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| Fighting price rise | | PM calls for temporary ban on export of essential items | | New Delhi Feb 6
Prime Minister Manmohan Singh today called for a temporary ban on the export of essential commodities to fight rising prices, and urged state governments to take every step possible to ensure the poor were not burdened further.
"We have to moderate inflationary expectations," the prime minister said in his inaugural address at a conference of chief ministers here, convened specifically on the issue of tackling rising prices, especially of essential commodities.
"We must ban export of these items," the prime minister said, while outlining the steps taken by his United Progressive Alliance (UPA) government over the past several months, such as additional allocation of grain for distribution through fair price shops. At the same time, he also urged state governments to invoke their respective Essential Commodities Maintenance Act to prevent hoarding and take strict action against those creating artificial scarcity and fanning inflationary expectations.
The Prime Minister said chief ministers must also remove all existing curbs on the processing of imported raw sugar, as some states like Uttar Pradesh had banned the entry of raw sugar into mills.
The day-long meeting came against the backdrop of India's annual food inflation ruling sharply higher at 17.56 percent, with prices of potatoes and pulses nearly 50 percent higher over the past year, rice up 11 percent, wheat 16 percent and milk 14 percent.
The chief ministers of different states that are not under Congress party-led governments came down heavily on the issue of price rise, with Karnataka's B.S. Yeddyurappa saying it was unfortunate the states were being blamed for the federal government's inaction.
In a similar vein, Kerala Chief Minister V.S. Achuthanandan said the price rise was due largely to the failure of the federal government in improving supplies of essential commodities like rice, wheat and sugar.
Under attack over spiraling prices, Prime Minister Manmohan Singh said the worst of food inflation is over and the situation will ease soon.
"The worst is over as far as food inflation is concerned. I am confident that we will soon be able to stabilise food prices," he said.
"Food prices have softened in recent weeks and I expect this to continue," he told the Chief Ministers who voiced serious concern over the rising prices.
In a stern warning to hoarders, the Prime Minister said powers under the Essential Commodities Act would be used against them to stop artificial scarcity.
Driven by rising prices of essential food items like pulses and vegetables, food inflation touched a decade high of nearly 20 per cent in December before moderating a little bit in January.
The Prime Minister said that good crop prospects and increasing linkages between the domestic and global food prices would help in stabilising the food inflation.
Thanking Food and Agriculture Minister Sharad Pawar, who has been under attack both by the Opposition, allies and a section of Congress, for convening the conference, Singh said, "We are all very concerned about the distress that the sharp rise in food prices has caused to the common man."
The Prime Minister also made a strong case for opening of retail trade for greater competition pointing out that there was a huge difference between the wholesale and retail prices.
Under the current dispensation, only domestic business houses are allowed to enter the retail sector. The government has not taken a view on opening retail trade to foreign direct investment (FDI), though overseas companies are permitted in wholesale trade.
"We need greater competition and therefore need to take a firm view on opening up the retail trade," he said.
Expressing concern over multiple state and local taxes and levies, he said they collectively increase the cost of essential commodities by 10 to 15 per cent. "This too needs to be addressed," he added.
Referring to the spiralling prices of pulses, the Prime Minister said, the government would soon launch a National Mission on Pulses to address the supply shortage.
Domestic production of pulses has stagnated over the past several years, he said, adding the government had imported yellow peas, a substitute for domestically grown pulses, to augment supplies.
On sugar, the Prime Minister said the government had allowed import of raw and refined sugar at zero duty to meet the production shortfall.
"We must expedite the processing of imported raw sugar and remove all impediments that come in the way," he said, pointing that the country needs a medium-term policy framework to address the periodic scarcity of sugar.
Expressing concern over the lackluster response of the state governments in dealing with the price situation, the Prime Minister said, "I regret to say that lifting of wheat and rice by the state governments under the OMSS has not been encouraging in most states."
To augment the supply of cereals, the Centre under the Open Market Sale Scheme (OMSS) had released 30 lakh tonnes of wheat and rice to the States for sale to retail consumers. However, the response of the States to the OMSS has been lukewarm.
Attributing high prices of food items to factors like rising global prices and monsoon failure, Singh said, "while we did well to protect incomes, we have been less successful on the price front."
The government, he added, provided subsidised diesel and seeds to farmers to deal with rain shortfall and also allowed duty free import of food items while imposing restrictions on their exports.
On the back of adequate food stock and good rabi (winter crop) prospects, the Prime Minister expressed hope that food prices would moderate.
"All this augurs well for our ability to stabilise food prices at a reasonable level," he added.
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