As inflation rises in May, govt acts against price rise

The government on Tuesday (June 17) reviewed the price situation of food items and decided to impose a minimum export price on onions, release more rice in the open market and crack down on hoarders. State governments have been advised to de-list trade of fruits and vegetables through the Agriculture Produce Market Committee so that farmers are free to sell these in the open market at lower prices.

"The situation is not alarming and the price rise is only marginal. We are acting to discourage hoarding (in anticipation of a deficit monsoon) and prevent middlemen from taking advantage of the spike", said Finance Minister Arun Jaitley after a review meeting that was attended by Agriculture Minister Radha Singh and Food and Consumer Affairs Minister RamVilas Paswan in the capital on Tuesday evening.

Jaitley said that the government monitors prices of 22 edible commodities and there has been some increase in the prices of four or five of them. Price increase has been seen in onions, potatoes and some pulses in recent weeks. The government today imposed a minimum export price (MEP) of $300 per tonne on onions while the Commerce Ministry will announce an MEP for potatoes. State governments will be given a Line of Credit to import pulses wherever a shortage is felt. FCI has been directed to release 5 million tonnes of rice in the open market.

The wholesale inflation rate rose to 6.01 per cent in May from 5.20 per cent the previous month on account of a surge in all broad categories- primary articles (unprocessed items) including food, manufactured products and fuel. Earlier this week, the IMD scaled down its monsoon forecast from 95 per cent (announced in April) of the long-period average (LPA) to 93 per cent. LPA is the average rainfall received over a period of the last 50 years. IMD said that almost the entire country, except the North East, is expected to receive less than normal rain. Most affected will be the northwestern states of Punjab, Haryana, Rajasthan, Chandigarh and Uttar Pradesh as these may get 85 per cent of the LPA during the June-September monsoon season. Accordingly, crops like paddy, pulses, sugarcane and coarse cereals may suffer. Rainfall across the country between June 1 and 8, the first week of the season, was almost 44 per cent below normal.