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I-T raids on brokerages, traders in 4 cities to check pulse hoarding

With imports not bringing down prices, PMO recommends move

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The Income-Tax (I-T) department on Tuesday searched and raided the offices of select commodity importers and traders to check the unusual spurt in profits and cash flow through alleged manipulation of pulse prices.
More than 57 places were raided in New Delhi, Mumbai, Indore and Chandigarh. At some places, like the National Commodity and Derivatives Exchange (NCDEX), raids are likely to continue till Wednesday.

Top officials of the ministry of consumer affairs and food ministry said that the raids were an outcome of a strong commitment and recommendation from the PMO.

I-T sources said that they have strong inputs about an international cartel. Trading houses hold stocks and delay imports.

A senior I-T official told dna: "The shortage of pulses, especially tur dal, across major markets in the country, triggered the raids. Despite visible increase in supplies through imports, retail prices failed to dip below the Rs 200-plus mark."

In Mumbai, searches were conducted at NCDEX, commodity brokerages and their parent outfits of ETG Commodities, Edelweiss and Glencore India.

"One of the main reasons for the NCDEX search was to shortlist the data of traders indulging in speculative trading of pulses and delivery thereof," said an I-T source.

"We are looking at tax evasion on incomes, probably gained through manipulation of dal prices," said a tax official.

An NCDEX spokesperson said, "The visit of I-T officials is part of a routine survey by the department. The exchange is fully cooperating."

Edelweiss refused to comment. Others were unavailable for comment.

"The raids are to check whether the huge differences in dal prices reflect on the books of accounts of traders or not," said Suniil Pachisia, vice-president of Pratibhuti, a leading brokerage house in Mumbai.

With the latest development, many hoarders are expected to release stocks and prices are likely to come down.

According to consumer affairs ministry data, the wholesale price of tur is at Rs 178 per kg while the retail price of branded tur dal is hovering at Rs 210 per kg. The maximum price of urad dal is Rs 190 per kg in wholesale and Rs 200 per kg in retail, while the average rate is Rs 120 per kg.

PMO officials and the cabinet secretariat had discussed with the inter-ministerial group of ministry of consumer affairs and the food ministry in the second week of December to clamp down on price manipulation.

The trigger point of the raids was the failure of earlier measures to curtail prices. Sources said that the Food Corporation of India (FCI) and National Agricultural Marketing Federation of India (NAFED) failed to procure pulses on minimum support price (MSP). In Maharashtra, traders have rejected the offer of procurement agencies. Traders neither sell nor provide the farmers' list to FCI, NAFED and Small Farmers' Agriculture-Business Consortium (SFAC).

The central government had issued an advisory to states to take strict action against hoarding and black marketing in July 2015. State governments have conducted 14,721 raids and seized 1.3 MT pulses.

The government has started several initiatives to keep pulse prices affordable. Action plan documents show that pulse exports have been banned, except kabuli chana, and up to 10,000 MT of lentils and organic pulses.

The government has extended zero import duty on pulses till September 30, 2016. It has also extended stock limit till September 2016. Still, there is no significant impact on prices.
 

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