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India: Prices crisis: Cabinet to meet today

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Rajeev Deshpande, TNN, 12 January 2010, 03:08am

NEW DELHI: Amid signs of a gathering political storm over continued rise in prices of food items, the Cabinet Committee on Prices is expected to discuss the situation threadbare on Tuesday.

The discussion, likely to be followed by a statement that the government is engaged in reining in retail rates, will be held a day after Congress acknowledged the seriousness of the situation, and the BJP demanded agriculture and food minister Sharad Pawar's resignation.

"We have taken strongest possible cognizance of food inflation and are going to come out with tough measures," Congress spokesperson Abhishek Singhvi said.

The government's statement on rising prices is expected to dwell on factors fuelling food prices and list measures that the government is considering such as cuts in import duties, export bans, and release of wheat and rice, besides steps to check hoarding and illegal sales.

But while the price spiral has caused consternation - as brought out by agriculture minister Sharad Pawar's testy "I-am-not-an-astrologer" response to queries on when the trend could be arrested - there was not much clarity on options. The agriculture minister is still wary about imports as the price of sugar in the international market is high.

Prices of packed rice of middling quality have been rising steadily.

There has also been a creeping increase also in the cost of wheat and atta. The prices of pulses have remained high despite an increase in kharif sowing areas.

So far, measures such as increased supply of wheat and rice through the open market scheme have not worked too well with states reluctant to lift grain that is more expensive than market rates as it come with a transportation cost. Government has reduced the cost of OMS supplies but in the meanwhile, prices have risen further. Import duty on sugar is already zero and the worry in government is that despite being sectional, inflation has soured the popular mood.