Rice prices spurt with reduced supply from neighbouring states

Kochi: The prices of various varieties of rice have gone up in the markets across Kerala just ahead of the prime Onam festival season and soon after the imposition of 5% Goods and Service Tax (GST) on essential items such as food grains and pulses.

Reports from markets from across Kerala indicate the prices of all types of rice have increased by at least Rs 10 in the last couple of months.

The supply of rice to Kerala from neighbouring states has thinned of late. This short-supply is behind the spurt in prices, market sources claimed. Some also acknowledged the role of the recent nation-wide taxation of packed food products behind the price revision.

Every month, more than 3.3 lakh tonnes of rice are sold in Kerala, which includes 1.83 lakh tonnes of white rice and 1.5 lakh tonnes of matta (red) rice.

GST factor
Several new items that came under the GST regime from July 18. Accordingly 5% GST is now charged on an array of pre-packed food products including cereals like rice and white as well as pulses.

As reported earlier a five per cent GST is being charged for rice packets supplied to wholesale agents from mills. This was expected to upward revision of rice price.

Earlier, only products like branded rice were slapped with tax. When the GST was introduced in the country five years ago, essential items such as rice, vegetables, egg, and fish were excluded from the GST regime.

Kerala Government had sought the rollback of 5% GST imposed on pre-packed, labelled food products and Chief Minister Pinarayi Vijayan even announced that the State will not implement the new tax.

But despite its publicised opposition to the recent GST hike, the State implemented the latest Central government order in this regard.

General market trend
Often profiteering by middlemen and lack of state government intervention in the market lead to spike in prices of various rice varieties.

It is also alleged rice mills which have a monopoly over production engage in hoarding of stocks to create an artificial shortage leading to price rise.

The prices in the Kerala market also go up in the wake of natural calamities and adverse weather in major rice-producing states like Karnataka and Andhra Pradesh.

The increase in fuel prices and increased loading and unloading charges also are reflected in the price of the food grain.

TN, AP rice

In the wake of the economic crisis in Sri Lanka, the Tamil Nadu Government is diverting large stocks of rice there. This has also reduced the availability of the cereal in the south Indian markets.

Significantly, the Andhra Pradesh Government is directly procuring paddy from cultivators. The government aims to procure 50 lakh metric tonne of grain during the Kharif season.