How the govt plans to curb rising prices

The government has decided to tackle price rise on a war footing. It plans to boost the supply of wheat, rice, sugar, edible oils and pulses in a bid to bring down rising prices.

State chief ministers will meet the Prime Minister Manmohan Singh in New Delhi on January 27 to discuss various measures to curb price rise.

The government has also relaxed sugar imports by abolishing import duty on refined white sugar with no ceiling on the quantity to be imported and allowed Uttar Pradesh sugar mills to get processed raw sugar imported anywhere in the country.

Sugar mills are already permitted to import duty-free raw sugar up to December 31.

With 5.64 million tonnes of sugar, including 1.2 million tonne refined, already contracted for imports, Agriculture and Food Minister Sharad Pawar said the total availability in the country will rise to 24.10 million tonnes, which is more than the total domestic demand of 23 million tonnes.

He said sugar mill associations have assured him that the sugar price will fall to Rs 3200 per quintal (Rs 32 a kilogram) in the next seven days.

Flooding markets
Briefing reporters on the emergency measures decided by the Cabinet Committee on Prices chaired by the Prime Minister, Pawar said the Centre will provide 20 lakh tonnes of wheat and 30 lakh tonnes of rice in open market on a priority basis in the next two months and provide another five lakh tonnes of wheat and two lakh tonnes of rice
for sale by Nafed and National Consumer Coopeative Federation (NCCF) through its outlets and through the affiliated cooperatives.

He said the state governments will also be asked to keep an eye on the substantially big difference persisting in the wholesale and retail prices hitting the consumer hard. He gave the instance of Delhi where potatoes sold at Rs 11 a kilogram on Monday as against wholesale price of Rs 4.87 a kilogram, onions at Rs 24 a kilogram as against wholesale price of Rs 11.25 a kg.

Similar kind of differences persisted in the retail and whole sale prices of groundnut oil and pulses, he said. He, however, wriggled out when asked what should be difference and what should be the margin of the retailer, saying it depends on various factors.

At the Chief Ministers' conference, Manmohan Singh will discuss dehoarding and other steps under the Essential Commodities Act to contain price rise and ask them to procure non-PDS (Public Distribution System) items for supply at reasonable price to the consumer if their market prices shoot up.

The states are also categorically advised to remove VAT (value-added tax) or any other tax slapped on imported sugar as already done by the Delhi government.

States blamed
Pawar blamed the state governments for not only ineffective dehoarding drives but also for not lifting wheat and rice allotted to them for PDS supplies and most of the states also not showing interest in taking the subsidised edible oils and pulses imported by the central agencies to control prices.

The Centre has allotted 20 lakh tonnes of wheat and 10 lakh tonnes of rice, but the states' offtake in the two items is just 1.59 lakh and 2.09 lakh tonnes respectively.

If the state governments do not raise the stock to ease prices, Nafed and NCCF will be pushed in to serve the retail consumers.

Pawar said the Centre is also releasing 20 lakh tonnes of wheat and 10 lakh tonnes of rice over and above their monthly PDS quota for disbursement to those not getting at the subsidised rates.

Oil and pulses
The central public sector undertakings (PSUs) are importing edible oils and pulses and supplying them at subsidised rates, but not many states have taken the advantage to help out the poor hit by their high prices.

Only four states of Maharashtra, Andhra Pradesh, Tamil Nadu and Himachal Pradesh have so far taken the subsidised oil for distribution to consumers while these as also Rajasthan and West Bengal governments have so far used the subsidised pulses.

The Centre provides a subsidy of Rs 15 a kilogram on edible oil and Rs 10 a kg on pulses. A committee of secretaries will review if higher subsidy is warranted in case of the edible oils, Pawar said.

UP Imbroglio
In view of the Mayawati government in Uttar Pradesh not permitting the entry of raw sugar imported by the state's sugar mills despite repeated requests by the Centre, Pawar said the central excise rules are relaxed to allow them to get processed anywhere in the country and yet enjoy the zero excise duty benefit. About 9 lakh tonnes of raw sugar imported by these mills is lying in Kandla and Mundra ports.

Pawar said the Home Ministry has been also asked to check smuggling of sugar and sugarcane to neighbouring countries from borders. A complaint had been received about such smuggling into Nepal, he said.