Govt to subsidise imported edible oil
From price controls and outright bans to distribution, the government is sparing no policy measure to tame prices in an election year. Its latest price control proposal: distribute imported edible oil at highly subsidised prices through state government agencies.
Sources in the government confirmed that import of edible oil would be canalised through four state-owned agencies — the MMTC, STC, Nafed and the PEC. “These agencies have been asked to import 1,00,000 tonnes of edible oil per month for 2008-09 which would be distributed through government channels at subsidised rates in retail packs,” a senior government official said.
The subsidy would be Rs 15 per kg. States have been requested to indicate their demands for edible oils. “Some of them have responded and the rest have been reminded. A scheme has been framed and the finance ministry is examining it,” the official said. Since India is expected to import around 50 lakh tonnes of edible oil, the subsidy amount would be over Rs 7500 crore.
Stung by rising prices of essential food items, the cabinet committee on prices, headed by Prime Minister Manmohan Singh, announced a series of measures including complete removal of import duty on crude edible oil, while the duty on refined versions were slashed to 7.5 per cent. However, after the announcement, the future price of Soya oil has gone up to Rs 57 from Rs 54 per Kg. On the Chicago Board of Trade, the price of soya oil has increased to 55 cent per pound from 49 cent per pound.
The government completely banned export of non-basmati rice and raised the minimum export price of basmati rice to $1,200 per tonne.
Sources said the subsidised distribution was necessary as the landed price of imported edible oil, even after the duty reduction, is much higher than the domestic price.