The extent of the government's concern about inflation was evident at the meeting of the Cabinet Committee on Prices, which started at 8 pm on Monday and went on past 12 midnight.
Commerce Minister Kamal Nath challenged Agriculture Minister Sharad Pawar to explain why wheat import this season had been delayed.
Agriculture Secretary P K Mishra explained that procurement season was starting from today (April 1) and only after that an assessment could be made as to the quantum of import.
Besides, he added, wheat prices internationally were still very high.
Nath persisted. Hadn't the Food Corporation of India advised import? And hadn't the minister consciously told government agencies not to import?
Pawar hesitated, but then came out with the real story: if wheat was imported at upwards of $500 per quintal at a time when farmers were being paid Rs 1,000 per quintal of wheat, it could become a political embarrassment.
Finance Minister P Chidambaram observed that a shortage of wheat was not advisable. Food riots had been reported from some countries, he said.
The Cabinet Committee on Prices went on to discuss other commodities that were leading to price rise. Against a background of the increase in prices of long-term contracts for iron ore export by 60 per cent over the last year, and increase in the price of steel by producers citing a hike in input costs, duty measures were discussed but as Steel Minister Ram Vilas Paswan was not present, a decision was deferred.
Moreover, the finance ministry will have to take a revenue cut anywhere between Rs 2,000 crore and Rs 3,000 crore if the duty structure on steel is rejigged to bring prices down, it was pointed out.
The group learnt how steel prices, instead of being calculated every week, had been released after a 27-week lag, showing a sudden -- and somewhat misleading -- spurt.
However, Railway Minister Lalu Prasad Yadav had an original and innovative suggestion on disciplining the iron ore and steel industry, the simplicity of which took everyone's breath away.
"What if I stop giving iron ore exporters wagons to transport ore?" Lalu enquired of the gathering. "Then" he concluded triumphantly "they will not be able to take their product to ports for shipping. Prices will fall automatically."
Everyone smiled. This relieved the tension somewhat. None of the ministers, however, articulated the full implications of curbs on iron ore exports -- because miners are big political contributors.
The fact that the government has limited options to control prices was not discussed, but everyone in the room was conscious of it: when the economy is growing at 9 per cent per annum and agriculture at 2 per cent, even though production is at record levels, the supply simply can't match demand, a minister explained after the meeting.
On the government's to-do list of short-term measures to deal with foodgrain shortage, is an eye on arhatiyas (agents) who act as fronts of corporate houses and hoard grain till prices rise.