Prepare plan for agri sector to contain inflation: Assocham

The government should prepare a comprehensive action plan for the farm sector to boost production in order to contain food inflation, a report by industry body Assocham has said.

"Persistently high inflation has become structural in nature rather than being episodic which calls for a comprehensive action plan for the farm sector to boost production of fruits, vegetables, fish and poultry," it said.

Manufacturing inflation is more responsive to interest rate hikes but food inflation is not so sensitive to the monetary measures being adopted by the RBI, it said.

The report added that a more pragmatic approach is required to deal with food inflation which has risen sharply after May 2010, due to shift in dietary habits towards protein-rich food items like pulses, milk, fish and eggs.

"The reason structural changes have triggered inflation is that supply response in respect of most protein items has not been adequate," it said, adding that the idea of an 'evergreen revolution' as advocated by agriculture expert MS Swaminathan needs to be considered seriously.

Cultivation needs to be done with integrated natural resource management systems for integrated nutrient supply, it said.

Storage capacity of nearly 151 lakh tonne needs to be created in 19 states by private entrepreneurs in collaboration with central and state warehousing corporations, the report said.

It added that modern technology to preserve perishable commodities and processing of horticultural produce needs to be encouraged.

Food inflation dropped to four-year low of 4.35% for the week ended December 3.