FM calls meeting as tomato prices blow through roof


Write Comment     |     E-Mail To a Friend     |     Facebook     |     Twitter     |     Print

NEW DELHI: Despite the forecast of a better-than-average monsoon, it can never be good news when the price of tomatoes goes through the roof. And it has.

So bad is the news that Finance Minister Arun Jaitley has called a high-level meeting today to discuss ways to keep commodity prices in check.

Crude Culprit

Blame the price of crude oil that’s touched a 7-month high. It is going now for $50 a barrel.
What’s the connection between the cost of a tomato and the cost of crude oil? This: Oil prices affect the entire economy because of its use in transportation of goods and services.

India, which depends on imports to meet 80% of its oil needs, will have to spend Rs 9,126 crore more for every dollar per barrel increase in crude oil prices. So, even if the price of crude oil increases by $5 a barrel, it would lead to dizzying inflation .
Tomatoes bear the first brunt

Tomato prices have blown through the Rs 60 a kilo mark and now cost upwards of Rs 65 a kilo, if you’re lucky enough to be in Kolkata or in Delhi, and up to Rs 80 a kilo, if you happen to be in Chennai.

Because of that, data released yesterday showed that vegetable price inflation rose 2.21 percent to 12.94%. That then badly hit the Wholesale Price Index, or WPI, pushing it to 0.79% in May, its highest level in 19 months.

With no change in the already high inflation in the price of pulses - at 35.56 percent - food inflation on the whole spiked to 7.88% in May from 4.23% a month earlier.

Pulse unbending

In fact, pulse inflation has remained in double digits since January of last year. Pulses are retailing at over Rs 170 a kg, even though the government is trying to increase its supply through the creation of new mechanisms like a buffer stock, and with imports.
Industry has been asking for "supply side responses" and that’s one issue that will likely be discussed at today’s meeting.
The government has procured 1.15 lakh tonnes pulses directly from farmers, as of now, for creating a buffer stock of 1.5 lakh tonnes this year. It is also importing pulses through state-owned trading agencies, PTI reported.

Subsidies will likely be debated today, as will a duty on the import and export of sugar, wheat and edible oils, sources told news agencies.
Oil is everything

Minister Jaitley has said India can handle the current crude oil price level, but if it spikes further, it will lead to inflationary pressure.
Minister of State for Finance, Jayant Sinha, said in an interview to PTI that the economy will be "fine" if oil price stays in the range of $40-60 per barrel.

Inflation up, interest rates up

Anticipating this inflationary scenario, Reserve Bank of India Governor Raghuram Rajan kept the main policy interest rate unchanged at 6.5% earlier this month.

The bank also said then inflation readings make the future trajectory of interest rates somewhat more uncertain.
Top Comment

The government has been publicising the growth graph to the people of the country painting a rosy picture. It has consistently failed to arrest the rising prices of vegetables and pulses. An average ... Read More
K.S.Chandra Shekhar

Economists said earlier this month that if another cut does happen it will possibly be the last reduction in rates in the cycle.
"We will have to figure out ways to attain 5% inflation target set for Jan 2017," Rajan said.

Comments on this Article
Jossey Saldanha, Nashville Fri, June-17-2016, 12:21
Patel Brothers from Gujarat are selling tomatoes in Nashville for Rs. 67 ($1). Is Modi trying to recover money spent on his last flop tour to USA ...

Write your Comments on this Article
Your Name
Native Place / Place of Residence
Your E-mail
Your Comment   You have characters left.
Security Validation
Enter the characters in the image above
Disclaimer: Please write your correct name and email address. Kindly do not post any personal, abusive, defamatory, infringing, obscene, indecent, discriminatory or unlawful or similar comments. will not be responsible for any defamatory message posted under this article.
Please note that under 66A of the IT Act, sending offensive or menacing messages through electronic communication service and sending false messages to cheat, mislead or deceive people or to cause annoyance to them is punishable. It is obligatory on to provide the IP address and other details of senders of such comments, to the authority concerned upon request. Hence, sending offensive comments using will be purely at your own risk, and in no way will be held responsible.
Similarly, reserves the right to edit / block / delete the messages without notice any content received from readers.

Kallianpur: Students Suffer during rain.
View More

Save SwarnaSave Swarna
@ Rosario Grounds, Mangalore@ Rosario Grounds, Mangalore
Photo Album:

Ronald Andrade (67), laid to Rest.

Obituary: Ronald Andrade (67), Kambla Thota, Kemmannu
Rozarich Gaanch September- 2018Rozarich Gaanch September- 2018
Flat For Sale in BrahmavarFlat For Sale in Brahmavar
Welcome to Thonse Naturecure HospitalWelcome to Thonse Naturecure Hospital
Santhosh Villa short film by youth of Udupi Parish and ICYM.Santhosh Villa short film by youth of Udupi Parish and ICYM.
Crossland College, Year book 2017-18Crossland College, Year book 2017-18
Watch Eye to Eye by Avila D’souzaWatch Eye to Eye by Avila D’souza
Delite Caterers and Delite Event ManagementDelite Caterers and Delite Event Management
An appeal to Kemmannu Parishioners, Friends and Well Wishers:


An appeal to Kemmannu Parishioners, Friends and Well Wishers:<P> <Center>[Comments]</P> </Center>
Read online Uzvaad:<font color=red> Read online Uzvaad</font color=red>:
For all your travel needs contact Sequeira TouristFor all your travel needs contact Sequeira Tourist
Power Care Services, MoodubellePower Care Services, Moodubelle
Read Online RaknnoRead Online Raknno
Kemmannu Platinum Jubilee Souvenir – Amruth KaanikKemmannu Platinum Jubilee Souvenir – Amruth Kaanik
Udupi TodayUdupi Today
St. Alphonsa of India