Tuesday, 1 April, 2008

Government unveils measures to fight inflation

In a slew of measures to combat inflation, the government on Monday decided to scrap import duty on crude palm and soya oils and ban export of non-basmati rice and pulses.

The decisions were taken at a meeting of the Cabinet Committee on Prices at Prime Minister Manmohan Singh's official residence in Delhi on Monday night.

The CCP approved ban on export of non-basmati rice with immediate effect and decided to extend the ban on pulses export for one more year from Monday, Finance Minister P Chidambaram told reporters after the meeting that lasted over three hours.

These decisions will come into effect from midnight tonight, but a notification would be issued on Tuesday, he said.

Chidambaram said all edible oils in crude form can be imported at zero duty, while the duty on oils in the refined form would be 7.5 per cent.

The government also decided to raise the Minimum Export Price of Basmati rice to $1,200 per ton from $1,100, to discourage export and increase availability in the domestic market.

It also cut import duty on butter and clarified butter (ghee) from 40 per cent to 30 per cent.

Besides, the CCP also decided to scrap import on maize from 15 per cent at present.

The Union government also advised states to impose limits on stocks of commodities under the Essential Commodities Act, besides asking steel producers not to raise prices.

Asked whether these measures would help in containing inflation, which has touched 6.68 per cent for the week ended March 15, Chidambaram said: "I sincerely hope so."

The meeting of CCP, which was attended by Commerce and Industry Minister Kamal Nath, Agriculture Minister Sharad Pawar, Railway Minister Lalu Prasad Yadav, besides Chidambaram, deferred a decision on duty reduction on iron and steel as Steel Minister Ram Vilas Paswan is away from the country.

The CCP was informed that the ministries of commerce and industry and steel are trying to bring together iron ore and steel producers to work out ways to moderate prices.

Steel producers have increased prices between Rs 3,500 to Rs 4,000 per tonne during the past three months, triggering concerns among dealers and realty developers.

The meeting between the two ministries and producers is likely to be convened on Tuesday or the day after, Chidambaram said.

On maize, he said zero duty would be applicable on import of up to five lakh tons.

He said only 5-6 states have started collecting data on stock position of various commodities, although the Centre had empowered them 18 months ago to impose "restrictions on stock limits under the Essential Commodities Act."

"There is a large onus upon state governments to exercise the power, which they wanted and which was given to them 18 months ago," Chidambaram said.

Earlier, the Left parties gave the government two weeks to work out measures for containing prices.

The Congress, which heads the multi-party United Progressive Alliance government, too decided to ask the government to ban futures trading in more farm items to keep prices under check.

Futures trading is already banned on staple commodities like rice, wheat and pulses -- urad and tur.

Also during the day, the Consumer Affairs Ministry called a meeting of the three national commodity exchanges on Monday to seek their views on whether a few more essential commodities like potato and edible oils be banned from the futures trading to check prices.