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Supply constraints driving food prices up: Cabinet Secy

Last Updated: Monday, November 16, 2009 - 16:02

New Delhi: Amid inflation doubling to 1.54 per cent in October on monthly basis, the government on Monday admitted that there have been supply constraints on some food
items, leading to rising prices of those items.

"Primarily there has been supply constraints in
particular commodities. As it is, the overall rate of
inflation is just over one per cent. In particular
commodities, there has been, not only in India but globally,
supply constraints which is reflecting in this (price rise),"
Cabinet Secretary KM Chandrasekhar told reporters here today.

It can be noted that some food times, especially
vegetables, saw major price increases. Within the past one
month alone, onion became costlier by around 30 per cent and
potatoes by over 11 per cent.

Even as inflation shot up massively from 0.50 per cent in
September to 1.54 per cent in October, overall food price came
down in October by one per cent and vegetables by 16 per cent.

The Cabinet Secretary admitted that inflation has to be
watched and expressed confidence that prices would moderate
once the supply situation improves.

Speaking on the sidelines of a CII seminar, Chandrasekhar
informed that a number of measures have been taken to augment
supply of food products and procurement is going well.

"Import duties have been removed on most of these goods, free
import is allowed, procurement is going well; last year it did
well, and this year it is even better," he added.

‘Govt watching sugar prices’

The government today attributed high sugar prices to global shortages and said it is closely
monitoring the situation in the domestic market.

"The sugar prices are pretty high all over the world,
primarily because of global shortage," Chandrasekhar told reporters. He said the Centre is keeping a watch on prices.

Domestic retail prices for sugar have risen by 90 per
cent to Rs 38 a kg from Rs 20 a kg during October last year,
according to government data.

In 2008-09 sugar season (October to September), India`s
sugar production, the world`s largest consumer, fell to 15
million tonnes from 26.4 million tonnes in the previous year.

The government has taken steps like allowing duty-free
imports of both raw and white sugar and banning of futures
trading in the commodity.

Global prices have been firming up on expectation of
lower production in Brazil, a major sugarcane growing country.

According to the International Sugar Organisation, global
sugar output is estimated to have declined by 7.1 per cent to
155.3 million tonnes in the 2008-09 season.

On wheat imports, the government said it has no plans to
go in for imports.

"There is no plan to import wheat. The situation is
comfortable," he said.

Bureau Report

First Published: Monday, November 16, 2009 - 16:02

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