Indian Government imposes stock limits on pulses to curb rising prices

The Indian government has imposed stock-holding limits on two types of pulses, tur (pigeon pea) and chana (chickpeas), to address rising prices and low supply. These limits will be in effect until September 30, 2024. This decision comes after a poor monsoon last year led to reduced pulse production and higher prices.

The new rules, part of the Removal of Licensing Requirements, Stock Limits, and Movement Restrictions on Specified Foodstuffs (Amendment) Order, 2024, set specific caps on how much these pulses can be stored by wholesalers, retailers, supermarkets, millers, and importers. Wholesalers can store up to 200 tonnes, retailers up to 5 tonnes, and large retail chains can store 200 tonnes in their depots. Millers are allowed to store an amount equal to their last three months of production or 25% of their annual capacity, whichever is higher. Importers cannot keep imported stocks for more than 45 days after customs clearance.

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Reasons and impacts

These measures aim to prevent hoarding and increase market availability of these pulses. Food prices, especially for cereals and pulses, have remained high, with pulse inflation hitting 17.1% in May. Despite a general drop in overall consumer inflation to 4.75%, food prices continue to be a concern.

India, which imports about 15% of its pulse demand, spent nearly $4 billion on pulse imports in the last fiscal year due to growing domestic demand. Retail prices for gram have risen by 17% to Rs.87.74/kg, while pigeon pea prices have surged 27% to Rs.160/kg.

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The government has been working to boost domestic pulse production through policies and agreements with countries like Mozambique to stabilize prices. Efforts to distribute better seeds have increased productivity by 34.8%, from 727 kg per hectare in 2018-19 to 980 kg per hectare in 2021-22. However, unpredictable weather still poses a risk to crops and prices.

Abhishek Agrawal, an analyst with Comtrade, suggests that the government should expedite imports to further stabilize prices and improve supply, as stock limits alone may not be sufficient to address the issue.