Just as food inflation hit a three-year high in August, the food and consumer affairs ministry will seek Cabinet approval this week to extend stock-piling limit on pulses, edible oils and oilseeds by one year through September 2014 to keep supplies steady and discourage hoarding, senior government officials said.
India imports more than half of its edible oil and one-fifth of its pulse requirements a year. Its edible oil imports jumped to a record $11.31 billion in 2012-13, while pulse purchases from overseas, too, hit an all-time high of $2.34 billion. So hoarding can significantly affect the prices of these items, especially when the rupee has depreciated by 17% since April, worsening risks of imported inflation.
?Since we import edible oil and pulses in large volumes to tide over a domestic shortage, it is only logical that hoarding should continue to be contained effectively. For this, extending the stock holding limit on these items is necessary, especially in times of high inflation,? one of the officials told FE.
The validity of the current limit on these items expires on September 30. The restriction under the essential commodity Act,1955, empowers states to undertake de-hoarding operations against speculative holding of stocks, and the limit of stocks a dealer can hold varies according to states.
The stock-piling norms, coupled with comfortable supplies following adequate imports and steady global prices, have helped keep domestic pulse and edible oil prices subdued in recent months. Inflation in pulses dropped 14.40% last month while that in edible oils and oilseeds inched down by 3.86% and 7.22%, respectively. In a stark contrast, overall wholesale food inflation hit 18.18% in August from 11.91% in July, mainly due to spiralling prices of onion and other vegetables.
