Economic Survey 2024 Suggests Excluding Food from Consumer Price Index

The Economic Survey 2023-2024, tabled in the parliament today in the inaugural day of the budget session, has presented various ideas on developing a new policy structure for India’s agriculture sector. This includes a re-examination of the country’s headline inflation targeting framework.  The consumer price index (CPI) measures inflation in the country by tracking the change in prices of goods and services consumed by the retail population. The Central Statistics Office under the Ministry of Statistics and Programme Implementation (MoSPI) publishes the CPI data every month, usually on the 12th of each month.  Currently, the CPI is measured by tracking prices of 299 items across categories such as food and beverages, clothing and footwear, housing, education, household goods, health, etc. Economic Survey 2023-2024 notes, “Higher food prices are, more often, not demand-induced but supply-induced. Short-run monetary policy tools are meant to counteract price pressures arising out of excess aggregate demand growth. Deploying them to deal with inflation caused by supply constraints may be counterproductive.” At present, spike in the prices of food products threatens the country’s inflation targets and forces the Reserve Bank of India (RBI) to request government intervention in bringing down food prices. “That prevents farmers from benefiting from the rise in terms of trade in their favour,” the economic survey says. Also read -Economic Survey 2024 LIVE: RBI’s Policy Interventions helped Maintain Retail InflationTo mitigate the challenges faced by poor consumers due to higher food prices, the survey recommends direct benefit transfers or highly specific purchase coupons. 

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