Prime Minister Manmohan Singh on Tuesday asked his economy A-team to make a concerted effort to tackle rising food prices. Signalling the seriousness with which his administration views the spike in food inflation, Singh summoned top advisors to review the situation and suggest a concrete plan of action.
A top government functionary told Business Standard that at the meeting, it was evident that the PM "is very concerned about the issue and wants focused attention on what the government can do". Singh is understood to have discussed soaring vegetable prices as well as food export and import policies.
The PM's personal intervention is seen as significant in light of the sharp rise in food inflation, which touched 18.32 per cent for the week ended December 25 on the back of dearer onions and other commodities.
Although the official said there was no takeaway from Tuesday's meeting, as Finance Minister Pranab Mukherjee had to leave to attend an earlier scheduled pre-Budget discussion with industry representatives, the group is scheduled to reconvene soon. "Another round is expected to take place in a day or two," said the official.
Mukherjee told a news channel that the government would announce some short- and long-term measures on Wednesday aimed at cooling agricultural commodity prices, including possible changes to policies for the transportation of these commodities. However, he did not elaborate.
Besides Mukherjee, those who attended the meeting included Agriculture Minister Sharad Pawar, Home Minister P Chidambaram, Cabinet Secretary K M Chandrasekhar, Planning Commission Deputy Chairman Montek Singh Ahluwalia and the finance ministry's Chief Economic Advisor, Kaushik Basu.
What concerns the government is that the current rise in food inflation has been fuelled by a significant flare-up in the price of a few primary items like fruits & vegetables, milk, meat, poultry, eggs and fish.
The price of rice, wheat and pulses has remained relatively stable. Onion prices continue to rule at a high of Rs 55-60 a kg in most parts of the country, as supplies remain sluggish.
The uptrend in inflation has also raised the possibility of an increase in key policy rates by the Reserve Bank of India when it reviews monetary policy later this month. The prospect of a rate increase has already spooked markets, with foreign funds pulling money from Indian equities.
