Leaky PDS and high subsidy will test FSB

Sep 04 2013, 09:10 IST
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SummaryWhile food inflation has risen sharply in the last few months, the government’s efforts to implement the Food Security Bill are expected to have a lasting impact on India’s agriculture sector

While food inflation has risen sharply in the last few months, the government’s efforts to implement the Food Security Bill are expected to have a lasting impact on India’s agriculture sector. Commission for Agricultural Costs and Prices (CACP) chairman, Ashok Gulati, spoke to Sandip Das on a range of issues including the impact of the Food Security Bill (FSB) and the need for reforms in marketing of agricultural produce.

The prices of fruits and vegetables have shot up sharply in the last few months. What should the government do to keep the trend in check?

While the overall food inflation is hovering around 12%, veggie prices are on fire. Vegetable prices were 46% higher this July than the last. While onion prices made headlines with a 145% increase, the prices of other vegetables were not far behind. Cauliflower is selling at R99 per kg in Safal outlets in Delhi while Himachal apples sell between R60-80/kg. This is simply perverse.

Monsoons do interrupt the smooth flow of supplies in certain parts of the country due to floods or excessive rains. But the reasons for high prices of vegetables run deep—into the fragmented value chains, the archaic APMC laws that give undue oligopolistic power to commission agents in mandis, the lack of investment in proper logistics (transportation and storages, including cold storages) leading to wastage, and the lack of processing of perishables and organised modern retailing. Unless we understand this, and act urgently to build efficient value chains, vegetable prices will remain volatile, sometimes touching the sky and at other times going through the floor. As a fire-fighting measure to contain the prices of onions, the government is already importing and selling at concessional prices. But beyond that, I don’t see any serious efforts; this story will be repeated year after year, for one commodity or the other.

What measures should the government initiate to ensure food inflation does not climb further?

We must note that cereals, which account for the largest share in the poor consumer’s thali, are also registering an inflation of around 18% (year-on-year comparison for July). The government was busy trying to get the food bill passed as this was happening. The food bill envisages selling at least 5 kg of cereals per capita per month at R1, 2 and 3/kg (coarse cereals, wheat and rice respectively), and the government granaries are overflowing (74 million tonnes on July 1).

Given that

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