Govt mulls tariff policy to contain prices

An inter-departmental team from the ministries of finance, food and consumer affairs and commerce has been asked to work out a strategy to this effect.

The finance ministry's department of economic affairs has submitted its views and a final paper is under preparation.

The policy aims to create a framework for the import of commodities like wheat, pulses and edible oils, some of which have contributed to the recent surge in inflation.

As part of this exercise, the department of commerce is examining procedures for government purchases that could allow multiple agencies to import commodities on the government's behalf to enhance economy and efficiency.

Another key proposal is aimed at promoting government-to-government contracts for imports of essential commodities, for which the parameters and principles are being finalised.

Some experts feel there is no need for a specific tariff policy for imports. Ramesh Chand, national professor in agricultural economics at the National Centre for Agricultural Economics and Policy Research said: "Ideally, we do not need a policy. No international agreement prevents us from lowering tariffs on imports."

He pointed out that the government has already made wheat and pulses imports duty free to check domestic prices.

"In any cases, at present international prices are much higher than domestic prices," Chand said.

He cautions that there are issues with the government imposing tariffs on exports. He also feels that trying to cultivate essential commodities overseas would be an admission that India has failed in raising domestic agricultural production.

"This may seem a fashionable measure to tackle an immediate crisis, but cannot be a long-term solution. Our food supply is growing at 0.5 per cent, while demand has grown 2 per cent," he added.