Black marketing is not the only reason for food inflation in the country and other factors like demand-supply mismatch, price trend in global markets are also responsible, Finance Minister Arun Jaitley said on Friday.
“Black marketing is only one of the many reasons for inflation of food or essential commodities. Rise of prices of any essential commodity depends on various factors, such as demand and supply mismatch, trend of prices in international markets,” Jaitley said in Lok Sabha today.
He was replying to a question whether trading in commodity market and black marketing of food commodities have played a significant role in high food inflation in the country.
Jaitley said commodity futures market is a platform for price discovery and hedging price risk. Citing various studies, he said future trading does not lead to any price rise, instead fiscal deficit, global food inflation and domestic wages were the primary reasons for food inflation in India.
The minister said Sebi took over regulatory functions of commodity derivatives market on September 2015 and no case of irregularities has come to its notice. Besides, government has taken various measures to check black marketing of food items and curb inflation, he said.
Strict action against hoarding and black marketing under the Essential Commodities Act, imposition of stock holding limits, concerted dehoarding operations to increase availability of pulses in market, buffer stock of pulses under Price Stabilisation Fund are the steps taken by government, he added.
Also, there is a 20 per cent duty on export of sugar and zero import duty on pulses, he said, adding government has also raised the minimum support price for kharif pulses for current season to safeguard farmers’ interest.
“In order to further incentivise farmers to increase the acreage under pulses so as to tame price of pulse, government has decided to give a bonus of Rs 425 per quintal for kharif pulses — arhar, urad, moong, payable over and above the MSP recommended by Commission for Agricultural Costs and Prices,” he said.
In reply to a separate question if 7th Pay Commission payouts would push prices up, the Minister of State for Finance Arjun Ram Meghwal said: “There is no concern of higher inflation in the present scenario.”
On price effect on real estate sector, he said utilisation and prices of housing are market driven, which are based on demand and supply. “Housing and other sectors could benefit from the higher disposable income of a section of the population,” Meghwal said.