To curb inflation, wants State Govts to crack down on hoarders; imposes stock limits

In an apparent bid to douse the raging fire of rising onion and potato prices, the Centre on Wednesday brought these two vegetables within the purview of stockholding limits under the Essential Commodities Act, 1955.

With this move, the ball is clearly in the court of State governments to take up de-hoarding operations and control the prices of onions and potatoes and improve availability.

“The Cabinet now expects State Governments to take firm measures against hoarding,” Ravi Shankar Prasad, Union Law and Telecom Minister, told newspersons after the Cabinet Committee on Economic Affairs (CCEA) meeting here on Wednesday, which cleared the proposal to bring onions and potatoes under the stockholding limits.

The move followed a decision earlier in the day to hike the minimum export price (MEP) of onions to $500 a tonne from $300 a tonne. A higher MEP would mean that exports will become costlier and no longer profitable for traders. On June 26, the Government had imposed an MEP of $450/tonne for potato.

Once the Centre’s notification is issued, States can take action to impose stockholding limits, said Prasad, adding that this would help tackle the problem of hoarding and rising prices.

States can use this window for one year from the date of the Centre’s notification, he added.

“We have sufficient supply. There is no need to panic. We are taking measures to improve supply and control prices,” Prasad said, adding that the Government was hopeful “the rain gods would smile on India soon.”

Stockholding limit

A stockholding limit ensures that traders cannot stock more than a prescribed quantum. If it is found that traders are holding more than the prescribed limit, they can be fined and, in some cases, even prosecuted. Currently, stock limit provisions exist for various foodgrains and cereals under the Essential Commodities Act.

Additional rice allocation

The CCEA also gave its nod for additional allocation of 50 lakh tonnes of rice for distribution to Below Poverty Line and Above Poverty Line families for the July 2014 to March 2015 period.

This will mitigate the problems of people affected by food price inflation, particularly in States where the National Food Security Act has not been implemented so far.

The allocations have been approved in view of the persistent demand from States and Union Territories for more foodgrains to meet their targeted public distribution system requirements, an official release said.

(This article was published on July 2, 2014)
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