UPA chairperson Sonia Gandhi on Saturday reviewed runaway food prices at a meeting with food and consumer affairs minister KV Thomas, who has proposed changing a key law related to sale of farm produce to bridge farm gate and retail prices.
A slew of monetary and administrative steps have failed to cool food prices in Asia's third-largest economy. Food inflation stood at 11.43% for the week ended October 15, the sharpest rise in six months.
Thomas told HT that the government might have to bring fresh amendments to the Agricultural Produce Marketing Committee (APMC) Act.
An innovative legislation originally designed to protect farmers from exploitative traders, the APMC Act - implemented as a national model in the 70s - is now being blamed for rising vegetable prices.
APMC laws make it mandatory for farmers to sell all produce through local committees. Licences for participating wholesale buyers, who are required to pay a transaction or mandi tax, are concentrated in a few hands.
Most APMCs harbour monopolistic practices. They now serve as platforms for hoarders, rather than a buyer-seller junction.
On the other hand, farmers who don't go through APMCs can be booked for avoiding mandi taxes.
"I told her (Sonia Gandhi) that prices of food grains, sugar and onions were stable during this season. Prices of milk, meat and vegetables have gone up largely because of change in the consumption pattern and rise in income of people across all sections," Thomas said.