Amid pressure over rising food prices, Finance Minister Pranab Mukherjee on Friday asked State Chief Ministers to crack down on hoarders to ensure smooth supply of essential items from farm gate to retail customers.
Food inflation has touched a high level in more than a year at 18.32% for the week ended December 25 as costlier onions and vegetables jacked up prices of essential items.
In a letter, Mukherjee urged them to ensure that all bottlenecks in the supply chain are removed at the earliest.
The minister said the availability of the items that are driving the current round of food inflation in the economy should be improved so that food prices can be brought down quickly.
The wholesale food inflation climbed nearly to a year's high of 18.32%, up from 14.44% in the previous week, taking government by surprise.
Mukherjee said, "a larger part of price rise is due to the widening gap between the wholesale and retail prices and the growing demand for these products due to rising income levels."
Chief economic advisor Kaushik Basu recently blamed cartels among traders for high onion prices. He had said the movement of onions should be expedited to cool its prices.
The damage to onion crops in parts of Maharashtra due to unseasonal rains had led to short supply, as its prices skyrocketed to Rs 75-80 a kg in various retail shops in the country.
However, the Centre's move to ban onion exports and remove customs and countervailing duties on the vegetable led to some cooling of prices later.
Prices are now ruling at around Rs 45-50 a kg.
During the week, prices of vegetables rose by 58.58% in the wholesale market.
Among individual items, onion became dearer by 82.47% on an annual basis, egg, meat and fish by 20.83%, fruits by 19.99% and milk by 19.59%.
Mukherjee asked the state Chief Ministers to "urgently look into the supply management of items that are driving the current round of food inflation in the economy, in particular the local factors that are widening the gap between the wholesale and retail prices."
The Finance Minister said much of the food inflation has been due to significant increase in the prices of a few primary items (those found in the raw form) like fruits and vegetables, milk, meat, poultry, eggs and fish.
He also mentioned in his letter that the inflation data shows that three-fourth of food inflation is due to rising prices of vegetables.
On the other hand, nearly one-fourth of cereals and pulses prices have declined sharply and continue to do so even in the recent weeks when food inflation started rising.