New Delhi, July 2: The government today decided to bring onions and potatoes under the essential commodities act to prevent hoarding and curb price rise. States can impose stock holding limits on food wholesalers once the two staple vegetables come under the act.
“This will empower the state governments to undertake de-hoarding operations and to control the prices of onions and potatoes. It will help in the efforts being taken to tackle the problem of rising prices and also improve availability,” law minister Ravi Shankar Prasad told reporters after a meeting of the Cabinet Committee on Economic Affairs.
He said, “We think there are enough potatoes and onions in the country and there’s no need to panic.”
The state governments will fix stock holding limits according to local conditions and the limit will remain for a year, he said.
Earlier in the day, the government had raised the export prices of onions by 67 per cent to $500 per tonne to augment domestic supply and curb a price rise.
Limits are currently imposed till September on pulses, edible oils and oilseeds; and till November on rice and paddy.
Finance minister Arun Jaitley yesterday said high inflation was one of the major challenges facing the government ahead of the budget next week.
The wholesale price-based inflation rose to a five-month high of 6.01 per cent in May against 5.20 per cent in the previous month because of a sharp jump in food and fuel prices.
Retail inflation, measured in terms of the Consumer Price Index (CPI), was recorded at 8.28 per cent in May, according to latest government data.
Food price inflation is near double-digits, with a late monsoon pushing up the cost of vegetables and dairy products.
Despite sufficient supply of onions and potatoes in the country, their prices have been rising in the past few days in apprehension of a below-normal monsoon.
In the national capital, the retail price of onion is in the range of Rs 25-30 per kg and the wholesale price is Rs 18.50 per kg. Similarly, the retail rate of potato is Rs 27 per kg and wholesale price is Rs 16.75 per kg.
Onion production is estimated to have risen to 192 lakh tonnes during the 2013-14 crop year (July-June), from 168 lakh tonnes in 2012-13. Onion is usually cultivated four times in a year — early kharif, kharif, early rabi and rabi.
Meanwhile, the CCEA has approved an additional allocation of 50 lakh tonnes of rice for distribution to below poverty line (BPL) families for the period July-2014 to March-2015 or till implementation of the National Food Security Act (NFSA) by the respective state or union territory, whichever is earlier.
This will protect people affected by price rise, particularly in those areas where the food security act has not been implemented.
States/Union territories have been asking for more foodgrain to meet their requirements for the public distribution system.