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Pak ban on onion exports adds to governments worry
Published on 12 Jan. 2011 12:50 AM IST
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Prime Minister Manmohan Singh Tuesday chaired a meeting of senior ministers and officials on checking rising prices that have sent India’s food inflation soaring to over 18 percent. But no measures were announced.
“A host of issues were discussed. Some inputs have been sought. There will be another meeting in a day or two,” an official said after the hour-long talks, indicating the Tuesday’s deliberations remained inconclusive.
Those in attendance included finance minister Pranab Mukherjee, agriculture minister Sharad Pawar, home minister P. Chidambaram, planning commission deputy chairman Montek Singh Ahluwalia and cabinet secretary K.M. Chandrasekhar.
Chief economic advisor in the finance ministry Kaushik Basu also briefed the participants at the meeting, the official said. Even though the government and the central bank have initiated several measures to check inflation, prices of essential items have continued to soar. To add to the government’s worries, Pakistan also banned onion exports via the land route.
The opposition parties from the Left Front to the BJP-led NDA have slammed the government for the price spike, particularly of essential items, and have scheduled a series of public rallies. “This government has stolen food out of people’s mouths,” said BJP spokesperson Shahnawaz Hussain. “No item of daily consumption - be it onions or tomatoes - is affordable today.” The Left wanted petrol and diesel prices to be lowered. “They should immediately regulate the prices of petrol and diesel, reverse the policy of de-regulation because that is one of the prime reasons that is pushing up prices,” said CPI-M politburo member Brinda Karat.
The Congress party, which heads the ruling UPA government, said state governments, too, must take responsibility and come forward with steps to arrest price rise and lessen the burden on the average citizen.
The FICCI said the use of monetary policy for controlling inflation has not worked and criticised the government for mismanagement of the food supply chain that has widened the gap between the farm gate and retail prices.
“Food prices have once again gone up and this shows that monetary policy has become an ineffective tool for containing food inflation,” said the industry lobby’s secretary general and noted business economist Amit Mitra.
Another industry association, Assocham, said the huge rise in food inflation has reinforced fears that the trend would spill over to non-food items and put a lot of pressure on the Reserve Bank of India (RBI) to tighten its monetary policy.
“This reinforces the scenario of a 50 basis point rate hike when the central bank reviews the policy. The industry should be prepared now for a much larger front-loaded rate hike series than what it was expecting a month ago,” it said.
Official data last week suggested that the high cost of onions had spread its effect to other vegetables as well, pushing the annual food inflation nearly 400 basis points to the highest level in a year at 18.32 percent for the week ended Dec 25, 2010.
The data indicated that even at the wholesale level, onions were costing a whopping 82.47 percent more than year ago, vegetables were up 58.85 percent, fruits were up 19.99 percent, milk was up 19.59 percent and eggs, meat, fish were up 20.83 percent.
This was the fifth straight week of a sharp rise in food inflation, which stood at 14.44 percent the week before.
Cabinet reshuffle likely after Jan 14
Stung by scams, rising prices and runway inflation, an upset Prime Minister Manmohan Singh is likely to go in for a cabinet reshuffle.
The overhaul is likely to focus on making the cabinet more cohesive.
Sources have told CNN-IBN that the reshuffle is expected to take place after January 14, but before the end of the month.
UPA sources have told CNN-IBN that performance and a clean image will be the yardstick and younger faces are expected to be inducted into the cabinet.
Agriculture and Food portfolio currently with NCP chief Sharad Pawar could be split.
With food inflation at a 23-week high, Pawar and the Agriculture ministry have come in for tough criticism.
Poor performers like CP Joshi and BK Handique could also face the axe.
Salman Khursheed is expected to get a cabinet post.
Jyotiraditya Scindia could be shifted to another ministry possibly external affairs to fill the vacancy that followed Tharoor’s resignation.
Telecom ministry will remain with the Congress. Kapil Sibal took over as the telecom minister after A Raja resigned following the 2G scam With twin troubles of Jagan and Telangana in Andhra, congress is expected to move Ghulam Nabi Azad as Andhra in-charge - that could mean that he will have to give up the cabinet post.

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