The Modi government has extended some duty exemptions on key food items as it seeks to check food inflation, with the Lok Sabha elections months away.

While the imports of masur dal have been exempted from agriculture and infrastructure development cess by one more year, the duty cuts on edible oil imports will remain for the same period.

Economists expect food price volatility to continue because of lower reservoir levels and delayed sowing of crops such as onions.

With the 2024 general elections only a couple of months away, analysts said the Modi government would try to do everything to control prices lest it becomes a significant poll issue and mar its electoral prospects. They said political considerations would outweigh all other obligations as Modi would seek not just a third term in power but also a majority government like his previous two terms.

As per an order from the Central Board of Indirect Taxes and Customs (CBIC), the exemption on masur — a type of lentil — effective since October 2021, will now stay till March 31, 2025.

The central government has also extended the reduced import duty regime for crude palm oil, crude edible oil and crude soy oil by a year.

The reduced duty, which was set to end in March 2024, will continue till March 2025, an official notification from the government said.

Retail inflation in India rose at its fastest pace in three months in November, largely due to a spike in food prices. Food inflation, which accounts for nearly half of the overall consumer price basket, was 8.70 per cent in November, against 6.61 per cent reported the previous month.

Tanvee Gupta Jain, UBS India Economist, said: “We expect headline CPI inflation to remain elevated in December (partly on unfavourable base effect) before softening towards 5-5.5 per cent in Q4."