Modernisation of agricultural marketing is important when dealing with inflation in the long run, said Montek Singh Ahluwalia, deputy chairman of the planning commission, in Kolkata."The present system of intermediation is high costs and an efficient supply chain. Stress has to be laid on ensuring that farmers are able to realize higher margins, while consumers are able to get cheaper commodities", said Ahluwalia.
Stating that integration modern marketing in agricultural supply is a big part of the overall planning agenda, Ahluwalia stressed on the importance of amendment to the Agricultural Produce Market Committee Act.
Ahluwalia justified the need to "drastically alter" the APMC Act based on the fact that unless the act is not amended, there would be no significant investment in the modernization of back-end operations.
While he termed foreign direct investment in multi-brand retail as a secondary issue, Ahluwalia reiterated the prior position that has been taken by the Planning Commission in support of FDI in multi-brand retail.
The deputy chairman of the Planning Commission also reiterated the fact that inflation at present was characterised by non-cereal food products, which he said was a seasonal spike that would witness correction and come down to 7
per cent by March.
"Inflation in prices of vegetables such as onions which have a 0.18 per cent weightage in the wholesale price index will see correction with the inflow of the new crop around March", he said.
Ahluwalia also discounted banning product export as a method of dealing with crisis stating that disruption of standard trade channels is never a good idea.
"When there is a shortfall, substitution through import is a better idea than banning exports. Having said that, long-term import is not the solution either given that these would be costlier than even inflated indigenous produce," he said.
Current Account Deficit to remain at 3.5 per cent.
Ahluwalia also indicated that current account deficit for the financial year 2010-11 would remain at 3.5 per cent, which was not a big worry on account of sufficient reserves.
"The current account deficit is one of the pressure points that the economy faces right now. My expectation is that for the current year, 2010-11, the current account deficit will remain at 3.5 per cent," he said.
