Government announces ‘feeble, toothless’ plan to combat inflation
14 Jan 2011
After two days of hectic parleys, the government on Thursday finally came out with a plan to counter spiraling prices - but most observers dismissed it as toothless and limited in scope.
Even as the government admitted it had no control over spiraling vegetable prices - which is the key issue at the moment - it said stringent action would be taken against hoarders and black marketers.
The new measures - including a scheme to sell onions at Rs35 a kg - are similar to those announced by the government to beat rising prices a year ago, but now experts say the measures proposed are half-hearted and low on specifics.
The main proposals are:
- Review the import and export of essential commodities regularly.
- Intensify the purchase of essential commodities.
- Ask the states to consider waiving octroi charges and local levies - which the states likely to oppose.
- A ministerial panel headed by the prime minister's economic advisor Kaushik Basu will be set up to monitor inflation.
- NAFED and NCCF will sell onions at Rs 35 per kg to provide some relief.
However, the Government also says a hike in agricultural output is the only lasting solution to check the rise in food prices.
Critics say this is merely old wine in new bottles. The government should have waged war on onion prices in all cities and not just Delhi. It should have tried to check milk prices - this is a very essential commodity and unlike vegetables, the price of milk will not come down on its own.
The government should also have taken a decision on sugar exports. If sugar exports are allowed, sugar prices are bound to rise, slowly but surely.
