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Resource centre on India's rural distress
 
 

Panel wants mandi law revised


An inter-ministerial group set up by the government to keep a watch on inflation and suggest measures has reiterated the need to revise the mandi law that prevents competition among buyers for farm produce. The group headed by chief economic advisor Kaushik Basu said the Agricultural Produce Marketing Committee (APMC) Act needed to be revised to encourage competition among traders and promote efficiency in retailing.

Kishore Biyani , Chairman, Future Group , made a presentation on "debottlenecking the food value chain: An Indian retail practitioner's view" before the committee, a finance ministry release said on Monday. Food inflation has moderated to 9.42% for the week ended March 5 from over 20% in mid-December 2010, but the central bank lifted policy rates for the eight time since March last year to cool prices amid signs that high food inflation was spilling over to manufactured goods, or becoming generalised.

PK Basu, Secretary, Department of Agriculture & Cooperation said prices had declined because of prospects of a good rabi crop. In this second meeting of the group, Basu said that price changes are market's ways of signalling information to consumers and it was not a good idea to flatten out these changes. The sharp swing in prices because of a small drop in production is telling us that there is a problem in the marketing system that needed to be corrected, he said.

He said the task before his group was not to react to each and every crisis but to making structural improvements in the system of food production and delivery. Planning commission , departments of agriculture and food & public distribution, and finance ministry have representation in this group. Biyani pointed to the huge value erosion as commodities pass through various supply chain systems and procedures and urged better post-harvest management techniques such as sorting, grading, crating and packing.