Agriculture minister has told that food prices will come down in 8-10 days. This statement from Mr. Pawar had come after the meeting of cabinet ministers on prices was completed. The government has decided to take the following measures:

1. The government has relaxed the central excise rules for raw sugar refining. Now all the mill that    refine/process raw sugar would be able to do so at zero duty.

2. Raw sugar can be imported at zero duty up to Dec 31 2010.

3. Refined sugar will also be allowed to be imported at zero duty.

4. The PM would convene a meeting with the CMs of all the states to lift their quota of allocated rice and wheat. As per them the states had not been lifting it, resulting price hike.

Our View: If prices can come down now then why such a delay in taking these steps earlier? Are they sure that the prices would come down and are the steps enough to bring prices under control? What will government do with the excess stock is not lifted? There are many questions that arise from its comment. But the bottom line remains the sam that it is because of the irresponsible attitude of government and sharad pawar that this has happened. If such a price rise continues, the GDP growth rate would have lesser significance. Also though government has allowed duty free import of sugar the prices in the international market is already high due to increased import by India and Growing demand in Brazil and its diversification into Ethanol production. The commodity food prices all over the world are also on rise, due to increasing global demand for the commodity. But the only problem is that we are not taking steps where we could have taken. Thus relatively small price hikes due to internal shortage or global price hike creates more pressure on prices due to market inefficiencies, black marketing and hoarding.

Link: http://timesofindia.indiatimes.com/india/Food-prices-will-fall-in-8-10-days-Pawar/articleshow/5440893.cms