New Delhi, Dec 11 (IANS) Even as India’s annual food inflation stands at a high 19 percent, Finance Minister Pranab Mukherjee Friday warned that the full adverse impact of poor monsoon on the country’s economy would be felt in the current quarter.
During a debate in the Lok Sabha, the minister also attributed the rise in food prices to a mix of issues including shortage in production, increase in the statutory price paid to farmers, and rising international commodity prices.

“Price rise is a matter of great concern. It is not because of the demand management. It is mainly because of the shortage of supply,” Mukherjee said.

“If the international commodity prices go up, naturally our price will also go úp. When we jack up the minimum support prices, and go in for massive procurement, then you fix the benchmark. And once this is fixed that the market prices will be less than that. This is the ground reality,” he added.

Recent weeks have seen prices of items of daily consumption like potatoes shoot up 102 percent over the past year, while pulses are dearer by 42 percent, vegetable by 31 percent, onions by 23 percent and cereals by 13 percent.

The finance minister called for diversification of the export market, which he said “unidirectional”.

“Nearly 62 percent of India’s exports are directed towards North America, Europe and Japan. And when there is economic slowdown in these countries, it gets reflected in our poor export performance,” Mukherjee maintained.

“We should make constant efforts so that it can be evenly spread and I do hope the various trade agreements will help to diversify the export market.”

He also said the country was likely to meet its tax target this fiscal, thanks to higher direct tax receipts.