Limits failed to check prices: Plan panel group

A group set up by the Planning Commission has pointed out that the reimposition of controls on wheat and pulses under the Essential Commodities Act (ECA), 1955, "has not had any favourable effect on the price and the availability of these commodities has only added to the costs of dealing with them at the retail level".

The group, chaired by Planning Commission member Anwarul Hoda, included ICICI Bank Managing Director and CEO KV Kamath, Wipro Chairman Azim Premji, Infosys CEO Nandan Nilekani and Future Group Chairman Kishore Biyani, among others.

The report, submitted to Planning Commission Deputy Chairman Montek Singh Ahluwalia today, goes on to recommend that this special dispensation for wheat and pulses control should be "allowed to lapse with effect from August 31, 2008".

The recommendation is significant as the UPA government had 18 months ago restored the power of states to control production, supply and distribution of essential commodities under the Act.

This power was taken away by the then NDA government in 2002. The order has been extended periodically since then.

Late Monday evening, the Cabinet Committee on Prices kept the removal of licensing restrictions on edible oil and oil seeds in abeyance for one more year. Finance Minister P Chidambaram had then pointed out that only five or six states had exercised the power in this regard and called for states to exercise it in order to control prices.

"Only five or six states have exercised the power given to them. There is a large onus on state governments to exercise the power they wanted. It is largely unexercised and we would want states to act," he said.

In 2002, after the stock limit restrictions were dispensed with, dealers were allowed to freely buy, stock, sell, transport and dispose of any quantity of wheat, paddy, rice, coarse grain, sugar, edible oilseeds and edible oils without any licence or permit under the Essential Commodities Act.