Jaitley: No panic situation on food

“One thing is clear that there is no panic situation. Whatever feedback we have got from state ministers is that there is no need for panic,” Jaitley said after the meeting, adding that though prices of vegetables and pulses generally rise in July, there has been an abnormal increase in prices of two to three commodities this year.

Minister for consumer affairs, food and public distribution Ram Vilas Paswan and agriculture minister Radha Mohan Singh along with ministers of 25 states also attended the meeting.

“There are reports of below normal monsoon this year. Hoarders are taking advantage of the situation. When production of food items is higher than last year and still prices rise, then it means that intermediaries are keeping the stock somewhere,” he said.

The government will also soon decide on a proposal by some states to strengthen the Essential Commodities Act and make hoarding a non-bailable offence, he said.

As part of the deliberations, states also suggested augmenting storage facilities and a price stabilisation fund. “In case if prices in certain commodities go up, there could be market intervention,” Jaitley said.

Food inflation touched 9.5 per cent in May even as headline inflation soared to a five month high of 6.01 per cent.

Concerned by the spurt in prices, especially of onions and potatoes, the Cabinet Committee on Economic Affairs on Wednesday had included the two items under the purview of the Essential Commodities Act. It had also allocated an additional 50 lakh tonne of rice for distribution to BPL and APL families.

Jaitely stressed that there is no shortage of onions and potatoes because of a record output. “It is not an issue of scarcity but it is an issue of supply side. These commodities are available in sufficient amount but the normal supply is disrupted by hoarders anticipating higher prices.” He also assured that the government has sufficient food grain stocks. “Depending on where the shortfall or deficient areas are … if such a situation arises, we are equipped to deal,” he said.

Noting that prices of crude oil have increased due to tension in Iraq, Jaitley said there are, however, indications of softening of prices.

This is the latest in a series of meetings that the NDA government has held to check rise in prices. Earlier, Jaitley along with Paswan and agriculture minister Radha Mohan Singh had met last month to discuss measures to contain price rise.

Cabinet secretary Ajit Seth along with finance secretary Arvind Mayaram and secretaries of ministry of food, consumer affairs and agriculture also hold periodic meetings to take stock of food prices.