Food inflation Over the last few weeks I have written several pieces around the fact that the government of India needs to stop hoarding rice and wheat, if it is serious about controlling food inflation. Looks like attempts are being made in that direction. Over the last few years several states like Madhya Pradesh and Chattisgarh have been announcing a bonus on top of the MSP offered by the central government. This led to more and more rice and grain landing up in the godowns of FCI and other state agencies that it operates through. With a lesser amount landing in the open market, it ultimately sparked inflation. The government is cracking down on this and has asked the FCI to restrict its purchase of grains from states recklessly offering bonuses on the minimum support price (MSP) to farmers. Over and above this FCI, in consultation with the Union food and public distribution department, will decide how much wheat or rice stocks it should acquire in a particular season, and restrict its central pool procurement to that extent, leaving the rest of the surplus stock to be disposed of by the state government, at its own risk and cost.” Further, as The Financial Express points out in an editorial today total procurement from the state will no longer be open-ended as it was in the past, but will be restricted to the amount of grain the state requires for its own ration shop requirements—so, if Madhya Pradesh requires 100 units of wheat for its ration requirements, the state will not be allowed to procure 1,000 units and force FCI to pay for it as well as its storage. If implemented seriously this should go a long in way in controlling food grain inflation.
Posted on: Sat, 28 Jun 2014 04:12:02 +0000
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