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India is grappling with rising food prices in the wake of a drought, which affected large parts of the country. The high prices, particularly of sugar, are putting a dampener on the country's main festival.

Confectioners in the capital New Delhi are busy preparing the traditional sweets, which Indians distribute to friends and relatives for the country's main Hindu festival, Diwali.   

The week before the festival is usually a boom time for sales. But Girish Agarwal, the owner of a popular shop selling sweets in Central Delhi, says he is not seeing too many customers.

He says he has tried to hold prices of his sweets steady in order to boost sales, although this might lower profits. But it is not helping much.

The lack of customers is not surprising. Food prices have been jumping in the last two months, forcing many people to buy less. The price of sugar, demand for which jumps during the festival season, is up by over 40 percent - both due to a massive fall in sugar production and rising prices worldwide. Other staples in the Indian diet, such as lentils, vegetables, wheat and rice are also more expensive.

The government says wholesale food prices are up by 15 percent. Prices have risen after the lowest monsoon rain levels since 1972 affected production of crops such as rice, sugar and groundnut. The drought was followed by flash floods in southern India, further damaging crops.  

Shweta Singh, who is shopping for the Diwali festival, says spending more on daily food items is forcing people like her to cut back on festival shopping.

"If you check about the prices, the rice, the sugar, everything has been rising," said Singh. "So, it really affects the entire monthly budget. If you are spending more on your monthly budget, then you have a limited budget for occasions as well."

The high food prices are particularly worrisome for millions of poor Indians who earn less than two dollars a day. Among them is 19-year-old Ajay who works at a parking lot in a busy market.

Ajay says he cannot even think of buying sweets on his income of two dollars a day. He says even potatoes, selling for bout 50 cents a kilogram, are out of reach for him.

The government has assured people that the country has sufficient stockpiles of food. It has banned exports of rice, wheat and lentils to ensure that there are no shortages in the domestic market. It has put limits on companies that stockpile sugar in order to check hoarding. And it has promised to protect poor people through subsidized food programs.

But for the time being, the high food prices are dampening the festival mood.