New Delhi: In a bid to check rising food prices, the centre has urged state governments to exempt pulses from VAT and other local taxes that can bring down prices by 5-7%. Further, it has suggested states to impose stock limits on pulses, sugar and edible oils on a rational basis—depending on whether a state is a producer or a consumer of the goods—to check hoarding by traders and middlemen.
The decisions were taken on Saturday at a meeting of states’ ministers and officials with food minister Ram Vilas Paswan and agriculture minister Radha Mohan Singh. The meeting also recommended that importers of pulses should display their stock positions on the food ministry’s portal.
“Prices of the specified food items like pulses, sugar, edible oil seeds commodity shoot up abnormally due to hoarding, profiteering and cartels by traders and middlemen, without any benefit to the farmers,” Paswan said after the meeting.
“There should be a logical and scientific formula for stock limits separately in consuming states and surplus states, and also for millers, producers and importers, so that the supply chain mechanism remains smooth and pulses are available at reasonable prices,” he added.
On rising sugar prices, the food minister said that major producing states like Maharashtra, Uttar Pradesh and Karnataka have been asked to keep a close watch on release and stock positions of sugar mills to ensure availability in the domestic market. Also, he informed that the export incentive scheme has been withdrawn by the centre to increase domestic supply.
Paswan further informed that the centre is using the Rs.900 crore price stabilization fund to create a buffer stock of pulses and are supplying to states. The centre is also planning to include more markets for daily price monitoring and states were also requested to set up similar systems, he said.
Saturday’s meeting follows an upward trend of retail inflation, which quickened to 5.39% in April from 4.83% in March. The rise in retail inflation was on account of food inflation due to higher prices of pulses and potatoes. While pulse prices rose 36% in April, potato prices were up by 35%.
A rise in retail and wholesale price inflation means the Reserve Bank of India may not cut interest rates in its next monetary policy review due in June.
Food prices hardened in the past month due to supply shocks, not just for pulses but also for sugar. Consecutive droughts in 2014 and 2015 have hurt the production of pulses, a rain-fed crop. Pulse production was estimated at 17 million tonnes in 2015-16, unchanged from 2014-15, but lower than the 19.8 million tonnes produced in 2013-14, according to the third advance estimate released this month.
Also, sugar output is down 11% in the 2015-16 season (October to September), compared to the year before, due to lower production in cane growing states of Maharashtra and Karnataka, which were hit by a drought.