## India’s Consumer Affairs Ministry Targets Reliance Retail to Curb Pulse Price Inflation
In a bid to combat rising pulse prices, India’s consumer affairs ministry has taken direct action, specifically targeting Reliance Retail, the country’s largest retailer by revenue. The ministry has requested the company to lower both prices and profit margins, believing that this move will trigger a domino effect, encouraging other retailers to follow suit. This direct intervention comes after a previous directive to major retail chains in October to reduce prices failed to deliver significant results, with data from the department of consumer affairs (DoCA) showing that pulse prices have actually increased since then.
The ministry’s concern stems from the widening gap between wholesale and retail rates, with major retail chains seemingly profiting from this disparity. For example, on October 7th, the average retail price of tur was ₹ 163.31 per kg, urad was ₹ 124.79 per kg, and chana dal ₹ 94.32 per kg. However, by October 14th, while wholesale prices showed a decrease, retail prices remained largely unchanged or even increased slightly. This disparity highlights the need for intervention to ensure that consumers are not bearing the brunt of rising costs.
Pulses play a pivotal role in India’s food inflation, acting as a staple food and a significant source of protein. Contributing factors to the rising cost of pulses include demand-supply gaps, seasonal production issues, high dependency on imports, and escalating input costs. The ministry’s move to target Reliance Retail is strategically motivated, considering the retailer’s vast reach across 4,000 pin codes. It is hoped that by setting an example with Reliance Retail, the government can encourage a broader shift towards lower prices and greater transparency in the retail sector.
The matter was discussed at a meeting between government officials and Reliance executives last week. Reliance Retail has reportedly agreed to align its retail prices with wholesale rates, a move that is anticipated to directly benefit consumers. The timing of this intervention is crucial, as major festivals are approaching, and a price reduction would offer much-needed relief to consumers who are already facing financial strain due to rising prices.
The government’s intention, as clarified by officials, is not to eliminate retailer profits but to regulate excessive profit-making practices. This approach aims to create a more equitable market, ensuring that benefits are shared between retailers and consumers. The government’s efforts to control price increases are further amplified by the fact that the cost of a home-cooked vegetarian thali surged 11% year-on-year in September, driven by rising vegetable and pulses’ prices, according to a report by the rating agency Crisil. The prices of pulses, which contribute 9% to the vegetarian thali cost, witnessed a 14% increase due to a decline in production in 2023, leading to lower opening stock this year.
The government’s intervention highlights the urgency to address the issue of rising food prices, particularly those of pulses. The actions taken against Reliance Retail are expected to set a precedent for other retailers, ultimately benefiting consumers and stabilizing the market. While the government is not seeking to eliminate profits, it is determined to ensure fair practices and prevent excessive profiteering, especially in the context of essential commodities like pulses.