Prime Minister Manmohan Singh today announced an 11-member committee of central ministers and chief ministers of states to overhaul the public distribution system and check the rise in food prices. Singh will be the chairman of the committee. Other members include Finance Minister Pranab Mukherjee, Agriculture Minister Sharad Pawar, Planning Commission Deputy Chairman Montek Singh Ahluwalia (he holds the rank of cabinet minister) and chief ministers of Punjab, Haryana, Andhra Pradesh, Gujarat, Maharashtra, West Bengal and Assam.The announcement came after a day-long meeting of chief ministers along with the Union cabinet here today to look into the issue. Prices of most farm commodities have risen sharply in the last few months, which has caused food inflation to climb to 17.56 per cent for the week ended January 23. Food inflation hurts the weaker sections of the society harder because staples form a higher portion of their overall consumption.
There was near unanimity at the conference that the public distribution system is hopelessly outdated and needs to be urgently revamped if low-income groups have to be shielded from the rise in prices. It is an opens secret that large quantities of subsidised food grain meant for the poor get diverted to the market.
Singh also asked the chief ministers to act against hoarders who want to benefit from higher prices in the future. But he said that the worst is over as far as food inflation is concerned. “With good crop prospects, remunerative procurement prices being in place and Indian prices being broadly in line with international prices, I am confident that we will soon be able to stabilise food prices. Food prices have softened in recent weeks and I expect this to continue,” he said.
Singh attributed the inflation to the global rise in prices and poor monsoon rains last season, and added that his government has been “less successful” on the food prices front, though it has protected incomes well through a range of social sector schemes. Economists and food experts have said there is a shortage in the world markets because of higher demand from emerging markets like China and India, and increased usage of farmland for bio-fuels.
“This is not the first time we are facing high rates of inflation in food articles. We had a similar upsurge in 1998. Food prices are subject to cyclical bursts of inflation and we must work together to bring them under reasonable control.” Singh added.
Maintaining that the government has adequate food stocks of rice and wheat, Singh asked the chief ministers to ensure the “tempo for increased production is not lost and the necessary inputs — fertilisers, water and power — are made available to the farmers on priority”.
He also asked the wheat-growing states to conduct a review to ensure that all the necessary arrangements are in place. “In addition, we should also plan for Kharif 2010 to ensure that all necessary inputs are tied up well in time. These measures will help to moderate inflationary expectations and contribute to price stability,” he added.
Singh asked the chief ministers to ensure that food released by the Centre quickly reaches the intended beneficiaries.
“The state governments should give focused attention to developing market intervention mechanisms which can act as a supplement to the Public Distribution System. Civil supply corporations and directorates should be strengthened. Powers under the Essential Commodities Act should be used to prevent creation of artificial scarcity,” he said.
