IMC-ERTF Rabi Crop ) Prospects and Food Inflation Outlook Mumbai. January 11, 2016 Opening Remarks G. Chandrashekhar Economic Advisor, IMC and Director, ERTF

World and India.... So far soft agri prices worldwide due benign weather, near-record harvests, large inventory and low crude oil prices; speculative capital in the sidelines. India benefited from global cues - food prices generally consumer friendly (barring exceptions like pulses) THIS IS SET TO CHANGE!!!!!

Major threats Moisture stress Acreage concerns Weather risk Currency Possible rise in global prices

Acreage concerns (planted area as on ) in Lakh hectares Crop Normal Wheat Rice Maize Pulses –Gram Oilseeds RM

Rabi crop targets v/s harvest in Rabi Crop Wheat Rice Maize Pulses Chana Oilseeds RM

Weather risk India has suffered two back-to-back less-than-satisfactory harvests – Rabi and Kharif (El Nino) Is a third one in the making? Unseasonal rains & hailstorm in (March/April) 2014 and 2015 reduced harvests What if weather hurts again in 2016?

Currency Rupee shows weakening tendency Weaker currency will make imports more expensive (edible oil, pulses) Is $ 1 = Rs the new normal?

Ominous portends on price front Palm oil prices set to rise by ~$ 100 a ton in Q due El Nino aftereffects World (exporters) watching Indian Rabi pulse harvest; upside risk to prices Sugar: domestic prices up by > 20% Wheat: Weather worries in Black Sea region; World taking note of Indian situation

How should India respond? Notwithstanding +ve macro data, emerging food price situation a cause for concern What should the policy response be? Will normal food trade be interrupted by kneejerk policy interventions? Impact on monetary policy

Thank You G. Chandrashekhar Economic Advisor, IMC and Director, ERTF Phone: