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Government unveils measures to bring food bill down

The government on Thursday announced an eight-point action plan to rein in food prices, but most of them are unlikely to help beyond a point. HT Correspondent reports.

delhi Updated: Jan 14, 2011 01:05 IST
HT Correspondent
HT Correspondent
Hindustan Times

The government on Thursday announced an eight-point action plan to rein in food prices, but most of them are unlikely to help beyond a point.

Of the measures spelt out, only three can have some impact:

* NAFED and cooperative consumer bodies will sell onions at R35 per kg through their retail outlets. The government is also banking on the arrival of 1,000 tonnes of onions from Pakistan and new domestic harvests to bring down onion prices.

* Other state-owned bodies will purchase cooking oil and pulses both from within India and abroad and retail them at reasonable prices.

* The ban on export of onions, pulses, edible oil and non-basmati rice will continue.

The measures were announced on a day when overall food inflation rate, released for the week ending January 1, stood at 16.91%. Though this was slightly lower than the corresponding figure for the previous week — which was 18.32% — it was still high enough to merit concern.

Though the measures are expected to bring down prices of food items mentioned earlier to some extent, they will have no impact on the prices of other household consumption items like milk, meat, eggs, paneer, tomatoes, potatoes, etc.

The measures came after three days of high-level meetings involving the top political and administrative leadership.
"Cartelisation will be strictly dealt with,” a government statement said. It promised action against hoarders, asking states to invoke the Essential Commodities Maintenance Act and Competition Act.

The other measures were more long-term in nature.

The government has set up an inter-ministerial panel headed by its chief economic advisor, Kaushik Basu, to recommend action to fight inflation.

It will closely monitor imports and exports of essential commodities, to act as an early warning system for possible spikes in prices.

There is also a proposal to rope in residents’ welfare associations to sell food articles to ensure supplies reach households with the least intermediation cost, the statement said.

Also on the table is a plan to fund states to set up farmers’ mandis and mobile bazaars to eliminate middlemen from the supply-chain.

“It is too little, too late and shows neither direction nor vision. It is ironic that this is a product of a series of meetings, interactions and confabulations,” Bharatiya Janata Party spokesperson Ravi Shankar Prasad said.

“Since 2009, high inflation has co-existed with high buffer stocks. This means even distribution of government-owned grains was not effective in reining in prices,” said NR Bhanumurthy, economist with the National Institute of Public Finance & Policy.

First Published: Jan 13, 2011 21:47 IST