PM meet on inflation remains inconclusive

NEW DELHI: A high-level meeting on coining measures to bring down food inflation urgently held here under the chairmanship of prime minister Manmohan Singh took stock of several medium and long-term possibilities. These included asking states to reduce their APMC and inter-state transport taxes until March, drafting a plan to encourage vegetable cultivation in semi-urban and areas around the major cities and towns, embarking on a major fodder production programme to enhance milk production, reducing skimmed milk powder import duty to zero, monitoring local sugar prices and the possible impact of allowing OGL exports to the tune of 5 lakh tonnes as well as subsidising onion distribution and imports.The group will meet again on Wednesday to take firm decisions.

Today’s meeting, attended by finance minister Pranab Mukherjee, agriculture, food and consumer affairs minister Sharad Pawar and home minister P Chidambaram, besides Planning Commission deputy chairperson Montek Singh Alhuwalia is also understood to have discussed ways to address the supply side of the problem. Mr Mukherjee is said to have spoken about the fiscal and monetary measures being taken by his ministry to ease inflationary woes.
RBI governor D Subbarao is likely to meet the prime minister to discuss monetary measures to curb inflation. The meeting assumes importance against the backdrop of the growing popular outrage over the Manmohan Singh government’s failure to rein prices of essential commodities, especially food items. With the Centre slipping badly on the job, the Opposition parties, particularly the BJP, have been quick to heap scorn on the ruling coalition’s aam aadmi credentials.

The bulk of the talking in today’s meeting was said to have been done by Mr Pawar. While he said that the prices of rice, wheat and pulses were going steady, the situation of onion, other vegetables, milk and sugar was a matter of concern. Steps were being taken to meet the concerns, especially in the urban areas. He insisted that the situation was not so alarming in the countryside.

On the onion front, which had brought tears into the eyes of the common man because of the steep rise in its prices, Mr Pawar is learnt to have told the committee that arrivals from Gujarat, Maharashtra and Karnataka, besides Rajasthan, had improved considerably. He said Nafed was being asked to increase the number of trucks ferrying onions into the Capital from two to 10 every day with immediate effect. It has also been asked to set up more mobile shops in the city. These outlets will be partly financed by the agriculture ministry.

He also informed the group that a fresh batch of 500 tonnes of onion will be landing at the Mundra port in Gujarat from Pakistan on January 14. These will be transported to the Capital immediately after their arrival. Mr Pawar exuded confidence that the supply of onions internally will improve considerably in the coming days.

Drawing inspiration from the JNURM, the government is also in the process of finalising a plan to enhance vegetable production in the semi-urban centres and areas surrounding major towns and cities. A project will be taken up on a pilot basis to see its workability. The programme, to be taken up under the PPP model, will help ease the vegetable situation in the urban areas within six months to a year. He said in the long-term there was no option but to go in for a higher productivity to meet the growing demand.

On the issue of the paucity of milk and its escalating price, he maintained that measures were being taken to enhance the supply of “feed and fodder’’ to the farmers. As much as 70% of the cost of milk, Mr Pawar said, was borne by the cost of feed and fodder for the cattle. With cattle-grazing fields dwindling significantly across the country, the animal husbandry department was being directed to prepare a major fodder production programme.

On the positive side, the NCP leader said the rabi and late kharif crops were quite good. Wheat production, at 82 million tonnes, was very comfortable. This was 2 million tonnes more than the production in the previous season. The pulses crop too had shown a good increase because of the concerted efforts made by the government. The country, Mr Pawar said, had a record pulses production, with 16.5 million tonnes, up from 14.5 million tonnes in the prevaious season.

Officials are understood to have pointed out to the dropping NCDEX futures price and lower volumes traded as an indication that earlier decisions to extend the 200 tonnes stock holding limit for sugar traders to March 31 and to release a high quota of 17 lakh tonnes of sugar in the markets in January (comapred to a three-year January average of only 14.5 lakh tonnes) was having an impact on lowering sugar prices.

IT raids were conducted in both UP and at the Capital’s key vegetable mandi Azadpur on Tuesday against persistingly high `60 a kg in the retail despite the countrywide raids on traders. The traders in Nasik may have called off their strike but meanwhile, onion and garlic traders in the Capital have threatened to go on strike from Wednesday in protest against the raids, a development that could boost prices higher even while potato retail prices moved up in local markets on news that the intense cold could affect the crop. Mr Pawar told reporters that the coming onion crop from Rajasthan could impact prices downward over the next fortight when it arrives in the Capital’s markets but traders are of the view that the crop is not a big one and would likely only have a marginal impact and that prices would likely drop noticeably only by March.

The high-level meeting comes against a backdrop of food inflation shooting up to over 18% and the heightening pressure on the government to bring down prices noticeably.