Transporters’ stir fuels spurt in food prices
Household budgets could be impacted as a nationwide indefinite strike by transporters disrupted supplies of fruits and vegetables.
As the stir entered the fourth day, prices of select commodities, including vegetables, surged. Truckers are protesting against high diesel prices and the compliance difficulties posed by the goods and services tax (GST) rules.
All India Motor Transport Congress (AIMTC), the apex association of transporters, which launched the strike, said an immediate resolution to the strike is unlikely even as traders of perishable items such as fruits and vegetables warned that the price situation could worsen if the strike continued.
“Since the strike was launched, vegetable prices have gone up by 25-30% and fruit prices by 10%. With supplies cut, we will be able to manage with inventory for barely 2-3 days. If the strike continues, prices could surge further,” said Metha Ram Kriplani, president of Chamber of Azadpur Fruit and Vegetable Traders. Azadpur wholesale vegetable market in Delhi is the largest in Asia.
The sudden spurt in food prices is worrisome as it comes at a time when retail food inflation remains firm. It softened marginally to 2.91% in June after accelerating to 3.1% in May from 2.8% in April, according to data released by the government earlier this month. The minimum support price announced in January by the government for major winter crops such as wheat, mustard and chana could put further pressure on food inflation. A surge in crude oil prices and weakening rupee has led to consumer price index-based inflation accelerating to a five-month high of 5% in June from 4.87% in the preceding month.
Experts said that there had been an upward pressure on vegetable prices even before the strike. “The transporters’ stir will impact prices in the short term as movement of vegetables from the farmer to the mandi and from the mandi to the retail outlets gets hit,” Madan Sabnavis, chief economist at Care Ratings, said, adding that the impact of the strike on prices will depend on how long it lasts.
Potato prices, for example, shot up by 12% in the Azadpur market from j958 a quintal (100kg) on Friday to j1,073 on Monday, while tomato prices shot up by over 13% in the period from j1,436 a quintal to j1,629 a quintal, according to agriculture ministry data.
However, politically sensitive onion prices did not see a sharp increase in Delhi due to ample supplies, although in some markets including Maharashtra, a major producer, prices increased by a little. In Nashik, price of onions inched up from j1,050 a quintal last Thursday to j1,100 on Friday. It held steady.
Naveen Kumar Gupta, secretary general of AIMTC, said the strike was launched as the industry did not feel reassured by the promises given by the government in resolving the difficulties. On 19 July, finance minister Piyush Goyal had met transporters to dissuade them from going on the strike.
“The meeting with the minister led to no tangible outcome and we went on strike. The grievances of the 15 crore people directly or indirectly associated with the transportation industry needs to be addressed,” said Gupta.
Raising of e-way bills, the electronic permits needed for goods shipment in the GST regime, has declined. Compared with around 1.7 million e-way bills issued on 19 July, only 1.4 million were issued on 20 July. The decline continued on 23 July.
However, some industry watchers said that the strike has not made a big impact. “Eighty percent of the trucks on roads are running as usual and only 20% or less has been impacted probably. Toll collections on highways are down by just 8%. Had the strike been successful, this drop would have been substantial,” said Sanjay Singh, senior fellow and founder of Indian Foundation of Transport Research and Training.