Food prices likely to decline: Montek

KOLKATA: Planning Commission deputy chairman Montek Singh Ahluwalia on Tuesday said surging food prices were a great concern to everyone and the Centre was expediting steps to tame food inflation. He was addressing the media on the second day of CII’s national leadership meet in Kolkata through a video conference since he couldn’t make it to the event.

"As food prices have increased steeply in global markets, the scope of containing them through imports gets restricted, unless it is subsidised. But subsidising imports is a debatable issue with farmers opposing the idea. The government is looking at all options to tame inflation in food prices," Mr Ahluwalia said.

"The flare-up in vegetable prices is excessive, but what is even more worrying is the wide gulf between wholesale and retail prices, which hints at a dys-functional distribution system," he added.

Mr Ahluwalia, however, felt that with no signs of another drought, food prices, especially those of cereals, were likely to decline shortly.

Speaking on the role of the manufacturing sector in driving economic growth, he said GDP growth at 9-to-9.5% couldn’t be sustained without a 12-13% growth in that sector, wherein the private sector had a big role to play. "To facilitate growth in the manufacuring sector, the government is keen to explore the public-private partnership model to shore up investment in energy, transport and infrastructure," he added.

In so far as the government investment in infrastructure goes, it is not unsatisfactory either. He felt the scope of private participation in road development projects had brightened with the ministry of roads, transport and highways deciding to bid for 8,000 km of road construction contracts for execution in the next two years. This is considered an ambitious target, given that the same ministry has also bid for 2,000 kms of road construction contracts over the past three years.

Mr Ahluwalia also felt there is a need to reform labour laws to spur growth in the manufacturing sector. "This reform has to be done obviously in consultation with trade unions. When the government talks of reforming labour laws, it is being suggested not to weaken trade union rights, but to modify the labour laws for the sake of growth of the sector," he said.