Prime Minister Manmohan Singh today indicated that the government is ready to undertake open market intervention to prevent the rise in grain prices caused by deficient and delayed monsoon rains.
“We should not hesitate to take strong measures and intervene in the market if the need were to arise,” Singh said at a meeting of state chief secretaries here.
The meeting was called to take stock of the situation caused by the lack of rains and was attended by Agriculture Minister Sharad Pawar, Cabinet Secretary K M Chandrasekhar and Agriculture Secretary T Nanda Kumar, among others.
The government usually sells food grain when prices get out of hand. The government procures wheat and paddy from farmers. Sugar mills are required to sell a part of their output to the government for sale through the public distribution system. It can also ban the export of such farm commodities or put high export taxes in order to make them commercially unviable.
“The country is facing a difficult situation. The monsoon has been delayed and in many places it has been deficient, though some parts of the country have received normal or excess rainfall. Agricultural operations have been adversely affected in several parts of the country, causing distress to farmers and their families. A deficit of more than six million hectares has been reported in paddy, which is the worst-affected crop,” Singh said.
He expressed concern over the rising trend in prices of certain essential commodities like pulses, sugar and some vegetables.
“We need to be aware of the possibility that reduced production of kharif crops in the current year may have an inflationary impact on prices of food items in the coming months,” Singh said.
Singh urged the state governments to take strong measures, which includes action against hoarders and black marketers, to check the spiralling prices of essential commodities.
The Prime Minister, however, expressed satisfaction over the good crop last year and the comfortable stock position of food grain. “We are in a position to ensure adequate availability of food grain in the drought-affected areas,” he said. As on July 1, the government had wheat stock of 32.92 million tonnes and 19.61 million tonnes of rice.
While laying emphasis on saving the standing crops and maximising production from crops in areas which received adequate rains, Singh said the country should start planning for the coming rabi season so that it is able to “increase rabi production to compensate for whatever loss in production we may face in kharif”.
He assured the states of full support. “In case the Contingency Relief Fund available with the states is not sufficient, they (states) should quickly prepare a detailed memorandum for assistance under the National Calamity Contingency Fund,” he said.
