Price rise: Cong tells UPA govt to 'better regulate' forward trading

The UPA regime today came under pressure from the ruling Congress to "better regulate" forward trading in foodgrains and some essential commodities and to review the February 2002 notification of the then NDA regime that had removed government's control over traders by allowing them to freely buy, stock, sell, transport and dispose foodstuffs without requiring any licence or permit under the Essential Commodities Act, 1955.

These suggestions came from chief ministers of the 14 Congress-ruled states who were called here by Congress President Sonia Gandhi to discuss the recent increase in the prices of essential commodities.

Elaborating on the steps taken by them, the CMs put the blame on forward trading and on the lack on control over traders. Many of them including Haryana CM Bhupinder Singh Hooda and Himachal Pradesh CM Virbhadra Singh were learnt to have favoured a "blanket ban or at least, better regulation" on forward trading to curb "excessive speculation".

The government side, represented in the meeting by Prime Minister Manmohan Singh, Finance Minister P Chidambaram and Defence Minister Pranab Mukherjee, explained that a regulator was already in place but had no powers because a Bill to empower the regulator was still pending in the Lok Sabha.

The food ministry headed by Sharad Pawar had not been able to push the Bill through, one of the CMs told Business Standard.

CMs of 11 states and representatives of the CMs of three other Congress-ruled states including Assam, Punjab and Meghalaya requested the UPA regime to "reconsider" the Removal of Licensing Requirements, Stock Limits and Movement Restrictions on Specified Foodstuffs Order, 2002 under the Essential Commodities Act so as to empower the state governments to intervene in cases of hoarding of essential commodities.

Pranab Mukherjee refused to spell out the government's stance on the CMs' suggestions. "They also raise the question of decontrol of agriculture commodities, license raj and permit raj. All these will be reviewed by the government," he said.

Sonia seemed to be more concerned about the functioning of the public distribution system as she asked the CMs to personally monitor the PDS. She asked them to create a network of fair price shops, galvanise food procurement, take credible action against hoarding and moderate diesel prices.

The CMs had earlier reported to her the steps taken by them to control prices, including the reduction in VAT/sales tax on petroleum products.

Andhra Pradesh CM YSR Reddy was learnt to have raised the demand for increasing the minimum support price and also providing subsidies on imported pulses.

Punjab Deputy CM Rajinder Kaur Bhattal raised the issue of a court ban on a truck carrying more than nine tonnes load, saying that it increased the transportation costs.

The issues of less-than-expected procurement of foodgrains in Punjab and Haryana also came up in the meeting, but the two states attributed it to 'demand-and-supply' theory.

Congress spokesman Rajiv Shukla said later that the least procurement was in Uttar Pradesh.