all essential commodities and imposing controls on exports and easing restrictions on imports are on the cards. Is that enough?

Not for the opposition parties. With elections to half a dozen states in May-June the political element has come to the fore in dealing with the price rise. The Congress has high stakes in Kerala and West Bengal where the left parties are on the decline while in Tamil Nadu and Puducherry the Congress is crucial for the formation of a government. In Assam the Congress would like to attempt a hat trick.

The Congress has the twin headache of dealing with the public anger as well as tackling the difficult UPA allies who would like to distance themselves from the government’s inaction.

The NCP, which is a coalition partner not only at the centre but also in Maharashtra, has become the whipping boy for the Congress whenever there is price rise. Earlier, even the Congress Working Committee blamed the NCP chief and Agriculture Minister Sharad Pawar for not handling the price hike promptly. What is Pawar’s answer to the criticism? He claims that the entire cabinet takes decision and he alone cannot be blamed. Things worsened recently when Rahul Gandhi was reported to have stated in U.P that because of the coalition the Congress was not able to control prices. Ultimately Civil Aviation minister Praful Patel smoothened the feathers putting the controversy to rest.

In West Bengal, the TMC is a crucial ally for the Congress. Assembly polls are scheduled in April-May this year. With the mood for a change in the state, the Congress-TMC alliance appears to be a winning combination but there are still strains between the two. The TMC chief is upset that she was not informed about the recent petrol price hike. The political fall out could mar its prospects in the polls. This is not the first time that the TMC has expressed its reservations over increase in fuel prices. In February last year, the Trinamool Congress and DMK had made similar noises. The CPI-M politburo has already taken a decision to launch a countrywide agitation in consultation with the other non-UPA parties. The left would make use of the fact that the TMC is a constituent of the UPA. The TMC minus Mamata have taken the issue to the streets to counter it.

The DMK is also in a dilemma, as that too has to face the elections and also the onslaught of the AIADMK chief Jayalalithaa. The BJP and Shiv Sena are also in the process of taking the battle on food inflation to the streets. Soon other smaller parties may join hands. With the left and the right on warpath, it is going to be free for all unless the Congress led UPA manages to contain food inflation. Will It? (IPA Service)