As vegetables feed inflation fire, govt lays out counter-measures

NEW DELHI: The government announced on Wednesday a raft of measures to rein in food prices, including selling subsidised pulses from mobile vans, stepping up imports and limiting stockholding by big retailers.

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Soaring food prices, especially of pulses, veggies and dairy products, have fed wider inflation, driven up mainly by shrinking supplies after two years of back-to-back droughts in top farm states.

Although the meteorological department has predicted bountiful rains this year, rising prices can turn into a political worry for Prime Minister Narendra Modi’s government going into a string of crucial state elections over the next few months.

Wednesday’s decisions came after a meeting of finance minister Arun Jaitley and his colleagues from the food, farm and parliamentary affairs ministries.

“Our department was told to procure more pulses for buffer stock,” food minister Ram Vilas Paswan told reporters.

“State governments have been urged to take the pulses from the buffer stock and sell them at not more than Rs120 per kg to ensure availability of pulses at reasonable prices,” he said.

At the meeting it was decided that central retail shops such as Kendriya Bhandar and Safal will sell tur and arhar dal at Rs120 per kg. Paswan also flagged off the first mobile vans for subsidised sale of the lentils in Delhi.

In recent weeks, prices of tur and arhar dal touched Rs170 per kg, tomato sold at Rs80-100 per kg and potato, sugar and wheat prices were also on the rise.

Pulses are a key source of protein in India, which has been struggling to increase its output to meet local demand. In 2015-16 crop year, production is estimated to be 17.06 million tonnes while the demand is pegged at 23.5 million tonnes.

“We see a demand and supply gap of at least 7 million tonnes for pulses,” a government source told Hindustan Times after the meeting. The source said the government planned to meet the shortfall by releasing a buffer stock of 1.5 lakh tonnes and stepping up imports of the commodity from Myanmar and Africa.

The Centre has also decided to send a team immediately to these pulses-growing regions to explore government-to-government imports, the source said.

Earlier this month, the government increased the minimum support price (MSP) for pulses in the hope of boosting output. But although India is the largest producer of the commodity, its output has failed to keep pace with demand, partly because of lower yields, poor storage infrastructure and smaller irrigation cover.

Paswan sought to shift some blame to states for the rising prices, saying they were also responsible for keeping the rates of essential commodities under control. “In a federal structure, states have equal responsibility in controlling prices,” he said.

Government agencies had also been asked to crack down on hoarders and keep an eye on inventories of private importers.

But experts point out how governments react only when inflation sky-rockets, leaving long-term reforms in the farm sector only on paper. “Long-term measures like improved irrigation and increased investment in agriculture is needed. Not publicised meetings of ministers and tweets. The past two years have been about Make in India and bullet trains. Where does agriculture figure in this?” asked noted agricultural economist Dr Ashok Gulati.

Former agriculture secretary Siraj Hussain said: “While the government should be lauded for creating a buffer stock of pulses but increased imports will not bring down prices. Most of the imports are done by private agencies. Of the 4.5-5 million tonnes of pulses imported, the government’s share is only about 10,000 tonnes”.