Edible oil prices in India have seen a significant rise over the past year. While prices have cooled somewhat of late, the issue is hot pot...
Edible oil prices in India have seen a significant rise over the past year. While prices have cooled somewhat of late, the issue is hot potato politically given that it impacts each and every Indian.
What happened to oil prices?
Oil prices in India have shot up over the past year. Look at this chart of packed oil retail prices in the city of Delhi, for example. Mustard, vanaspati, soya and palm oil have gone up by around 30% while sunflower has shot up by more than 40%.
Why have the prices gone up?
India imports a large part of its edible oil. Around 70%. This wasn’t always the case.
Till the early 1990s, India was self-sufficient in edible oils, depending on traditional cooking mediums such as mustard oil. However, a series of government decisions post-liberalisation to favour international free trade as well as a significant increase in per capita consumption, engineered a massive shift, with imported palm oil becoming the market leader.
India’s edible oil imports are so large that the country spends more on importing only two other commodities: crude oil and gold.
The impact of this extreme dependence on imports means that retail prices of edible oils in India are highly sensitive to international conditions. In the past year, to India’s poor...
