Take steps to revamp PDS, act against hoarders: FM tells states

New Delhi: Finance Minister Pranab Mukherjee today said that Centre had done whatever was possible to blunt inflation and it was for the states to take action against hoarders and revamp the public distribution system to check prices.

At the same time, he said shortage of supply of food items like pulses and edible oil, in tandem with hardening of international prices, had compounded the situation, yet the government's efforts have brought down food inflation from 21 per cent in December to 9.55 per cent now.

Replying to a debate on inflation in the Rajya Sabha, Mukherjee said he is not passing the buck to the states for controlling surging prices, but most areas like PDS and enforcing the Essential Commodities Act lay with them.

"I shudder to think of a central mechanism to control the distribution system in over six lakh villages," he said, rubbishing the charges that the government is insensitive to the plight of the poor.

The Finance Minister said no insensitive government takes welfare steps like NREGA, providing right to education till 14 years, etc., initiated by the UPA regime.

He said revamping the PDS is primarily a responsibility of states and has to be done by them.

The Centre cannot decide as to what stock of foodgrains has to be kept in which shops, he said.

The power to enforce the Essential Commodities Act is with the state government, he added.

The Finance Minister said the Centre, on its part, has taken steps to blunt inflationary pressures and took credit for bringing down inflation to 9.53 per cent during the week ended July 24 from over 20 per cent in December last.

"In December, the index was 21.6 per cent. Now, it has come down to 9.53 per cent (week ended July 24)... it is because of certain steps that were taken (by the government)," he said.

However, the House adopted a resolution asking the government to take more steps to control inflation.

Mukherjee said despite the government exempting pulses and crude edible oils from customs duty, their supply could not increase much because private players did not find landed prices to be as remunerative.

Mukherjee attributed this to rising global prices for these items.

The Finance Minister asked states to lift the stocks of imported edible oil and pulses for distribution through the PDS, on which the Centre is giving subsidy to the tune of Rs 15 and Rs 10 per kg respectively.

On the monetary front, Mukherjee said the central bank is monitoring the demand factors that fuel inflation and will adjust rates, if found necessary.

RBI is taking steps in doses, in coherence with the fiscal policy of the Centre, he added.

To a charge from CPI (M) leader Sitaram Yechury on how the Centre can take credit for giving subsidy to petroleum products when it has raised taxes on the same, the Finance Minister said the government has to take care of its fiscal position also.

He said he did not want to repeat the incident of 1991, when India had to pledge gold for a few million dollars and the then Indian Finance Minister had to wait at the doors of a Finance Minister of the rich country to take his appointment.

He said states also get resources from the Centre's tax on petroleum products.

As much as 34 per cent of states' tax revenue comes from petroleum products, he pointed out and asked states to support bringing them in the ambit of GST so that these products are not used as a milch cow.

The Finance Minister appreciated the NDA regime for deregulating petroleum prices, which resulted in enhanced refining capacity in the country.