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Updated: May 01, 2025 07:25
India's 2025 summer sowing has increased by 6.5 lakh hectares over the previous year to 37.54 lakh hectares as of early March, supporting crop buffers against possible supply shocks. The growth, spurred by better agricultural planning and support from the government, may stabilize food prices, which have recently moderated but are exposed to the risk of climatic shocks.
March 2025 witnessed retail inflation falling to a near six-year low at 3.34%, while food inflation fell sharply to 1.57%-from 3.38% in February-due to lower prices of vegetables, pulses, and dairy products. The development is a sign of better supply chains and seasonally driven harvest gains.
Yet, the Economic Survey 2024-25 cautions against lingering threats: unseasonal weather destroyed crops in FY25, driving up prices of onions, tomatoes, and pulses. Vegetables and pulses alone accounted for 32.3% of total inflation in April-December 2024, highlighting their volatility.
Projections indicate food inflation may bounce back as record summer temperatures pose a risk to major crops such as wheat, onions, and potatoes. Maharashtra, Odisha, and Bihar-states that are crucial growers of these items-are already witnessing above-average heat, leading to fears over yield loss and supply-chain pressure.
Outlook:
Though sowing expansion has a cushion, the RBI sees FY26 inflation at 4% with climate and global commodity pressures bending the risks upward. The March rate cut indicates optimism on near-term price stability, but authorities are concerned about heat-related disruptions.
Sources: Ministry of Agriculture & Farmers' Welfare, Ministry of Statistics and Programme Implementation (MOSPI), Economic Survey 2024-25, Bank of Baroda Research, India Meteorological Department (IMD).
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