Inflation, based on the Wholesale Price Index, has jumped way above the comfort level of 5% to touch 6.68 % for the week ended March 15.
The government had withdrawn incentives on the export of at least 40 key goods, including steel, cement and non-basmati rice.
Meanwhile, investors have started selling off their long positions in agriculture commodities in futures market on fear that the government may ban trading in some more commodities to curb rising inflation. In a concerted action involving the ministries of finance, consumer affairs and agriculture, the commerce ministry withdrew or temporarily suspended the tax refund scheme Duty Entitlement Pass Booklate on Friday night.
Total number of items on which DEPB benefits have been withdrawn would be running into about 40-50, commerce secretary GK Pillai told reporters here on Friday. While the country was importing cement at zero-duty, it has stopped the export incentives as a precautionary measure.
As for steel, he said: When there is a shortage in the country and prices are high, why give export incentives. Besides measures to discourage exports, the government is considering more fiscal steps to improve supplies and rein in inflation, he indicated. Pillai said an empowered group of ministers (eGoM) would be meeting on April 2 to consider measures for maintaining adequate supply line in the face of global pressure on prices. The eGoM would be (reviewing) prices of rice, wheat and procurement of edible oil, he said. The government has already reduced duties on import of different varieties of palm oil and the duty cut on soya oil would be one of the options to be considered by the eGoM.
In one shot, the government has also raised the minimum export price for non-basmati rice from $650 per tonne to $1,000 dollars.
India, the worlds second-biggest rice producer, has taken this step as the global stockpiles of cereals fall to the lowest in more than two decades.
The Food and Agriculture Organisation said in February that 36 nations including China face food emergencies this year. World rice stockpiles may total 72.1 million metric tons by end of July, the lowest since 1984, the U.S. Department of Agriculture said. India cut the import tax on vegetable oils last week, the fifth reduction since January 2007, and banned exports of all cooking fats for a year, to rein in inflation thats at a 13- month high. Prime Minister Manmohan Singhs government has curbed exports of wheat and lentils, and banned futures trading in some commodities to cool prices before elections in May 2009. The government had also banned shipments of rice in October, before raising the benchmark price to $650 a ton on March 7 as demand for the grain for welfare programs doubled in the past five years.