K`taka slaps stock limits on grains

"As per the Union government's directive, the government of Karnataka has issued orders in exercise of the powers conferred by the Essential Commodities Act, 1955," B Shivappa, additional director, Food Civil Supply and Consumer Affairs Department informed Business Standard.

According to the new norms, prescribed under the Karnataka Essential Commodities Licensing (Amendment) Order, 2008, a licensed trader in Karnataka can now store only up to 1,000 quintals of wheat, 1,000 quintals of pulses, 800 quintals of edible oil, 2,000 quintals of oil seeds, 1,500 quintals of rice, 3,000 quintals of paddy and 150 kilolitres of kerosene at any given point.

In the case of wheat and pulses, the stock restrictions hold good for a period of six months and for edible oils, oil seeds and rice, the restriction period is one year, which may be extended later.

State food authorities and the police would be authorised to search storehouses to ensure that nobody violates norms. "The purpose is to put a curb on hoarding. Imposing stock limits may increase supply in the open market and prices will subsequently fall," said Shivappa.

However, in the post-liberalisation era, there are few takers for this hypothesis. Experts are of the opinion that supply control policy will not work in the present scenario. On the other hand, it will lead to malpractices and black market.

"Stock limit was taken as a measure in the traditional economy. However, it has no meaning in the liberalised economy. Imposing quantitative restrictions signals that we are back to the Licence Raj," said RS Deshpande, professor and Head, agricultural development and rural transformation centre, Institute for Social and Economic Change, Bangalore. According to him, it is very difficult to implement the stock limits legally as there will be unholy nexus between some influential traders and the implementing officials.