The inter-ministerial group on inflation is contemplating review of the APMC Act with a view to prevent cartelisation by traders and allowing free movement of essential commodities.
"We have to review the Agriculture Produce Marketing Committee (APMC) Act so that mandis are not held by a cartel," a source told PTI.
APMC Act provides for regulation of agricultural produce markets for providing an efficient system of buying and selling of agricultural commodities.
The official further said that the panel would pay lot of attention to marketing of products, especially agriculture and food products. This would reduce the gap between what the farmers are getting and consumers are paying.
The overall inflation increased marginally in February to 8.31% from 8.23% a month ago. Last week, the Reserve Bank in its quarterly monetary policy raised short- -term lending and borrowing rates by 25 basis points each in a bid to contain inflation.
The official further said that space should be created for small traders to freely bring their products from farm to retail outlets.
"We have to use our competition law very carefully and allow small traders to bring in their products," he added.
Last month, the government has set up the Inter-Ministerial Group (IMG) to suggest measures to control spiralling prices, particularly of food articles.
The IMG, headed by Chief Economic Advisor in the Finance Ministry Kaushik Basu, has seven-point terms of reference, including studying trends in international production and stocks, besides reviewing prices of major commodities and making recommendations for fiscal, monetary, administrative measures.