CONTROL OF INFLATION (II)

Transcription

1 CONTROL OF INFLATION (II) SUPPLY MANAGEMENT It is concerned with the management of the quantity of the goods and services and the pattern of their distribution. The government tries to adapt varies measures in this direction, some of them are increasing the domestic supplies, more release from the official stocks of food grains and widening the product varies. Widening and streamlining the public distribution, restricting monopoly and oligopoly in the market thus enabling competition. Let us now discuss on some of the important measures taken by the government to keep the price rise in control. 1) DIRECT MEASURES TO KEEP THE PRICES LOW. A) FIXED MAXIMUM PRICES:- This measure mainly aims to prevent the rise in prices due to unscrupulous practices of hoarding, black-marketeering and other speculative activities. The state governments are always directed to fix the Wholesale and Retail prices of various commodities produced, marketed in their jurisdiction. E.g. Commodity Prices During Last Week (Source: agmarknet.nic.in) NR : Not Reported Market: Shimoga, State: Karnataka Arecanut(Betelnut/Supari) 23/11/21 24/11/21 25/11/21 26/11/21 27/11/21 28/11/21 Bette NR NR NR NR NR EDI 1521 NR 1529 NR NR NR NR Gorabalu 9399 NR 926 NR NR NR NR Rashi NR 1535 NR NR NR NR Saraku NR NR NR NR NR Bengal Gram Dal Bengal Gram Dal 21 indianec 23/11/21 24/11/21 25/11/21 26/11/21 27/11/21 28/11/21 NR NR NR NR 325 NR NR 29/11/21 29/11/21

2 Bengal Grams(Gram) 23/11/21 24/11/21 25/11/21 26/11/21 27/11/21 28/11/21 29/11/21 Jawari/Local NR NR 26 NR NR NR NR Black Gram Dal 23/11/21 24/11/21 25/11/21 26/11/21 27/11/21 28/11/21 29/11/21 Black Gram 73 Dal NR 73 NR 73 NR NR Chili Red 23/11/21 24/11/21 25/11/21 26/11/21 27/11/21 28/11/21 Other 48 NR NR NR 8 NR NR Cotton 23/11/21 24/11/21 25/11/21 26/11/21 27/11/21 28/11/21 LD NR 42 NR NR NR NR Green Gram Dal 23/11/21 24/11/21 25/11/21 26/11/21 27/11/21 28/11/21 Green Gram NR Dal NR 58 NR NR NR NR Green Peas 23/11/21 24/11/21 25/11/21 26/11/21 27/11/21 28/11/21 Green Peas NR NR NR NR 225 NR NR Gur(Jaggery) 23/11/21 24/11/21 25/11/21 26/11/21 27/11/21 28/11/21 Achhu NR NR 32 NR 29 NR NR Maize 23/11/21 24/11/21 25/11/21 26/11/21 27/11/21 28/11/21 Hybrid/Loca 88 l NR 88 NR 88 NR NR Rice 23/11/21 24/11/21 25/11/21 26/11/21 27/11/21 28/11/21 Coarse NR NR 14 NR NR NR NR 29/11/21 29/11/21 29/11/21 29/11/21 29/11/21 29/11/21 29/11/21 21 indianec

3 Fine NR NR 29 NR NR NR NR Medium NR NR 21 NR NR NR NR Tur Dal 23/11/21 24/11/21 25/11/21 26/11/21 27/11/21 28/11/21 29/11/21 Tur Dal NR NR 58 NR 58 NR NR Wheat Besides in the realm of agriculture products (especially food items) the government announces the Minimum procurement price (Minimum Support Price for the farmers, Minimum Procurement Price for the Government i.e. the procurer). The government does not procure all the items from farmers. It only procures food grains from the farmers directly. In case of pulses and other produce it only intervenes when prices fall below the MSP. This MSP guarantees an assured income for the producers and prevents the rise of procurement price due to various factors. Agriculture Prices commission, is the body which recommends the MSP for 26 crops. Recently in June 21, CCEA, chaired by PM decided to raise the MSP of the pulses up to 33%. Pulse/quintal New MSP (Rs) Increase (Rs) Arhar 3 7 Moong Urad The objective was to stem the upward movement of the prices of pulses in the international market, driven by the demand (in India), which far exceeds production by more than 4 lakh tonnes. Against the production of 14.7 million tonnes during 29-1, the requirement was estimated to be million tones. The government also announced the rise in MSP for other crops Crop New MSP in Rs Increase in Rs Paddy 1 5 Paddy-A grade 13 5 Groundnut seed 23 2 Sunflower seed Niger seed Soyabean (Black) 14 5 Soyabean (Yellow) Sesame 29 5 Jowar (Hybrid) indianec

