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Rediff.com  » Business » Worst of food inflation over; prices to stabilise: PM

Worst of food inflation over; prices to stabilise: PM

Source: PTI
Last updated on: February 06, 2010 13:06 IST
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Under attack over spiralling prices, Prime Minister Manmohan Singh on Saturday said the worst of food inflation is over and the situation will ease soon.

"... The worst is over as far as food inflation is concerned. I am confident that we will soon be able to stabilise food prices," he said addressing the Chief Ministers' conference on food prices in New Delhi.

"Food prices have softened in recent weeks and I expect this to continue," he told the chief ministers, who voiced serious concern over the rising prices.

In a stern warning to hoarders, the prime minister said powers under the Essential Commodities Act would be used against them to stop artificial scarcity.

Driven by rising prices of essential food items like pulses and vegetables, food inflation touched a decade high of nearly 20 per cent in December before moderating a little bit in January.

The prime minister said that good crop prospects and increasing linkages between the domestic and global food prices would help in stabilising the food inflation.

Thanking Food and Agriculture Minister Sharad Pawar, who has been under attack both by the Opposition, allies and a section of Congress, for convening the conference, Dr Singh said, "We are all very concerned about the distress that the sharp rise in food prices has caused to the common man." 

The prime minister also made a strong case for opening of retail trade for greater competition pointing out that there was a huge difference between the wholesale and retail prices.

Under the current dispensation, only domestic business houses are allowed to enter the retail sector. The government has not taken a view on opening retail trade to foreign direct investment (FDI), though overseas companies are permitted in wholesale trade.

"We need greater competition and therefore need to take a firm view on opening up the retail trade," he said.

Expressing concern over multiple state and local taxes and levies, he said they collectively increase the cost of essential commodities by 10 to 15 per cent. "This too needs to be addressed," he added.

Referring to the spiralling prices of pulses, the prime minister said, the government would soon launch a National Mission on Pulses to address the supply shortage.

Domestic production of pulses has stagnated over the past several years, he said, adding the government had imported yellow peas, a substitute for domestically grown pulses, to augment supplies.

On sugar, the prime minister said the government had allowed import of raw and refined sugar at zero duty to meet the production shortfall.

"We must expedite the processing of imported raw sugar and remove all impediments that come in the way," he said, pointing that the country needs a medium-term policy framework to address the periodic scarcity of sugar.

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