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Despite the assurance of the Indian government that food prices will decrease, the adamant food inflation in India has triggered fears that it will eventually trickle down to Bhutan.

The managing director of the Food Corporation of Bhutan (FCB), Kuenzang Namgyel, told Business Bhutan: “There is a big possibility (for Bhutan to import the inflation).”

Kuenzang Namgyel added, “It might not be immediate and we can sustain for another two or three months but after that there is no way we can avoid it.”

India experienced an inflation of 8.56% in January, up from 7.31% the previous month, mainly contributed by soaring food prices. Over the past 52 weeks, the price of essential food items saw an increase of about 20% for vegetables, both potatoes and pulses by about 38% each, and fruits by 10%.

As a remedial measure to offset the inflation, India has sought to tame the soaring food prices by selling reserve stock of wheat and rice in the open market and has allowed duty free imports of sugar.

Back home, the FCB is doing just the opposite by planning to stock rice in case the situation worsens. The FCB revolves its reserve every three to four months. “But we do not have enough reserve for rice,” said Kuenzang Namgyel. The FCB currently has about 57 metric tons of local rice and has milled 30 metric tons to sell in the local market. There is 300 metric tons of sugar reserve.

In case the inflation affects Bhutan, “We would be selling the old stock at the same price,” he said.

Over the past two years while India experienced food inflation twice Bhutan was lucky not to suffer its impacts. But the fear this time could translate into reality if the inflation in India is prolonged. The pressure of food prices had also forced the Indian government to postpone a long overdue proposal on fuel price hike.

As of now, Bhutan can only hope that the food situation in India improves. “Let’s see the situation in March,” said Kuenzang Namgyel.

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