Hoarding to be non-bailable offence; fund to stabilise prices
New Delhi: Seeking to check rising prices, the government on Friday decided to amend the law to make hoarding a non-bailable offence and set up a price stabilisation fund to enable states to undertake market intervention.
Asserting that there was no cause for panic as there were sufficient food stocks, the government blamed hoarding and speculative trading on the basis of reports of weak monsoon for the rise in prices of commodities like onion and potato and asked states to crack down on hoarders.
At a meeting of state food and consumer affairs ministers, it was decided to strengthen the Essential Commodities Act to make hoarding a non-bailable offence.
The ministers decided that the Centre will set up a price stabilisation fund to enable market intervention by states to tackle spike in prices of fruits and vegetables.
The NDA government had recently imposed minimum export price and put stock holding limits on onions and potatoes.
"There was a consensus that the Essential Commodities Act should be strengthened and more teeth should be provided to the law. The offences under the law should be made non-bailable," Food Minister Ram Vilas Paswan said after the meeting called to improve availability and cool pricing.
While Paswan blamed hoarders for the recent spike in prices, Finance Minister Arun Jaitley stressed that "there is no panic situation."
Jaitley, who along with Agriculture Minister Radha Mohan Singh also attended the meeting, said there was no scarcity of any commodity and the normal supply was disrupted by hoarders anticipating higher prices.
"We have sufficient food grains stock with the government of India to face to any kind of situation. Depending on where the shortfall or deficient areas are.... If such a situation arise, we are equipped to deal," he said.
Paswan said a proposal to make necessary amendments in the Essential Commodities Act would be moved for consideration of Cabinet in a week.
He also did not indicate the size of the price stabilisation fund being created or the time-frame within which it will be set up.
Stating that rise in food prices is seasonal during monsoon months of July-September, he said it was decided that at least one storage space would be created in all the 635 districts in the nation.
On implementation of the National Food Security Act, Paswan said most of the states agreed to implement it in the next 3 months, but some including Telangana demanded extension of 6 months to one year to roll out this landmark legislation.
So far, only 11 states have implemented this law and 25 states and union territories are yet to enforce it.
To provide relief to poor people belonging to SC and ST category under the food law, Paswan asked state governments to follow the Madhya Pradesh model that has included all people belonging to Scheduled Caste (SC) and Scheduled Tribes (ST) other than tax-payers and government employees of class I, II, and III categories, in the list of beneficiaries.
The food law aims to provide highly subsidised foodgrains to the country's two-third of the population, which will cost the exchequer Rs 1.31 lakh crore.
Unveiling the action plan to curb food inflation, Paswan said states will delist vegetables and fruits from the ambit of the APMC Act to give farmers freedom to sell their produce anywhere and not only in mandies.
In the interim period, states are asked to exempt perishable commodities from the APMC yard taxes and local fees, if any, to provide some relief on pricing.
The action plan will cover rice, jowar, bajra, onions, tomatoes, potatoes, pulses, edible oils, bread, milk and eggs.
Stating that wholesale market of onion is being controlled by a cartel of 10-15 whole-sellers, the Centre called for free inter-state movement, de-hoarding operations and de-centralised stocking to meet the dispersed demand.
"There is also a need to maintain central stocks of onion," Paswan added.
Other plans include, identification of vulnerable areas prone to supply shortages in each state for ensuring smooth supply, setting up of price monitoring cells at state level and a revolving fund to store commodities in bulk for meeting festival demand for the benefit of poorest of the poor.
Allaying fears of the impact of a delayed monsoon on prices, the Finance Minister said "monsoon has just started, it is a late start and it is too early to create any panic".
He said the correct picture of monsoon would be known by the end of July.
Food inflation rose to 9.5 percent in May, while the WPI inflation was at a five-month high of 6.01 percent.