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Open markets to control prices: Modi-led panel

A panel of chief ministers led by Gujarat CM Narendra Modi has called for liberalising of agriculture markets to combat price rise. Shekhar Iyer reports.

delhi Updated: Mar 03, 2011 02:27 IST
Shekhar Iyer
Shekhar Iyer
Hindustan Times

A panel of chief ministers led by Gujarat CM Narendra Modi has called for liberalising of agriculture markets to combat price rise.

In its report submitted to to Prime Minister Manmohan Singh on Wednesday, the panel has favoured allowing private organised sector and cooperatives in retailing, farmers’ markets, agro-processing, and storage and cold chains for stopping the rot of food produce to make available cheaper food.

The panel said retail prices could be cut by bridging the gap with farm gate prices. That was possible by allowing direct marketing, contract farming and dispensing with the requirement of routing farm produce to be sold to consumers through agriculture produce marketing committees (APMCs).

Considering the lack of strong links between spot and future markets, the panel suggested essential commodities be kept out of it for now. At present, sugar and wheat are traded on stock exchanges.

Seeking greater involvement of states in tackling rising prices, the PM had set up three working groups of CMs last April.

Typical to his style, Modi did away with the practice of voluminous reports and came up with 20 recommendations with 64 actionable points to facilitate speedy implementation of the suggestions.

The panel wants the Centre to set up a price stabilisation fund to help state governments in procurement and distribution of essential commodities.

For evolving single national agriculture market, the panel wants a ministerial-level coordination mechanism at national and regional level.

It also recommends enlarging the scope of the priority sector to include agriculture marketing activities and the ratio of priority sector lending to the agriculture sector has been raised from the current level of 18%.

To minimise information “asymmetry” in the agriculture market, the panel called for a mechanism to collect and disseminate information to all stakeholders on production, import, stocks and availability of essential commodities and extensive use of the IT.

A suggestion was made to explore “unbundling” of FCI operation in terms of procurement, storage and distribution functions. The panel also asks for a 10-year “perspective plan” for improving agri-infrastructure of backward areas.