Thursday, March 3, 2011

“Encourage organised retail for agri-produce”

NEW DELHI, March 3, 2011

Ban futures trading in essential commodities, says Modi report

As chairman of the working group on consumer affairs, Gujarat Chief Minister Narendra Modi has recommended that futures trading in essential commodities be banned and that organised retail in agri-produce be encouraged to make a dent in food inflation.

The working group, comprising the Chief Ministers of Gujarat, Tamil Nadu, Maharashtra and Andhra Pradesh, was set up in April last. Mr. Modi submitted its report to Prime Minister Manmohan Singh on Wednesday.

Among the 20 specific recommendations is a suggestion to set up a ministerial coordination mechanism at the national and regional levels for coordinated policy-making and for evolving a single national agriculture market.

Another is liberalisation of agri-markets by increasing competition in produce through encouragement to retail by the organised sector.

The Bharatiya Janata Party has been demanding the banning of futures trading in essential commodities, a step the report has recommended. However, the party has been less than enthusiastic about encouraging organised retail in agri-produce fearing it would affect its core shopkeeper constituency. So it is somewhat surprising that Mr. Modi has been forthright in demanding "increased competition" in retail to lower prices.

The report says efforts must especially be made to build storage capacities in food deficit regions while developing cold chains and food processing to prevent wastage.

Information agency

The report has suggested the creation of an agency dedicated to dissemination of information on stock availability of essential commodities as well as import and export data. This could be disseminated to all stockholders well in time to enable policy decisions to check prices.

Over a 10-year period, a plan must be in place to improve agri-infrastructure with backward and forward linkages to help boost production, cut wastage and develop agri-markets. To deal with black marketers , the report suggests enhancing preventive detention from six months to one year, and that offences under the Essential Commodities Act be made non-bailable with special courts set up for speedy trial.

Union Finance Minister Pranab Mukherjee, Minister for Food K.V. Thomas, and Minister in the Prime Minister\'s Office V. Narayanswamy were present at the Prime Minister\'s residence when Mr. Modi submitted his report.

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