Modi Government and Food Inflation in India: How Much Has Been Controlled?

Introduction

Food inflation is perhaps the most politically and economically important measure of inflation in India because food absorbs a much larger share of household expenditure among poorer families than among richer households. A rise in the price of vegetables, pulses, cereals, milk, edible oils or other essentials therefore reduces real purchasing power immediately, even when headline inflation appears moderate. Judging the Modi government's record since 2014 consequently requires more than asking whether the Consumer Price Index has fallen: the relevant question is whether food prices have become structurally more stable, whether episodes of sharp inflation have become less frequent and whether poor households have been protected from supply shocks. The answer is mixed. India has achieved a substantial improvement in average headline inflation compared with the exceptionally high inflation environment inherited from the late UPA period, and monetary policy has become much more credible after the adoption of flexible inflation targeting. Yet food inflation has remained the government's weakest inflationary component, repeatedly reaching high levels because of weather shocks, crop failures, vegetable and pulse shortages, global commodity prices, supply-chain disruptions and export-import policy changes. The government's record is therefore better described as **considerable success in reducing general inflation, but only partial and uneven success in controlling food inflation**. Moreover, the interpretation of this achievement has become complicated by the recent change in the CPI base year from 2012=100 to 2024=100.

 

History

The Modi government entered office in 2014 after a period of exceptionally high inflation. Average headline CPI inflation was about 9.4 percent in 2013–14, according to RBI historical data, before falling to 5.8 percent in 2014–15, 4.9 percent in 2015–16 and 4.5 percent in 2016–17. It subsequently remained relatively moderate at 3.6 percent in 2017–18 and 3.4 percent in 2018–19, although inflation rose again to 4.8 percent in 2019–20, 6.2 percent in 2020–21, 5.5 percent in 2021–22 and 6.7 percent in 2022–23. This represents a significant disinflation compared with the beginning of the period, but it also shows that the government did not eliminate inflationary cycles. Food prices were particularly volatile. Food inflation averaged extremely high levels during the pandemic and subsequently during the pulses, vegetables, cereals and edible-oil shocks. The period after 2022 was especially revealing: food and beverages inflation averaged about 7.8 percent in 2022–23 and 7.0 percent in 2023–24, before easing substantially during 2024–25. Thus, the historical record supports both sides of the political argument. Supporters can reasonably claim that India moved from an inflation regime approaching double digits to one much closer to the RBI's 4-percent objective. Critics can equally reasonably argue that households continued to face repeated episodes in which the prices of essential food items rose far faster than headline inflation.

 

Studies

The economics of food inflation explains why the government's success cannot be measured solely by monetary policy. The RBI can influence aggregate demand and inflation expectations through interest rates, but it cannot manufacture tomatoes, onions, pulses, milk or wheat. Food inflation is heavily affected by agricultural supply, rainfall, irrigation, storage, transportation, market structure, international commodity prices and government trade policy. The Modi government's strategy has therefore combined monetary tightening with supply-side intervention, procurement, buffer stocks, food distribution, import liberalisation during shortages, export restrictions during domestic price spikes and efforts to improve agricultural infrastructure. The creation of a formal inflation-targeting framework was an important institutional achievement: the CPI target was set at 4 percent with a tolerance band of 2–6 percent. This helped anchor expectations and prevented temporary food shocks from automatically becoming persistent economy-wide inflation. Nevertheless, food inflation remained difficult because India's agricultural markets are fragmented and production is highly sensitive to weather. The evidence suggests that the government has been much more successful at preventing food shocks from permanently contaminating core inflation than at preventing the shocks themselves. In other words, the achievement is partly an **expectations-management success rather than a complete supply-side victory**.

 

Examples

The contrast between different periods illustrates this clearly. During 2019–20, food inflation accelerated dramatically, with the food-and-beverages component reaching double-digit inflation in several months as vegetable prices surged. The COVID-19 period created another unusual combination of supply disruption, logistics problems and changing consumption patterns. Food inflation remained elevated in 2020–21 despite weak overall economic activity, demonstrating that inflation was not simply a demand phenomenon. In 2022–23 and 2023–24, inflation in cereals, vegetables, pulses and other essentials again became a major political concern. The government responded through measures such as releasing food stocks, restricting or modifying exports, allowing imports, imposing stock limits and attempting to increase domestic availability. Such interventions can be effective in suppressing short-term price spikes, but they also reveal the structural problem: when inflation rises because production is inadequate, administrative restrictions cannot substitute permanently for productivity, irrigation, storage, cold chains and better agricultural markets. The recent experience also demonstrates the importance of weather. Food inflation fell dramatically during 2025 as favourable weather and higher production improved supply. By December 2025, combined CFPI inflation was actually negative 2.71 percent, while headline CPI inflation was only 1.33 percent. This extraordinary fall cannot reasonably be attributed entirely to government policy; favourable supply conditions played a major role. The lesson is that government policy can moderate food inflation, but nature and agricultural supply still exert enormous influence.

