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LATEST NEWS UPDATES | Singh recipe to fight price rise

Singh recipe to fight price rise

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published Published on Feb 5, 2011   modified Modified on Feb 5, 2011

Prime Minister Manmohan Singh today asked states to waive local taxes, including octroi, as well as reform the outdated Agriculture Produce Marketing Committee Act, or Mandi Act, to help control a runaway food inflation.

The Prime Minister also called for dovetailing organised retail chains with farm supply chains.

“Supply chains need to be strengthened and these need to be dovetailed with organised retail chains for quicker and more efficient distribution of farm products and more remunerative prices for our farmers,” he said at a meeting of state chief secretaries.

Singh said states needed to waive some taxes to facilitate the movement of crops. “There seems to be a strong case for waiving mandi taxes, octroi and local taxes, which impede the smooth movement of essential commodities,” the Prime Minister said.

“Each state has to work out a suitable plan of action suited to its requirements and its capabilities.”

Supply solution

Singh partly attributed the rise in the prices of “superior food products” to rising income level and termed it a “corollary of faster growth”.

He said a lasting solution for food inflation lay in expanding farm production and developing an organised supply chain.

While India has allowed retail chains to be set up by local industry and co-operatives, foreign investment in retail has not been allowed because of fears that this may wipe out local grocers. However, officials say limited FDI may be allowed in food retail soon.

Singh said “much of what needs to be done” to battle inflation “lies in the domain of state governments”. Onion prices shot up by 100 per cent within a few weeks this winter as did the prices of several vegetables — ranging from ginger to potatoes.

“The functioning of the Agriculture Produce Marketing Committee Act needs to be reviewed on an urgent basis,” Singh said.

Top finance ministry officials tasked with tackling inflation have pointed out that this act fuelled inflation.

The act, a state legislation, places trading in most farm commodities, including onions and vegetables, in the hands of 4,000-5,000 licensed traders who control the market and can manipulate it.

Steady steps

Finance minister Pranab Mukherjee today said steps had been taken to tame inflation but the government had no magic lamp to bring it down immediately.

“You cannot expect there is any magic wand or like Alladin's magic lamp you just rub it and your problem is solved,” he said.

He said the Reserve Bank had taken steps, including the tightening of the monetary policy.

The Telegraph, 5 February, 2011, http://www.telegraphindia.com/1110205/jsp/business/story_13539039.jsp


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