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Updated: January 13, 2011 03:09 IST

Centre seeks to get on top of inflation

Gargi Parsai
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A worker sits on onion bags at a market in Hyderabad on Wednesday. The government is holding a series of consultations with experts and economists on how to tame the high food inflation triggered by the zooming prices of onion and other vegetables.
AP A worker sits on onion bags at a market in Hyderabad on Wednesday. The government is holding a series of consultations with experts and economists on how to tame the high food inflation triggered by the zooming prices of onion and other vegetables.

Availability of commodities to be augmented

The Centre on Wednesday stepped up its efforts to rein in food inflation, which touched 18.32 per cent for the week ended December 25 last with onion price soaring to Rs. 60 a kg in retail.

Prime Minister Manmohan Singh met Finance Minister Pranab Mukherjee, who later held a closed-door meeting with Agriculture Minister Sharad Pawar and Planning Commission Deputy Chairman Montek Singh Ahluwalia. Mr. Pawar said the decisions taken at the inter-ministerial meeting would be communicated to the Prime Minister.

Separately, Chairman of the Prime Minister's Economic Advisory Council C. Rangarajan also met Dr. Singh. Informed sources said the Prime Minister was holding a series of consultations with experts and economists on how to tame the high food inflation triggered by the zooming prices of onions, other vegetables, meat, eggs, milk and edible oils. On Tuesday, he consulted senior Ministers.

Efforts are on to augment availability of commodities either through imports or by banning exports, and by facilitating seamless inter-State movement. The Centre has already banned the export of onions, pulses and rice.

There are expectations that the Reserve Bank of India too will announce some measures to curb inflation at its monetary and credit policy review meeting by month-end.

As for onions, the situation in Asia's biggest market, the Azadpur mandi, was brought under control as traders called off their strike at the intervention of the Delhi government. Pakistan has also reportedly allowed export to India on orders that were finalised before January 4. In addition, about 500 tonnes of imported onions are expected to arrive at the Mundra port in Gujarat by weekend. Fresh arrivals from Gujarat, Maharashtra and Karnataka by weekend will also help.

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Commission agents in every field are greatly responsible for price escalation because they get their commission in percentage basis and not fixed. Policy maker has to work out (if possible). Secondly media hype of price hike of one commodity too makes all other products to follow suit. Overhead costs added to the basic cost too are responsible for consumer prices as the same is 4 to 5 times of basic cost.

from:  Lalit
Posted on: Jan 13, 2011 at 11:59 IST

Inflation is a rise in the general level of prices of goods and services in an economy over a period of time. It doesn't suddenly descend on an economy. It is the cumulative effect of wrong economic policies of the government over the years. Manmohanomics dictated quick, nay, superfast economic growth and the originator and the votaries of this economic paradigm knew that development of agriculture is a slow process and therefore it cannot bring about fast economic growth. But they knew that growth in the manufacture of all types of consumer durables and acceleration of the real estate industry can do this. Giving Tax concessions to the IT industry which has been raking in huge profits helped that industry to put in large disposable incomes in the hands of its employees. Coupled with this, availability of cheap loans helped these high earners trigger an explosive growth of the personal vehicles indusry and the real estate business which in turn brought about very fast growth in industry in general.Along with this stockmarket boomed. All in all the country was inundated with money, though money was only in the hands of a minority of our population, Prices soared. In its excitement about the accelerating economic growth, the government and even the media forgot agriculture. They overlooked the fact that one can do without motor cars, but not without food. Can a government which brought about such an economic disaster, pull the country out of this miserable condition? Can it ever 'get on top of inflation'? Well, the answers to these questions are self-evident.

from:  K.Vijayakumar
Posted on: Jan 13, 2011 at 07:28 IST
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