As the Narendra Modi government completes one year at the Centre next month, the most dramatic improvement, by far, is falling inflation. Thanks to the crash in global commodity prices, the wholesale price index-based inflation remained negative for the fifth consecutive month, falling to minus 2.33% in March, and consumer price inflation hit a three-month low of 5.17% in March, after months of double-digit inflation before Modi came to power.
Food prices in both the indices has been moderating, affirming no visible price pressures caused by unseasonal rains as yet. Even petrol and diesel prices, which rose for years, have fallen steeply. Analysts expect WPI inflation to remain negative for the next three to six months because of base effects.
However, major agricultural reforms such as the restructuring of the Food Corporation of India need to be fast-tracked by the NDA government so that the entire foodgrain management system becomes more efficient. Also, the government must find ways to amend the APMC Act which is aimed to cut down the prices for agricultural produce by bringing down numerous taxes levied by states and weeding out middlemen from the farm gate to the market place.
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