M A I N   N E W S

Govt unveils steps to check inflation
To act against hoarders and black marketeers
Vibha Sharma/TNS

Government constitutes an inter-ministerial group to review the overall inflation Decides to continue ban on exports of edible oils, pulses and non-basmati rice Asks states to waive local taxes on essential commodities Import and export of all essential commodities to be reviewed on a regular basis

New Delhi, January 13
After discussions over two days, the government today announced steps to deal with rising food prices.

The Prime Minister decided to set up an inter-ministerial group (IMG) under Kaushik Basu, the Chief Economic Adviser of the Finance Ministry, to review key agricultural parameters like production, rainfall trends, marketing, distribution and infrastructure. It is a move that political observers are finding significant, especially with Agriculture Minister Sharad Pawar under direct attack from within and outside the government for “failure to foresee” the price situation.

A PMO statement issued this evening admitted that “food prices have frequently risen at unacceptable rates”.

The IMG will review overall inflation situation with particular reference to primary food articles. These include production, rainfall trends and build an institutional machinery to read warning signals, assess international trends, recommend action on fiscal, monetary, production, marketing, distribution and infrastructure fronts to prevent price spikes and suggest measures to strengthen collection and analysis of data and forecasting.

The Committee of Secretaries under Cabinet Secretary will review prices situation with individual states and advise the departments concerned of the Central Government to maintain close coordination with state agencies to get direct feedback with a view to taking suitable remedial measures on a fast-track.

Promising to crack down on black marketeers and hoarders, the government decided to continue ban on exports of edible oils, pulses and non-basmati rice and asked states to waive local taxes on essential commodities.

It will review import and export of all essential commodities on a regular basis and impose controls on exports and ease restrictions on imports, including tariff reduction where necessary, to improve domestic supplies.

Other measures include stringent action against hoarders and black marketeers manipulating market prices and ensuring products reach markets in time to moderate prices.

Long-term measures include a scheme to support state governments in setting up of farmers’ mandis and mobile bazaars and improve functioning of civil supplies corporations and cooperatives.

Experts, however, are not impressed by the slew of measures, saying that the plan to fight price rise lacks specifics and is high on promises.

The government, however, assured that arrival of onions from Pakistan will help cool prices. PSUs will intensify purchases of essential commodities, particularly edible oils and pulses, for distribution through retail network and also through PDS operated by state governments.

Other long-term measures include strengthening of PDS through computerisation and other steps. State governments will be urged to review the Agricultural Produce Market Committee (APMC) Acts and, in particular, consider exempting horticultural products from its purview thereby mitigating marketing and distribution bottlenecks in this crucial sector.

States will be urged to consider waiving mandi tax, octroi and other local levies which impede smooth movement of essential commodities, as well as to reduce commission agent charges. Investment will be encouraged in supply chains, including provisions for cold storages, which will be dovetailed with organised retail chains for quicker and more efficient distribution of farm products and minimising wastage.

Suitable support will be extended to facilitate stocking of the bumper Kharif 2010 crop, including by augmenting storage capacities and modernising/ upgrading the godowns and other infrastructure. The government also listed reasons for rising prices.

It said the current bout of inflation was driven by a rise in prices of vegetables and fruits which is more difficult to manage because these commodities are not held in public stocks.