With rising food prices raising alarm bells within the government, the Union cabinet on Wednesday took a series of decisions and for the first time brought vegetables under stock holding limit. In order to prevent hoarding, the government brought onion and potatoes under the purview of stock holding limit under the Essential Commodity Act. The meeting chaired by the prime minister Narendra Modi also empowered state governments to decide the stock limit in their respective states and take firm and effective measures to bring down prices. The government is of the view that there was enough crop available and the only way to stabilise prices was to target hording.
"Our government is committed to control inflation. States can now take the action of imposing stock holding limit for a period of one year from the date of notification. The notification bringing onions and potatoes under stock holding limits will be issued by Thursday," Union law and telecom minister Ravi Shankar Prasad told reporters after the meeting.
These measures are being considered in order to rein in the hoarders who are allegedly blocking supply in anticipation of poor rain fall affecting new crop. Such a limit would ensure that traders cannot stock more than a prescribed quantum. If it is found that traders are holding more than that then he can be fined and in some cases prosecuted. Currently, stock limit provisions exist for various food grains and cereals under Essential Commodities Act, 1955.
Earlier during the day, the commerce ministry announced hiking minimum export prices (MEP) for onion to $500 per ton from $ 300. This will mean the export of onions will become costlier and no longer profitable for the traders. The government has already imposed MEP of $450 for potato on June 26. The government has also advised states to delist fruits and vegetables from Agriculture Produce Marketing Committee Act so that farmers can have the option of selling their produce in the open market themselves apart from using the traditional mandi set up.
Retail prices of onion have risen to about Rs25-30 per kg, while the wholesale prices are ruling at Rs18.50 per kg in the national capital. Despite onion production estimated to have risen from 192 lakh tonne during 2013-14 crop year from 168 lakh tonne in 2012-13, the wholesale price of onion at Lasalgoan in Maharashtra, Asia's largest onion market, has risen by about 80% during June to Rs18.50 per kg.
Ahead of the cabinet meeting, the prime minister held a meeting with Union water resource minister Uma Bharti, food processing minister Harsimrat Kaur Badal, women and child development minister Maneka Gandhi and road transport and higways minister Nitin Gadkari to discuss food inflation.