Extra measures to tame inflation

Facing severe attack from opposition and its allies ‘Left’, government on Wednesday has made more announcements to curb inflation rate immediately. Responding to attacks, government’s two big ministries Union Agricultural Minister and Union Finance Minister have to reply the attackers in both houses of Parliament.

Union Agricultural Minister Sharad Pawar in Lok Sabha made new announcements on April 16 including government’s move to import edible oils and pulses in food products while Finance Minister P Chidambaram in Rajya Sabha said that government would not hesitate to take tough administrative measures for chopping skyrocketing prices in essential commodities. He also asked RBI to take some major initiatives to control the excess flow of liquidity in the market in the coming policy review that is scheduled to hold on April 29, 2008.

Speaking into Lok Sabha, Sharad Pawar has announced to import 1-million tonne of cooking oils and 1.5-million tones of pulses. “There is scarcity of edible oil in our country and we are dependent on import of edible oil. We will import one million tonnes of edible oil and we have told all public sector companies they should import edible oils,” announced Pawar.

These imported edible oils would be distributed to the public who come under BPL (Below poverty Line) and Antyodaya category via Public Distribution System at a subsidised price of Rs. 15 per litre, said Pawar.

While on pulses, Pawar said that measuring a shortage of pulses, government had no option except import. “We will be importing 15 lakh tonnes of pulses and we have placed an order of 11.86 lakh tonnes before March 31”, said Pawar. However, he also added that government has already scarp the import duty on edible oils and pulses.

Warning to a panel committee led by Planning Commission’s member Abhijit Sen, which had been set up to analyse the impact of future trading of some food commodities, Pawar said, “If the report of this committee is not received within ten days, we will take a decision only on essential commodities which affect the common man.” His statement came in the response of opposition’s and allies’ demand of barring the future trading on some essential commodities especially food grains. However, he also added that no impact seemed in the prices of four commodities, which had been removed from the future trading.

He not only responded the attacks but also did a counter attacks to the previous NDA government and alleged it for being responsible of this spiralling prices in wheat as he said, “NDA did not ban the export of wheat within time limit and the godown became empty. The Private traders benefited from the decision as they had got the subsidy over Rs 16,000 crore.”

While speaking over the chances of food riots, Sharad denied to this ‘rumour’ claiming that there was no shortage of food grains in the country and the prices of essential commodities had shown a stabilising trend in the past one-month.

On the other hand, Finance Minister in Lok Sabha said, “We can intervene through fiscal steps, monetary steps and supply-side measures”. He has also indicated that Prime Minister Dr Manmohan Singh would soon convene a meeting of Chief Ministers on the issue of spiralling price rise.

Speaking in Rajya Sabha, Chidambaram threatened the steel and cement manufacturers and export lobby to hold the government’s directive and not to go against the government’s appeal of not hiking the prices of crude steel and cement and in barring the export of these commodities.

“If the behaviour (of steel and cement manufacturers) does not change, the government will not hesitate to take tough measures….They are behaving like cartels and the government would break this ‘logjam’." said Chidambaram.

FM has also appealed to Governor of Reserve Bank of India to take appropriate measure on liquidity and money supply in the coming policy review. Moreover he has also said that government could scarify the revenue in a bid to curb price rise.

Chidambaram has however alleged the global inflation of rising prices in the country as the spiralling prices in most essential commodities have been sky-high in most of the countries. While in India, the condition is still better than that of other countries.

He has also blamed the less investment in the agricultural sector that is also a major cause of inflation due to declining of cultivation. "Unless the agriculture productivity increases we would continue to import global inflation.” said Chidambaram. However he hopes that the government has taken steps to improve agriculture production and already public investment in agriculture is rising.

Earlier, government has already scrapped the import duty on cooking oils, pulses and non-basmati rice while pull back the incentive on basmati rice in the food grains. In the other commodities, FM has imposed a ban in the cement export and wiped off the incentive over steel export to curb the exports on these products and to check inflation.

On the other hand, Science and Technology Minister Kapil Sibbal in an interview with the media told that as per meteorological department, this year, the chances of monsoon would like to near normal as against the last year’s in which the excess of rain has ruined the standing crop in many states.

According to Met office, “This year, monsoon rainfall, which occurs between June and September, is expected to be 99% of the long-period average with a model error of 5% (rainfall of 94-104%).”

The forecast may be a model error of +/- 5% , as per Met office informed.

While in the last year, the rainfall was a all time high record as per regular rain in month of March in Tamil Nadu, Karnataka and Kerala since 1875, while in Andhra Pradesh it was the second highest since 1875, said Kapil Sibbal.

“In Tamil Nadu the rainfall was in excess of 801%, that in Kerala in excess of 469%, that in Karnataka in excess of 1666% and that in Andhra Pradesh in excess of 811%.” he added.

While, “In past there has been cases of sudden spurt in day temperatures in early February this year causing damage to wheat crop” Sibbal said.

The spiralling price is then likely to come down with the new crops that are likely to come soon, as per minister said.