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LATEST NEWS UPDATES | Price-busters on way

Price-busters on way

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published Published on Dec 18, 2009   modified Modified on Dec 18, 2009

The government is planning to augment the supplies of essential items through imports to rein in food inflation which has flared up to a decade high of 19.95 per cent in the first week of this month.

“Food prices are going up and this is an area of concern ... We have to take appropriate measures to see what best can be done by increasing the supply through imports,” finance minister Pranab Mukherjee said.

A parliamentary committee has pulled up the finance ministry for not taking timely action.

Prices of potato, other vegetables and pulses had driven inflation higher from the previous week’s 19.05 per cent.

On an annual basis, potato prices zoomed 136 per cent and pulses became costlier by over 40 per cent. Onion prices rose 15.4 per cent. Other food items that became dearer include wheat 14 per cent, milk 13.6 per cent, rice 12.7 per cent and fruits 11 per cent.

Food price inflation has been triggered by a short supply of essentials because of lower farm output following drought and floods in many parts of the country.

The government has already asked states to ensure that the nation-wide public distribution system delivers foodgrain at controlled rates to the poor. It may follow this up with open market sales at lower prices for the middle class.

Food prices are politically sensitive. An onion crisis had in the last decade toppled the then BJP-led state government in Delhi.

The standing committee on finance in its report on inflation said, “The government has failed to intervene timely and squarely in addressing this burning issue (price rise) with due seriousness.”

The committee, headed by BJP’s Murli Manohar Joshi, said, “The government should overcome its inertia and come to grips with the reality of an unabated rise in the prices of essential commodities.”

The panel suggested that the government should formulate a comprehensive food pricing management policy.

C. Rangarajan, chairman of the Economic Advisory Council to the Prime Minister, has said, “By March next year, inflation can be close to 7 per cent. We need to watch the prices in December... Possibly some action will be taken which can have a moderating effect (on inflation).”

The rate of inflation for wholesale prices leapt to 4.78 per cent in November against 1.34 per cent in the previous month.


The Telegraph, 18 December, 2009, http://telegraphindia.com/1091218/jsp/business/story_11880779.jsp
 

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