Battling increasing criticism from the aam aadmi and the Opposition for its failure to check rising prices, the government on Thursday sought to reassure the common man by spelling out once again the steps it is taking to check the upward spiral. It said it will be undertaking a periodic review of the import and export of all essential commodities and warned of a crackdown against hoarders and black-marketeers who manipulate prices.
It also announced that where essential commodities are concerned, there would be controls on their export and easing of restrictions on their import, including tariff reductions where necessary, to improve domestic supplies.
With Prime Minister Manmohan Singh, an economist himself, chairing meetings to review price rise since Wednesday, the government also announced the formation of an inter-ministerial group headed by the chief economic adviser in the Union finance ministry, Kaushik Basu. The Basu panel has been entrusted with reviewing the overall inflation situation with particular reference to primary food articles.
Apart from this, the group will also be reviewing production and rainfall trends and building an institutional machinery to read warning signals, assess international trends, and recommend action on the fiscal, monetary, production, marketing, distribution and infrastructure fronts to prevent price spikes. It will also suggest measures to strengthen collection and analysis of data and forecasting.
Facing increasing flak over its inability to check prices ranging from those of onions to food grains, the Prime Minister’s Office (PMO), in a detailed two-page statement issued on Thursday, said a committee of secretaries under Cabinet Secretary K.M. Chandrashekhar will review the price situation with individual states and also advise the concerned Central government departments to closely coordinate with state agencies so that they get direct feedback in order to be able to take swift remedial measures.
The Centre also plans to urge the states to consider waiving mandi tax, octroi and other local levies that impede smooth movement of essential commodities, as well as to reduce commission agent charges.
Cartelisation by large traders will be strictly dealt with and the states will be requested to ensure that such action is effectively taken under the Essential Commodities Act, 1955, and the Competition Act of 2002.
Public sector undertakings shall intensify purchases of essential commodities, particularly edible oils and pulses, for distribution through their retail network and also through the public distribution systems of state governments.
The existing schemes for subsidised distribution of edible oils and pulses will be continued. Exports of edible oils and pulses, as well as non-basmati rice, will remain banned, said the government.
Special initiatives will be taken to involve residents’ welfare associations and self-help groups in distribution of essential commodities to address local shortages and ensure that supplies reach households with the least intermediation cost.
Among other measures to control inflation a scheme to support state governments in setting up farmers’ mandis and mobile bazaars and to improve the functioning of civil supplies corporations and cooperatives will be finalised urgently.
The existing PDS will be suitably strengthened through computerisation and other steps, including opening more procurement windows across the country.
The Centre will urge states 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. Investment will be encouraged in supply chains, including provisions for cold storage, which will be dovetailed with organised retail chains for quicker and more efficient distribution of farm products and minimising of wastage.
The government said the rise in prices is partly due to the late rains, which affected the onion crop.
There is also an underlying increase in the prices of milk, eggs, meat and fish, which is the result of the fast growth of the economy leading to rising income levels, combined with the effect of several inclusiveness programme that put greater income in the hands of the relatively poor whose food consumption has increased.
Agri-cooperatives Nafed and NCCF shall undertake the sale of onions at `35/kg from their retail outlets in various locations with suitable budgetary support to be provided for this purpose. The arrival of onions from Pakistan will also help cool prices. The import of 1,000 tonnes of onion has already been contracted. The export of onions stands banned.