Pranab asks CMs to crack down on hoarders

File photo shows a truck carrying onions from Pakistan entering India at the Wagah border post near Amritsar. Pakistan banned onion exports on Thursday to cool domestic prices.
New Delhi, January 7 (PTI): Under attack for inability to control surging food prices, especially onions, Finance Minister Pranab Mukherjee has written a letter to State Chief Ministers asking them to crack down on hoarders to ensure increase in supply of essential items. “The Finance Minister has written a letter to all State Chief Ministers to crack down on hoarders for removing supply bottlenecks and has sought their help in controlling inflation,” a key source said.
On Thursday, Mr. Mukherjee had said the State governments need to ensure that all bottlenecks in the supply chain are removed so that food prices can be brought down quickly. Food inflation climbed nearly to a year’s high of 18.32% on December 25, due to spurt in prices of onions among other vegetables besides milk. The wholesale food inflation jumped by 3.88% points from 14.44% in the previous week ending December 18, 2010, taking the government by surprise. The extent of high food inflation could be gauged from the fact that the rate of price rise last year at this point of time was almost 20%.
It means that food inflation now is 18.32% over 20% last year. The damage to onion crops in parts of Maharashtra due to unseasonal rains had led to short supply, as its prices skyrocketed to Rs. 75—80 a kg in various retail shops in the country. However, the Centre’s move to ban onion exports and remove customs and countervailing duties on the vegetable led to some cooling of prices later. Prices are now ruling at around Rs. 45—50 a kg. Meanwhile, Pakistan has refused to export onions to India, which may blunt the impact of removing customs and countervailing duties by the government here.
The further easing of onion prices depends on its imports from other countries as well as crackdown on hoarders, analysts said. Chief economic advisor Kaushik Basu recently blamed cartels among traders for high onion prices. He had said the movement of onions should be expedited to cool down its prices. In fact, Home Minister P Chidambaram wondered recently if the government has all the tools to calm down food prices. This implies that the Centre has to rely on cooperation of States to bring down prices of essential commodities.
India asks Pak to allow onion exports via land route
New Delhi, January 7 (PTI): India has initiated talks with Pakistan seeking resumption of onion exports from that country through the land route of Wagah border. “We have initiated talks and before not too long we are hopeful that we will find solution to this…,” External Affairs Minister S.M. Krishna told reporters in New Delhi on Friday. The Ministry has also requested Pakistan government to allow export of onions in bulk through rail and ship routes, sources said.
Commerce Secretary Rahul Khullar had on Thursday said that a contract has been entered into for Pakistani onion supply at Mundra port at Gujarat. However, if the supplies have to be diverted from Wagah border for arrival through ship routes, it would take at least few more days to reach India. Pakistan imposed a ban on export of onions through the land route on Thursday after 300 India-bound trucks loaded with about 3,000 tonnes of the commodity had reached the Wagah border near Amritsar. An official spokesperson said in New Delhi that the government is trying to resolve the issue with Pakistan. “Government is working on it,” she said.
Prices of this vegetable have shot up by Rs. 5-10 per kg since Thursday after Pakistan put a curb on onion movement through land route. Meanwhile, a report from Lahore said that Pakistani traders have expressed disappointment over the decision of their government to put these restrictions. “Such decisions hamper trade between the two countries and cause wastage of perishable goods. This is in the interest of neither the government nor traders and consumers,” said Iftikhar Ali Malik, vice-president of the SAARC Chamber of Commerce and Industry. The traders demanded that the customs authorities at the Wagah land border clear contracted consignments of 300 trucks. Before the federal Pakistani government imposed the ban, several traders had bagged major orders from India.