FM asks states to remove levies to bring down food prices

New Delhi, Jan 19 (PTI) Worried over rising foodinflation, Finance Minister Pranab Mukherjee today asked thestates to remove local levies like octroi and mandi tax tobridge the gap between farmgate and retail prices.

"I would urge you to review all local levies like manditax and octroi duty which add to prices of food articles andimpede smooth movement of essential commodities," Mukherjeesaid in his address to State Finance Ministers duringPre-Budget deliberations here.

Asking state governments to play their part incontrolling inflation, he said, "There is a need for you tourgently look into supply management of items that are drivingthe current round of food inflation, in particular localfactors that are widening the gap between wholesale and retailprices."

Bottlenecks in supply chain have to be removed. Stateshave to take steps to ensure agriculture grows and createefficient distribution and marketing infrastructure, he said.

There is also a need to cut down on the wastage offoodgrains, he added.

Indeed, Mukherjee said, there is a strong case to reviewand reform the Agriculture Produce and Marketing Act (APMC) instates where it has not been addressed so far.

The government regulated market are not only imposingtaxes and facilitating large commission and fees for themiddleman but also preventing retailers to integrate theirenterprise directly with the farmers, he said.

This leaves no incentive for the farmers to upgradeand inhibits private investment in the agriculture sector.

Farmers and consumer both lose in the process, he added.

Talking about efforts taken by the central government, hesaid, it has taken measures to facilitate imports and, whenrequired restrict exports to ensure supply of essentialcommodities.

During the last week of December, food inflation touchedas high as 18.3 per cent mainly driven by primary articleslike vegetables.

Food inflation has remained high and volatile due tosignificant increase in the prices of few primary items likefruit and vegetables, milk, meat, poultry, eggs and fish evenas the prices of cereals and pulses declined sharply in thecurrent year, Mukherjee said.

He also said that there are some weather induced supplyconstraints on some of the items currently exhibiting highinflation, as a large part of price rise is due to wideninggap between the wholesale and retail prices. The growingdemand for these products due to rising income level, he said.

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