A declining trend has started in the prices of food commodities over the past few weeks. Over the last three months prices of atta, gram dal, tur dal, urad dal, moong dal, masoor dal, potato and onion have shown a declining trend while rice, wheat and salt have remained constant. Apart from these, over the last one month prices of wheat, sugar, mustard oil and tea have also started showing a declining trend.

 

The Government is monitoring the price situation on a regular basis at the highest levels and taking necessary steps to calm down prices and ensure availability of food items at affordable rates to the people, especially the poor. The broad thrust of the measures taken by the Government has been,

 Agriculture and Food Minister, Shri Sharad Pawar, in his recent replies in Parliament to debates on price rise, explained the reasoning behind some of these steps. He said the Government has been releasing stocks through an open market scheme to ensure availability and check prices, apart from meeting the requirements of the Public Distribution System and welfare schemes. 20 lakh tonnes of wheat and 10 lakh tonnes of rice were allocated during October ’09 to March, 2010 to State Governments for distribution to retail consumers. State Governments are to ensure adequate lifting so that the open market price is kept under check. In addition, 20.8 lakh tonnes of wheat has been allocated for bulk users – this is being sold by tender. An additional allocation of wheat/rice has also been made in January and February 2010, at 10 kg/family/month, to the accepted numbers of AAY, BPL & APL ration cards. This is in addition to the existing allocation under PDS.

 

The country must have adequate foodgrain stocks for ensuring food security. So, one fulcrum of the Government’s policy is to have comfortable foodgrain reserves so as to meet the demand of PDS and welfare schemes, they also provide cushion for containing price rise. As against the buffer norms of 11.8 MT rice and 8.2 MT wheat (total 20 MT), we have over 24.2 MT of foodgrain stocks (as on 1.1.10). The Government has had record procurement last year and the trend is expected to continue in the current year also.

 

The Minimum Support Price (MSP) for major crops has been raised substantially in the last 5 years so as to improve the income of farmers who constitute about 62% of the country’s population. The MSP for wheat has been increased from Rs 640 per quintal to Rs 1100 per quintal and paddy from Rs 560 to 1000 per quintal. Vidarbha farmers have got Rs 2500-3000 per quintal for their cotton. These measures have improved the purchasing power as well as livelihood status of farmers. Increasing MSP was a conscious decision of the Government which in its common minimum programme had categorically stated its commitment toward making the terms of trade in favour of the farming community. A correct price signal given to the farmer through enhanced MSP is a must for increase in production and consequent food security of the Nation.

 

While the MSP has been raised year after year, the Central Issue Prices (CIP) have not been increased for AAY, BPL and APL families since 2002. Because of this, food subsidy has gone up in the last 6 years from Rs 20,000 crore to Rs. 60,000 crore.

 

Low sugar production for two successive years has put a tremendous pressure on sugar prices. In addition, the government has raised the price payable to farmers for their sugarcane. Farmers are now getting remunerative price for sugarcane and it is expected that this would encourage farmers to plant sugarcane in more area in the coming crop seasons. In order to meet the demand-supply mismatch and to control prices, the Government has undertaken a slew of measures. These are as follows:

Pulses

Pulses constitute a very important staple food in India. However, pulses production falls short of demand and to meet the shortfall, imports have to be made. Government agencies were, therefore, directed to step up imports. In 2008-09, 2.48 million tonnes of pulses were imported. In the current year, till October, 1.59 million tonnes of pulses have been imported as compared to 1.32 million tonnes in the corresponding period last year. A number of other measures have been taken to improve availability of pulses and contain their prices, such as:

So as to check hoarding and black marketing of food commodities, the Centre has advised States to take strict action under the available laws. At present 23 States/UTs have issued orders imposing stock limits/licensing /stock declaration requirements for pulses, rice, paddy, edible oils, edible oilseeds and sugar. State Governments have reported action under the Essential Commodities Act leading to over 1.5 lakh raids and arrest of over 7700 people.

 

In a federal polity, actions need to be taken at Union and State levels in a coordinated manner for issues of national importance. Agriculture and Food Ministries have been in constant touch with States on a regular basis for raising crop production and managing the food sector. On price rise, Prime Minister called a meeting of State Chief Ministers. Actions have been taken in concert on the agreed points in the meeting. A Core Group of Chief Ministers and certain Union Ministers has been formed to look into the entire gamut of issues relating to agriculture, food availability and prices.

 

As the Prime Minister recently put it, the worst is over and the price situation will improve. The rabi sowing is nearly over and as per the latest data available, wheat and pulses have been sown in more area than last year. When the crops come into the market, starting March end, the price of food commodities would further soften.