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CII suggests measures to tame food inflation

Industry body CII today said that India and its neighbouring countries should sign a special accord for import and export of perishables to tide over the demand-supply mismatch.

business Updated: Jan 19, 2011 20:58 IST

Industry body CII today said that India and its neighbouring countries should sign a special accord for import and export of perishables to tide over the demand-supply mismatch.

"A special agreement should be signed between India and the neighbouring countries - for import-export of perishables," CII prescribed in a 10-point recommendation to tackle inflation.

This would be a confidence building measure and would ease demand-supply challenges of similar commodities between India and the neighbouring countries, it said. Food inflation, which stood at 16.91 per cent as on January 1, continues to be quite high in the current year despite normal monsoons.

This compares oddly with high inflation witnessed last year when almost half of the country had witnessed drought-like conditions that affected prices of cereals and pulses. While stating that recurrence of inflation is due to "deeper structural problems", CII said that in the short-term, government should lower import duties and tariffs on agri-products, which are now hovering around 30-50 per cent.

In order to ensure easy availability of fruits, vegetables and other perishables, including fisheries, CII has asked full exemption of these items from the provisions of the APMC Act. APMC Act allows each state to sell agri-products only in government-regulated markets.

CII also suggested that the state governments should take stern enforcement measures to curb hoarding and speculative trading. Besides, the industry body said the Centre should encourage the states to help build infrastructure, especially cold storages, to save on wastages which would help boost supplies and thereby help in price moderation. "The Government should move towards a unified national market and allow free movement of fresh produce across the country without any taxes whatsoever," it said.

Most importantly, CII said, time was ripe to usher in market reforms by compressing the agri-commodities' value chain. "The model of creating a marketing platform at village level needs to be promoted where the buyers will come to the producer groups directly rather than farmers going outside to sell their produce," CII said.