Oil consumption price elastic: Govt

"If duty on edible oil imports is not raised to that level it should be restored to the previous level of 25 per cent," SEA had contended in a letter to Prime Minister Atal Bihari Vajpayee.

Government had last year cut the duty by 10 per cent after prices of edible oil began to spurt on supply shortage and rise in global prices.

India’s edible oil demand this season (November 1998-October 1999) has been projected at 84 lakh tonnes against a supply of 68 lakh tonnes.

But edible oil imports, encouraged by lower global prices, have already touched 25 lakh tonnes in the eight months of the season against 7.5 lakh tonnes during the corresponding period last year.

SEA has contended that the largescale imports have led to oilseeds prices ruling lower than the minimum statutory prices for these commodities announced by government.

But Sinha said apart from groundnut and soyaoil, prices of other oils were ruling higher than the prices in 1997. "We can not take 1998 prices into consideration as it was an abnormal year when prices increased sharply," he said.

Groundnut oil prices were ruling at Rs 3,620 a quintal in June 1999 against Rs 3,652 in June 1997. Last year, it ruled at Rs 5,000 during the same period. Soyaoil prices ruled at Rs 2,310 a quintal in June 1999 against Rs 3,200 in 1997. Prices of sunflower seed, gingelly (til) and other seeds in comparison to the 1997 situation were ruling higher, Sinha said.

Food minister Surjit Singh Barnala has also ruled out the possibility of government intervention in discouraging edible oil imports, saying imports were on demand.