1. IMC-ERTF Rabi Crop 92015-16) Prospects and Food Inflation Outlook Mumbai. January 11, 2016 Opening Remarks G. Chandrashekhar Economic Advisor, IMC and Director, ERTF

2. World and India.... So far 2015 - soft agri prices worldwide due benign weather, near-record harvests, large inventory and low crude oil prices; speculative capital in the sidelines. India benefited from global cues - food prices generally consumer friendly (barring exceptions like pulses) THIS IS SET TO CHANGE!!!!!

3. Major threats Moisture stress Acreage concerns Weather risk Currency Possible rise in global prices

5. Acreage concerns (planted area as on 01-01-16) in Lakh hectares Crop Normal 01.01.16 01.01.15 Wheat 296.0 271.0 293.0 Rice 43.0 14.8 16.0 Maize 14.2 11.5 12.2 Pulses 136.0 128.0 131.0 –Gram 88.0 81.0 80.0 Oilseeds 85.3 71.5 76.1 -RM 62.8 60.1 64.4

6. 2015-16 Rabi crop targets v/s harvest in Rabi 2014-15 Crop2015-162014-15 Wheat94.788.9 Rice14.013.9 Maize 6.5 7.3 Pulses13.011.6 - Chana 9.5 7.2 Oilseeds11.0 8.3 - RM 8.1 6.3

7. Weather risk India has suffered two back-to-back less-than-satisfactory harvests – Rabi 2014-15 and Kharif 2015-16 (El Nino) Is a third one in the making? Unseasonal rains & hailstorm in (March/April) 2014 and 2015 reduced harvests What if weather hurts again in 2016?

8. Currency Rupee shows weakening tendency Weaker currency will make imports more expensive (edible oil, pulses) Is $ 1 = Rs 66-68 the new normal?

9. Ominous portends on price front Palm oil prices set to rise by ~$ 100 a ton in Q1 2016 due El Nino aftereffects World (exporters) watching Indian Rabi pulse harvest; upside risk to prices Sugar: domestic prices up by > 20% Wheat: Weather worries in Black Sea region; World taking note of Indian situation

10. How should India respond? Notwithstanding +ve macro data, emerging food price situation a cause for concern What should the policy response be? Will normal food trade be interrupted by kneejerk policy interventions? Impact on monetary policy

11. Thank You G. Chandrashekhar Economic Advisor, IMC and Director, ERTF Phone: 919821147594 email: gchandrashekhar@gmail.com gchandrashekhar@gmail.com g.chandrashekhar@imcnet.org