After three days of hectic consultations with Cabinet colleagues and experts, Prime Minister Manmohan Singh on Thursday set up an inter-ministerial group under the Chief Economic Adviser to the Finance Ministry to review the inflation situation with particular reference to primary food articles.

It will also assess international tariff trends and recommend action on the fiscal, monetary, production, marketing, distribution and infrastructure fronts to prevent “price spikes.”

As an immediate measure to curb inflation, import and export of all essential commodities will be reviewed “on a regular basis.” It will impose controls on exports and ease restrictions on imports, including tariff reduction wherever necessary, to improve domestic supplies. The ban on export of edible oils, pulses and non-basmati rice will remain.

Even as food inflation declined to 16.91 per cent for the week ended January 1 from 18.32 per cent in the previous week, official sources said the government was closely watching the situation and committed to containing the adverse impact of any inflationary pressure on the common man.

To augment the availability of onions, now selling at Rs. 60 a kg in retail markets, import of 1,000 tonnes has been contracted for, while export remains banned. The arrival of onions from Pakistan is expected to cool the prices as also the sale of subsidised onions through official agencies.

The States have been asked to consider waiving mandi tax, octroi and other local levies and to reduce commission agent charges and exempt horticulture produce from the Agriculture Produce Marketing Committee Act.

The government will take stringent action against hoarders and black marketeers. The States have been urged to ensure that strict action is taken under the Essential Commodities Act, 1955, and the Competition Act, 2002, to prevent cartelisation.

Public sector undertakings shall intensify purchases of essential commodities, especially edible oils and pulses, for distribution through their retail network as well as the PDS. The help of resident welfare associations and self-help groups will be taken to ensure that supplies reach households with the least intermediation cost.

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