4 Bajra 88 4 Maize 88 4 Prices of commodities like textiles, sugar etc was controlled before. B) DUAL PRICES. The government adapted the dual price system to protect the poor and weaker section of society being crushed by the rising prices. Initially commodities like sugar, cement, paper, etc. were brought under it. Later cement was left out because of the confusion it created in the market over the different prices. Under this system, the weaker sections of the community are supplied these inflation sensitive goods through fair price shops, at controlled prices and the rest are allowed to purchase their requirements at higher prices from the open market. 2) INDIRECT MEASURES TO KEEP THE PRICES LOW. A) ENHANCED FOOD GRAINS SUPPLY:- Whenever there is a shortage of food grains like wheat and rice, the shortage is met by imports. Since the time of first Green Revolution India has almost become self sufficient in food grains. But the rapid growth of population, decreased fertility of soils due to overuse of fertilizers have posed a threat. According to norms the minimum level of buffer stocks in central pool maintained by the government should be; Food grains(lakh Jan1 April1 July1 Oct1 Tonnes) Rice Wheat Buffer stocks as for (Annual Report, Department of Food and Public Distribution) Food grains(lakh Jan1 April1 July1 Oct1 Tonnes) Rice Wheat indianec

5 The central government has asked the National Centre for Agricultural Economics and Policy Research (NCAP) to study the buffer norm and make recommendation on increasing it if the demand goes high Since few years the Food Corporation of India (FCI) used the open market sale of rice and wheat to check market prices of these essential inflation sensitive commodities. B) OILSEEDS AND EDIBLE OILS. The government has prepared medium and long-term plans to step up the production of oilseeds in the country. The government has announced higher MSP for the oilseeds, so to increase the supply in the market. ISOPOM, (Integrated Scheme of Oilseeds, Pulses, Oil palm and Maize) salient features. Flexibility to the states to utilize the funds for the scheme/crop of their choice. Annual action plan to be formulated by the State Governments for consideration and approval of the Government of India. Flexibility to the states for introducing innovative measures or any special component to the extent of 1% of financial allocation. Involvement of private sector by the State Governments in the implementation of the programmers with a financial cap of 15%. Flexibility for inter component diversion of funds upto 2% for non-seed components only. Diversion of funds from seed components to non-seed components with the prior Approval of the Department of Agriculture & Cooperation. Whenever there is a shortage imports are made to ease the price rise. India is the world s largest edible oil buyer (importing country). It imported 8.8 million tonnes in 29-1 (7.3%) more than last year. Experts say that this may grow to 12 million tonnes by ) DISTRIBUTION OF COMMODITIES Main in this is the Public Distribution System. The government has decided to strengthen the PDS. The essential commodities Rice, Wheat, Sugar, palm oil and Kerosene is distributed to the weaker section of the society through the fair price shops. It serves two purposes, first it checks price rise, and second it provides essential commodities to the poor at an affordable cost (The State of Tamil Nadu has implemented a system of Universal Public Distribution through rice is distributed to all, irrespective of their economic status). 21 indianec

6 4) OTHER MEASURES A) Open General License (OGL) policy for importing sugar, pulses, oils etc. According to the WTO (World Trade Organization) agreement, India has to put most of the items under Open General License (OGL) for import which means these items can be freely traded. We so far could announce around about hundred odd items under OGL and in that list shrimp, strawberry, rasberry and other fruits, have already featured. India has now freed import of 894 items including consumer goods and agricultural products by putting them under Open General Licence (OGL). Another 414 items are removed from the "restricted" list allowing these to be imported against Special Import Licence (SIL) that can be procured in the market by importers at a small premium. Fruits like oranges and pomegranates, soft drink concentrates etc. are falling in SIL category whereas a range of marine food products, vegetables, assorted fruits and juices, spices, edible oils, jams, jellies etc. are brought under OGL. B) Adjustments in trade and tariff policies in Budgets to ensure that domestic prices of industrial products remain competitive. C) Reduction in excise duties on number of items expected to promote the industrial growth. 21 indianec

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