States raid hoarders to check foodgrain prices

The UPA extended powers of state governments for six months under the Essential Commodities Act to prevent hoarding.

Soaring food prices has had several states conducting raids on warehouses of suspected hoarders, pulling down prices of some staples by nearly 5 per cent in three days, officials, analysts and traders said on Tuesday.

The Central government in February extended powers of state governments for six months under the Essential Commodities Act to prevent hoarding of key commodities to control prices.

Last Friday India’s wholesale price index rose 7.41 per cent in the 12 months to March 29, its biggest rise since mid-November 2004.

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Officials in Maharashtra and Delhi raided godowns of traders in the spot market over the weekend. Andhra Pradesh and Gujarat also imposed stock limits to prevent hoarding.

Commerce and Industry Minister Kamal Nath said earlier in the day that state governments must ensure there is better supply in the market and no hoarding by traders.

“We found that many traders were holding more stocks than what was allotted to them. We seized stocks of such traders,” said Sudhir Kursange, Deputy Secretary for Food and Civil Supplies, Maharashtra.

He said raids will continue in the state until prices eased substantially.

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Raids have dampened sentiment in the spot market and many traders have even discontinued buying from farmers, said Nitin Kalantri, a trader based in Latur, Maharashtra, a major spot market for pulses in India.

In Delhi, spot price of chana has fallen 7.77 per cent to Rs 2,420 per 100 kg since Saturday. Prices of tur or red gram, rice and wheat also eased in many spot markets.

“We have been asking traders not hoard and cooperate with the government agencies,” said Ashok Gupta, president, Dall and Besan Millers Association, based in Delhi, the main market for food grains.

“The government is very aggressive. In all pulses we can expect downside for the short term. But prices will recover due to an expected fall in the output,” said Chowda Reddy, an analyst at Karvy Comtrade.

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India’s winter, or rabi, pulses output is likely to fall by 8.82 per cent to 8.57 million tonnes in 2007/08, against 9.40 million tonnes a year earlier.

“Only reason behind the price rise was hoarding. With raids prices are coming down and we will continue this activity for next few days,” said an official at Delhi government’s Food Supplies and Consumer Affairs Department.