The open market sale of about 50 lakh tonnes of wheat over the next few months will have a moderating effect on prices. This has to be supplemented by other measures so as to make a real dent on prices. The huge procurement — over 220 lakh tonnes — from last harvest must also help moderate prices by adding to supplies.

As stated in the editorial, the supply of cooking oil at subsidised prices through PDS is a welcome initiative. It is almost clear that there will be no hike in Customs duty on edible oil in the near future.

The decision taken by the Cabinet to extend till April 2009 the extant storage restrictions on essential commodities will also create a favourable situation for moderating prices by reducing hoarding.

What is required at this stage is effective steps to expand supplies of all goods and commodities, including food articles. The government must encourage production of all commodities across all sectors. Some tax incentives can be given for capacity expansion.

To spur production and augment supply through capacity expansion, bank loans must be made available at affordable rates of interest. It is now difficult to get foreign loans or ECBs at cheaper rates of interest. Hence, industrialists and manufacturers have to depend on loans from banks within India.

The recent good monsoon, coupled with the above initiatives, will surely help moderate prices .

K. K. Ammannaya Udupi

More Stories on : Letters | Economy

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page