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As people despair, govt explains high food prices

delhi Updated: Jul 28, 2009 20:45 IST

As prices of fruits, vegetables and lentils across the country soar, the government on Tuesday said the rise in food prices was primarily due to higher remuneration to farmers, a fall in production of some crops and a seasonal rise in demand.

The government also warned of strict action against hoarders, even as opposition members in the Lok Sabha protested what they called was gross inaction in curtailing the price rise that was putting even basic food items out of the people's reach.

According to Minister of State for Finance Namo Narain Meena, the government had already taken a a slew of measures to keep prices of essential commodities under control.

He said a selective ban was also imposed on exports and futures trading in food grains, apart from permitting import of lentils and sugar by state-run firms at zero import duty.

"The government will also take strict action against hoarders and continue with restrictions on stock limits and movements of food articles," the minister said in a written reply to the Rajya Sabha, the upper house of parliament.

Prices of food items like tomatoes, onions and potatoes that are part of the grocery list of most Indian households are moving away from their reach as prices continue to soar because of erratic and low rainfall in major pulse- and vegetable-producing states.

The prices of potatoes and onions have touched Rs 20-Rs 25 a kilogram in the national capital, while that of tomatoes has shot up to almost Rs 40. A kilogram of tur dal, which is consumed across the country, costs as much as Rs 90 in some states.

Amid this already worrisome situation, the central bank Tuesday warned that the inflation could even rise further as monsoon rain - on which depends 60 percent of India's farm sector - has played truant in several parts of the country.

"Food price inflation continues to remain elevated," said Reserve Bank of India Governor D. Subbarao while presenting an update on the monetary policy for this fiscal in Mumbai. "The uncertain monsoon outlook could further accentuate food price inflation."

But senior authorities at the Agricultural Produce Marketing Committee (APMC), which overseas the availability and prices of essential food items, said that things were likely to improve in the coming weeks.

"The potato crop in West Bengal was spoilt and that affected the market here and retailers have taken advantage. The Punjab crop is due and things will improve in a few days," S. Yadav of APMC said.

Similarly, the tomato prices too are likely to stabilise and come down. "The drought conditions in many states and the heat had affected the tomato crop, which is a perishable item. Now with the rains, the situation is already improving."

Agriculture Minister Sharad Pawar admitted last week that the delayed monsoon was a "serious problem" in the country.

Out of 36 meteorological sub-divisions, rainfall was deficient or scanty in 29. According to Pawar, despite some improvement in rainfall in the past week, the government was on guard.

Between July 1 and now, there has been a significant improvement in monsoon rain, with the deficit based on long-term average coming down from 46 percent to 27 percent, Pawar told the Lok Sabha, the lower house of parliament, last Friday.

"But there are concerns regarding Bihar, western Uttar Pradesh, eastern Uttar Pradesh, and some parts in Punjab and Haryana - also in some pockets of Tamil Nadu, not the whole state," he said.