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The government announced Friday that it would amend the law to make hoarding of basic food items a non-bailable offence and would set up a fund to stabilise prices, in yet another round of tough measures to tame food inflation.
The decisions came after finance minister Arun Jaitley, food minister Ram Vilas Paswan and agriculture minister Radha Mohan Singh held a meeting with food ministers from the states. “There was consensus that the Essential Commodities Act should be strengthened and more teeth should be provided to the law. Offences under the law should be made non-bailable,” Paswan said.
On Wednesday, the government had put a limit on the onion and potato stocks traders can store to curb hoarding and also raised the price at which onions can be exported, as it battles a spike in prices of the two common ingredients of most Indian meals.
Hoarding refers to traders’ inclination to accumulate stocks of scarce commodities to trigger larger shortages in order to profit from the subsequent price spikes. It is currently punishable with a fine and carries a prison term of up to seven years under the Essential Commodities Act, which gives the government control over supply and distribution of certain food items to ensure affordability.
In May, food inflation rose to 9.5% while wholesale prices climbed to a five-month high of 6%.
Jaitley said there were adequate stocks of most food items and, hence, “no need to panic”. “There are reports of a below-normal monsoon. Hoarders are taking advantage of this. When production of food items is higher than last year and prices still rise, then it means intermediaries are keeping the stock somewhere,” he said.
Watch video: Jaitley asks states to take stern action against hoarders
The food ministers of some non-BJP-ruled states, however, criticised the Centre for passing the buck to the states. “The Centre is trying to escape the responsibility of controlling inflation. It wants to put all the blame on state governments. States will definitely help the Centre,” Maharashtra food minister Anil Deshmukh said.
His Odisha counterpart Sanjay Kumar Das Burma demanded a ban on onion exports, saying the current minimum export price was not “having much of an impact”.
Paswan said the Centre would set up a fund so states could intervene in the markets during price spirals of fruits and vegetables.
Jaitley said the “test” of good governance was “how to de-hoard the stock kept by intermediaries into the market to rein in prices. This is the biggest challenge”.
Paswan also said states would soon be taking vegetables and fruits out of the ambit of the Agriculture Produce Market Committee Act to give farmers the freedom to sell their produce wherever they wanted and not just in designated mandis.