Govt extends control order for pulses, edible oil

Control on edible oil and oil seeds to continue till September 2016; for the first time, those registered under warehousing regulator could come under stock limits

States will be allowed to impose stock limits on scarce pulses, edible oil and oil seeds till September 30, 2016, as the rise in the prices of these commodities defy the declining inflationary trend. They can also impose stock limits on those registered with the Warehousing Development and Regulatory Authority (WDRA), a first.

On Tuesday, the Cabinet cleared proposals in this regard, extending a control order under the essential commodities Act to allow states to take steps to curb unscrupulous trading and hoarding of pulses, edible oils and oilseeds, Ravi Shankar Prasad, communication and information technology minister, told reporters after a Cabinet meeting. The order was to expire at the end of this month.

“This will enable states to regulate trade of these essential commodities and continue to take effective operations under the Essential Commodities Act, 1955,” he said.

In view of shortages, it was decided last year, pulses, edible oils and edible oilseeds should be brought under a control order to ensure availability.

Currently, warehouses registered with WDRA are exempted from stock limits. The stock deposited in warehouses recognised by commodity exchanges doesn’t attract limits. If such limits are imposed, the stock with exchange-accredited warehouse comes up for selling, resulting in a fall in prices.

Jayant Manglik, president (retail distribution), Religare Securities, said, “Initially, stockists will have to liquidate additional holdings due to the levy of stock limit on WDRA-registered and exchange-accredited warehouses. But there will be a problem later, as traders won’t be able to deposit stocks in warehouse due to the limit.”

On the extension of the control order, Prasad said it to ensure state governments took appropriate measures to undertake legal initiatives under the Essential Commodities Act. “They (states) can impose stock limits, licensing requirements to curb unscrupulous trading, hoarding and profiteering,” read an official statement.

The extension would help states ensure adequate availability of these commodities in the domestic market and keep prices under control, it added.

On the imposition of stock limits on WDRA-registered warehouses (for pulses, edible oils and oilseeds), Prasad said, “Complaints had come to the government that many of the warehouses registered under WDRA… on which no stock limit was provided, but certain cartelisation was taking place, whereby these products were not coming to the market.”

Rajasthan, one of the highest producers of pulses, had long demanded that stocks in WDRA-registered godowns and warehouses be brought under the ambit of stock limit. Without this, it had said, traders lifted stocks from non-WDRA recognised warehouses and stored those in WDRA-recognised ones to circumvent the stock limit provision.

Three categories, however, will be exempted from the stock limit — stockists who export, those who store raw material for food processing and those who supply to the retail sector.

Consumer Price Index-based inflation for pulses rose from 22.88 per cent in July to 25.76 per cent in August, even as general retail prices fell 3.66 per cent, against 3.69 per cent in July. For edible oils and fats, retail prices rose 3.06 per cent.

To enhance availability and moderate the prices of essential commodities, the government has taken a slew of measures. Future trade in pulses such as urad and tur has already been suspended, while export of pulses has been banned and zero duty imposed on import of pulses.

To increase availability of pulses, an import order for 5,000 tonnes of urad and 5,000 tonnes of tur has been issued.