Crack down on hoarders, Pranab tells states

Increasingly jittery about the rising food price inflation, union finance minister Pranab Mukherjee on Friday asked the state governments to initiate swift action against hoarders, and ''urgently'' remove bottlenecks in the supply chain to improve availability.

In a communication to all chief ministers, Mukherjee noted that driving the current surge of food inflation were high prices of certain items such as fruits and vegetables, milk, meat, poultry, eggs and fish, and the build-up of prices was noticeable in the last few weeks.

Mukherjee pointed out that from a high of nearly 21 per cent in April 2010, the year-on-year food inflation had declined to 8.60 per cent on 20 November, mainly owing to the collective efforts of the centre and the states. That trend had since reversed and food inflation was now at 18.32 per cent as of 25 December.

The wholesale price index data released on Thursday showed that three-fourth of food inflation was due to rising prices of vegetables, especially onions, and nearly one-fourth on account of higher milk prices. During the current fiscal, although the prices of cereals and pulses sharply declined and continue to do so even in recent weeks, the trend in food inflation had reversed to a northward surge.

In his letter, Mukherjee highlighted that ''while there are some weather-induced supply constraints on some of the items that are currently exhibiting high inflation – and this goes against the seasonal decline in prices normally seen at this time of the year – a larger part of the price rise is due to the widening gap between wholesale and retail prices, coupled with the growing demand for these products following rising income levels.''

Apparently, the fact that the increase in the retail prices of certain items are not in sync with farm gate and the wholesale prices and the margins are widening further is a major worrying factor and the minister wants the states to have a close look at this aspect.