Govt unveils steps to curb food inflation

Promising to crack down on black marketeers and hoarders, the government today unveiled measures to check spiralling prices by deciding to continue ban on exports of edible oils, pulses and non-basmati rice and asked states to waive local taxes on essential commodities.

After two days of discussions at the highest level, chaired by Prime Minister Manmohan Singh -- on a day weekly food inflation showed some moderation -- the government constituted an inter-ministerial group under Chief Economic Advisor Kaushik Basu to review the overall inflation with particular reference to primary food articles.

Admitting that food prices have frequently risen at "unacceptable rates", a statement issued by Prime Minister's media advisor said that the "current bout of inflation is driven by rise in prices of vegetables and fruits which is more difficult to manage because they are not held in public stocks".

Attributing the rise in prices, especially the onion, due to late rains, the government said that fast growth of the economy, combined with the effect of several inclusiveness programmes, put greater income in the hands of the relatively poor whose food consumption increased. This led to rise in prices of milk, eggs, meat and fish.

On measures that it proposes to take, the government said it would take stringent action against hoarders and black marketeers manipulating market prices to ensure products reach markets in time to moderate prices.

"Cartelisation by large traders will be strictly dealt with. The states will be requested to ensure that such action is effectively taken under the Essential Commodities Act, 1955, and the Competition Act, 2002," the statement said.

It said that import and export of all essential commodities would be reviewed on a regular basis. The government will "impose controls on exports and ease restrictions on imports, including tariff reduction where necessary, to improve domestic supplies", it said.

The food inflation, measured by wholesale prices, for the week ended January 1, 2011, moderated slightly but was still ruling high at 16.91 per cent.