The forecast of 'below normal' monsoon rains does not pose "too much threat" to food inflation so long as the country's central part receives close to normal rains, a top Reserve Bank of India official today said.
"The central part is where there is lot of concentration of pulses and cereals... If rainfall in that part of the country remains close to normal, I do not think there will be any pressure," RBI Deputy Governor Subir Gokarn told reporters at the sidelines of a function here.
He said the Met Department's prediction of 95% rainfall this year does not pose too much of a threat in terms of its impact on food inflation, adding that the RBI was keeping a close watch on cereals, oilseeds and pulses.
He, however, said it was too early to speculate on the impact of the monsoon on food inflation.
The IMD has said monsoon rainfall is likely to be below normal at 95 per cent of the Long Period Average, triggering concerns of a serious fallout on agricultural input. However, allaying the fears, Union Finance Minister Pranab Mukherjee has said the projections are only a shade below the annual average.
Earlier, in his address at the 175th Annual General Meeting of the Madras Chamber of Commerce here, Gokarn said food inflation, human capital, infrastructure and financial inclusion hold the key to India's sustainable growth.
Pointing to reforms measures taken in many areas for achieving sustainable growth, he, however, said action needs to be taken in many more areas on the basis of credible supporting evidence.
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Food inflation has become a significant negative feature of today's economic environment, he said, adding that food supply needs to be increased rapidly to tackle the persistent demand-supply imbalances.
"Production of relevant (food) items has to be increased... Cultivation risk has to be mitigated for farmers to find these products more attractive. Transportation, storage and distribution efficiency has to be increased to keep losses and distribution margins down," he said.