India Food Secure But Vulnerable to Imported Inflation in Oils, Pulses

"India is well-positioned because of the strong domestic production base and buffer stocks, especially in rice and wheat. Rice stocks are at around three to four times the buffer norms, while wheat stocks are closer to norms but adequate," Srinivas told ANI in an interview.

India, a major importer of edible oils and a significant buyer of pulses, could see these import-dependent items impacted by global instability arising from tensions in West Asia, he said.

"However, we are structurally dependent on imports for edible oils, at about 55-60 per cent, and to some extent pulses, at around 10-15 per cent, which makes us vulnerable to global price shocks. India is structurally food secure, but exposed to imported inflation in oils and pulses," he said.

Srinivas further said that ongoing geopolitical tensions in West Asia could exacerbate these risks by driving volatility in global commodity and input markets. Higher crude oil prices and disruptions in key shipping routes such as the Red Sea could raise logistics costs and delay supplies.

"For context, crude oil prices can swing 15-25%, and freight costs through Red Sea and Suez routes have seen two to three times spikes during geopolitical escalations," he said, adding that this is less about a global shortage of food and more about price volatility and supply chain inefficiencies, particularly in commodities like edible oils and fertilisers.

Rising input costs, especially fertilisers and diesel, are another major concern for the farm sector. Fertiliser prices are closely linked to global energy markets, particularly natural gas, while diesel costs influence irrigation, transport and mechanisation.

"The input cost exposure is significant, with around Rs 1.7-2 lakh crore annually required for the fertiliser subsidy bill, which could come under pressure as global fertiliser prices have seen 30-80% volatility in recent years. Diesel also accounts for 15-20 per cent of cultivation costs in many crops," Srinivas said.

"These factors create cost-push pressure on farm margins, and unless supported by subsidies or minimum support price adjustments, farmer profitability can be impacted," he added.

On growth prospects, Srinivas said India's agriculture sector is likely to see moderate expansion, broadly in line with its long-term trend.

"Agriculture GVA growth was around 1.4 per cent in FY24, which was a weak year, and recovered to about 3.5-4 per cent in FY25," he said.

"The long-term average is close to 3 per cent, and we expect growth in the range of 3-3.5 per cent, assuming a normal monsoon and stable input costs. For FY27, growth could be in the 3-4 per cent range, largely monsoon-dependent," he added.

He also pointed to improvements in supply chain infrastructure, while noting persistent gaps. Warehousing capacity has expanded to over 150 million tonnes and cold storage capacity to about 35-40 million tonnes, though much of it is skewed towards potatoes.

"Supply chains are improving and we are more resilient than before, but we are not yet fully shock-proof. There are still gaps in cold chain infrastructure and overall integration," he said.

Srinivas flagged monsoon variability as the single biggest risk to the sector. "The key risk is not just the quantum of rainfall, but its timing and distribution. A 10% rainfall deficit can reduce agriculture GVA by around 1-1.5 percentage points and push up food inflation by 100-200 basis points, especially in pulses and vegetables," he said.

Despite these challenges, rural consumption is showing early signs of recovery, with indicators such as FMCG growth in rural areas at around 6-8 per cent, compared with 4-6 per cent in urban markets, and tractor sales posting mid-single-digit growth, he said.

"The recovery is gradual and uneven, but directionally positive," he added.

- ANI