 

Data

The long-run numbers show substantial progress in the inflation environment. RBI data put average headline CPI inflation at 9.4 percent in 2013–14, compared with 5.8 percent in 2014–15, 4.9 percent in 2015–16, 4.5 percent in 2016–17, 3.6 percent in 2017–18 and 3.4 percent in 2018–19. The later shocks pushed inflation higher, but the average remained far below the pre-2014 level. Food inflation, however, tells a less comfortable story. Food-and-beverages inflation averaged 3.0 percent in 2018–19 but 1.4 percent in 2019–20 before exploding to 10.5 percent in 2020–21; it then moderated to 2.6 percent in 2021–22, rose to 8.1 percent in 2022–23 and 4.2 percent in 2023–24, while the available 2024–25 data showed renewed food pressure in the first months of the year. By January 2025, CFPI inflation was still 6.02 percent. Yet by December 2025 it had fallen to minus 2.71 percent. These numbers demonstrate both the scale of the improvement and the volatility of the series. They also caution against attributing every movement to the government. The government's policies mattered, but weather, global prices, production cycles and statistical base effects mattered too.

 

Inflation Base Year

The role of the inflation base year is particularly important in evaluating the latest data. Until 2026, India's CPI series used 2012=100, with weights derived from household consumption expenditure from the 2011–12 consumption survey. MoSPI subsequently introduced a new CPI series with 2024=100, using the 2023–24 Household Consumption Expenditure Survey to make the basket more representative of contemporary consumption. The new series expanded the weighted basket from 299 to 358 items and incorporated substantially updated consumption weights. This does **not** mean that changing the base year magically reduces inflation. Inflation is fundamentally the percentage change in prices, whereas the base year establishes the reference point and, more importantly, the expenditure weights used to construct the index. Updating those weights can therefore change the measured inflation rate because Indian households consume a different composition of goods and services today than they did in 2011–12. MoSPI has also produced linking factors and a back series to improve continuity between the two systems. The distinction is crucial politically: if inflation appears lower under the new series, it should not automatically be described as statistical manipulation, but neither should the entire improvement be attributed to government performance. The new basket is intended to provide a more realistic representation of contemporary household consumption. Comparisons across the base-year change should therefore rely on the official linked series rather than simply placing two headline numbers side by side.

 

Debate

The strongest case for the Modi government is that India has experienced a fundamentally more stable inflation regime than the one prevailing immediately before 2014. Inflation targeting, stronger monetary credibility, improved food-grain procurement and distribution, strategic buffer stocks, infrastructure investment and rapid policy intervention during food shortages have helped prevent many temporary supply shocks from turning into prolonged generalized inflation. The government can also claim that extremely low food inflation in parts of 2025 demonstrated the capacity of the system to bring prices down when supply conditions improve. The strongest criticism, however, is that food inflation remains structurally persistent and that repeated export bans, import decisions, stock restrictions and administrative interventions sometimes address symptoms rather than causes. A poor household does not experience "headline inflation"; it experiences the price of rice, wheat, dal, vegetables, milk and cooking oil. If food prices rise 8–10 percent while headline inflation remains near 4–5 percent, the official success can coexist with considerable hardship. Furthermore, free or subsidised food distribution protects consumption but does not necessarily mean that market food inflation has been controlled. The distinction between **controlling prices and compensating households for high prices** is therefore essential. The government has achieved considerable success in the latter through food-security mechanisms, but the former remains incomplete.

 

Conclusion

The fairest assessment is that the Modi government has achieved **substantial success in controlling the broader inflation regime but only partial success in controlling food inflation itself**. The fall from approximately 9.4 percent headline CPI inflation in 2013–14 to a long period around 4–6 percent is economically meaningful and reflects improved monetary and policy credibility. Yet food inflation has remained the principal source of inflationary instability, with dramatic episodes during 2019–21 and again in 2022–24. The exceptionally sharp decline during 2025 demonstrates that supply conditions can transform the inflation picture rapidly, while the new 2024 CPI base reminds us that measurement itself evolves as household consumption changes. Therefore, claiming that the government has either completely defeated food inflation or completely failed would be equally misleading. Its real achievement has been to create a considerably more credible low-inflation macroeconomic framework and to respond aggressively to food-price shocks. Its unfinished task is structural: raising agricultural productivity, improving storage and logistics, reducing post-harvest losses, strengthening supply chains and making food markets less vulnerable to weather and policy shocks. Ultimately, the test of success should not be whether a favourable statistical base produces a low inflation number, but whether an ordinary Indian household can buy nutritious food with a steadily rising real income and without repeated price shocks. That is the standard against which the government's food-inflation record remains a **qualified rather than complete success**.