New Delhi to act on soaring prices of food

India will review imports and exports of all essential commodities in an attempt to tackle soaring food prices, the government has said.

New Delhi has struggled to deal with spiralling food inflation that has hurt the millions of Indians who spend 50 per cent of their income on food.
EDITOR’S CHOICE
Little relief seen in Indian food prices - Jan-13
Delhi onion sellers strike against raids - Jan-12
Economic fears as Indian food prices soar - Jan-06
UN body warns of ‘food price shock’ - Jan-05
Opinion: Time for India to rein in its robber barons - Jan-06
Algerians riot over rising price of food - Jan-06

The government said on Thursday it would “impose controls on exports and ease restrictions on imp­orts, including tariff reduction where necessary, to improve domestic supplies”. The announcement was made as countries from China to Algeria struggle to cope with rising food prices. Food inflation in India eased slightly to 16.9 per cent for the week to January 1, after hitting 18.3 per cent the previous week, the commerce and industry ministry said on Thursday.

But the cost of onions and other vegetables, the main drivers of food price rises, has continued to increase after unusual weather destroyed crops.

It is unclear what specific action the government will take. Industry observers suggest the plan is for state-run enterprises to control prices by absorbing losses and providing food staples at lower prices.

Madan Diwan, an analyst at Ramchandra Bhimaaji in Pune, said this was “a first signal to the market that the government is taking control of important ­commodities”.

New Delhi said it would take “stringent action against hoarders and black marketeers manipulating prices, to ensure that products reach markets properly and prices remain moderate”. It would also increase storage facilities and modernise warehouses.

A. Prasanna, chief economist at ICICI Securities, said: “This measure won’t solve the problem . . . the damage has already been done by the bad crop.”

Analysts say that structural factors such as low farm productivity and poor food storage and distribution networks are the underlying reasons for high food inflation.