Press Information Bureau

Government of India

Ministry of Finance

15-March-2012 12:34 IST

Options to Ensure Price Stability in Food Items – Economic Survey

According to Economic Survey 2011-12, compositional shift in food basket of common household has increased demand of some food items. There are some constraints also in supply side which have been exposed during the recent episode of inflation in vegetables and fruits The Economic Survey has suggested following options to address these constraints.

• Extension programmes and guidance to farmers regarding fertiliser and insecticide uses an alternate cropping pattern based on soil analysis could be undertaken and intensified.

• As a strategy, regular imports of agriculture commodities in relatively smaller quantities with an upper ceiling on total quantity could be considered. The upper ceiling can be decided annually, relatively well in advance, after assessing the likely domestic situation in terms of production and consumption requirements.

• Setting up special markets for special crops in states/regions/areas producing those crops would facilitate supply of superior commodities to the consumers.

• Improved Mandi governance is an area of concern. A greater number of traders must be allowed as agents in mandis. Anyone who gets better prices and terms outside the Agricultural Produce Marketing Committee (APMC) or its farmgate should be allowed to do so.

• For promoting interstate trade, a commodity for which market fee has been paid once must not be subjected to subsequent market fee in other markets including that for transaction in other states. Only user charges linked to services provided may be levied for subsequent transactions.

• Perishable food items could be taken out of ambit of the APMC Act. The Government regulatory mandis sometimes prevent retailers from integrating their enterprises with those of farmers. In view of this perishable may have to be exempted from this regulation.

• Considering significant investment gaps in post harvest infrastructure of agriculture produce, organised trade and agriculture should be encouraged and the FDI in multi brand retain once implemented could be effectively leveraged towards this end.

• The Government should step up creation of modern stories facilities for food grains.

DSM/RM/NC

APMC reform: remove duplicate market fees and exempt perishables to promote interstate trade and supply stability. Recommended measures to stabilise food prices emphasise supply improvements and market governance reform: intensify extension services and soil based cropping guidance, expand modern storage and post harvest infrastructure, and consider regular small imports under an annually fixed ceiling. Reform the APMC framework by allowing more traders as mandi agents, permitting transactions outside APMC or farmgate, exempting perishables from APMC regulation to enable retailer-farmer integration, and preventing repeat market fees on the same commodity while allowing only user charges for subsequent transactions.