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Manmohan Singh: the worst is over on food inflation

Gargi Parsai

‘With good crop prospects, we will soon be able to stabilise prices’

— Photo: AFP

CROSSING SWORDS: Union Finance Minister Pranab Mukherjee and Gujarat Chief Minister Narendra Modi at the Chief Ministers’ conference in New Delhi on Saturday.

NEW DELHI: Expressing concern at the distress caused to people by price rise, Prime Minister Manmohan Singh on Saturday said the worst was over on food inflation.

“With good crop prospects, remunerative prices being in place and Indian prices broadly in line with international prices, we will soon be able to stabilise food prices,” he said at a conference of Chief Ministers here.

“This is not the first time that we are facing high rates of inflation of food articles. We had a similar upsurge in 1998. Food prices are subject to cyclical bursts of inflations and we must work together to bring them under reasonable control.”

Dr. Singh said high prices caused by a shortfall in output could be handled only by augmenting supply either through a drawdown of available stocks or through imports. “As far as imports are concerned, we are freely allowing imports of those food articles whose prices have been under pressure. We have also discouraged or completely banned the export of these items.”

Turning to the “vital role of State governments in managing inflation,” he said they must use their powers under the Essential Commodities Act to prevent artificial scarcity and intervene in the market whenever required.

Retail trade

At the same time, the Prime Minister underscored the need to look at opening up retail trade. There was a wide difference between retail and farm gate prices. “We need greater competition and therefore, need to take a firm view on opening retail trade.”

Enumerating the steps taken to control prices, the Prime Minister admitted that the prices of pulses had risen sharply, mostly due to supply constraints. To address the issue, a National Mission on Pulses was being set up. The imported yellow peas could be a substitute for traditional pulses.

Union Agriculture and Food Minister Sharad Pawar urged the States to cooperate and coordinate with the Centre to fight the “battle against rising prices,” both as a short-term and long-term strategy.

Against petrol price hike

More than 30 Chief Ministers and heads of States/Union Territory administrations participated in the conference.

Several Chief Ministers cautioned the government against any hike in petroleum prices. They also wanted the price of wheat sold under the open market sale scheme to be lower to enable better lifting by the States.

Almost all States contested the poverty estimates of the Centre for public distribution system. Many spoke about the shortage of rail terminals and rakes for timely transportation of foodgrains.

Uttar Pradesh Chief Minister Mayawati did not attend.

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