Wheat, rice issue price increase for Above Poverty Line beneficiaries put on hold

Prime Minister Manmohan Singh on Tuesday held a high-level meeting with senior Ministers to discuss inflation and ways to tackle it, particularly the zooming prices of onions, other vegetables, fruits, eggs, meat and milk. Official sources said the government would come up in a day or two with measures to tame food inflation that soared to 18.32 per cent for the week ended December 25.

No decisions were announced after the meeting but informed sources said the move to export five lakh tonnes of sugar would be “reconsidered” by the Empowered Group of Ministers headed by Finance Minister Pranab Mukherjee. The Food Ministry has assigned a quota for 661 sugar mills for export on the back of a high output estimate this year.

Also, the decision to raise by 40 per cent the Central issue price of wheat and rice being sold to Above Poverty Line (APL) beneficiaries through the Public Distribution System will be put on hold. The Food Ministry's decision, approved last month by the Cabinet Committee on Economic Affairs which is chaired by the Prime Minister, has already been “minuted” and therefore is implementable. But it will now be put on hold.

Kharif crop

As for onions, availability will be enhanced from this weekend with higher arrivals of the late kharif crop from Gujarat, Maharashtra and Karnataka. Official agencies will launch mobile outlets to sell onions at a subsidy. Owing to supply constraints, prices have shot up to Rs. 60 a kg in most retail markets.

Presentation

According to informed sources, the Prime Minister's Office made a presentation at the meeting on inflation, which is at 7.48 per cent, and the high food inflation on account of the rise in the prices of vegetables, eggs, meat milk and edible oils.

The presentation gave an overview of inflation, both domestic and international, and the increase in demand due to a better consumption pattern in a growing population, and highlighted the steps that could be initiated to contain food inflation such as improving the supply-side and augmenting availability.

The government has already banned exports of rice, wheat, pulses and onions.

Role of States

The role of the State governments in cracking down on hoarders was highlighted and suggestions were made to take them on board to tackle the situation.

The 90-minute meeting was attended by Mr. Mukherjee, Agriculture and Food Minister Sharad Pawar, Home Minister P. Chidambaram and Deputy Chairman of the Planning Commission Montek Singh Ahluwalia, Cabinet Secretary K.M. Chandrasekhar and Economic Adviser to the Finance Minister Kaushik Basu.

The absence of Commerce and Industry Minister Anand Sharma was raised when the ban on onion export by Pakistan through the Wagah border was discussed. The high price of commodities was also attributed to a frequent hike in fuel prices.

For the week ended December 25, food inflation rose by 18.32 per cent, onion prices by 82.47 per cent, average vegetable prices by 59 per cent, fruits and milk by about 20 per cent each and eggs, meat and fish by 20.83 per cent. The price of wheat and pulses, though still high, held.

Congress’ view

The Congress said Tuesday's meeting showed the United Progressive Alliance government's “sensitivity” to the issue, but put the onus on the States to check price rise.