How Indian Government can contain price rise?

1. Proper warehousing & distribution; lacs of tons of precious crops get spoiled every year due to the improper management.

2.Proficiency in exim policy; often we came across govt's decision to import certain commodity at some higher prices, few months later the same being exported at lower prices.

3.Following Gujrat model of agri. growth (aprrox 12.5% against national avg. of round 4%), viz a viz providing infrastructure & other facilities to the sector.

4.Curbing black marketer's.

5.Emphasis on R&D for different soil treatment/crops/other new technics etc.

Govt. needs to have a well though out, concise & long term policy on Concise Policy on Commodity Warehousing, Trading, Import & Finance. No knee jerk reactions. Govt. needs to understand that we are a nation of mind boggling numbers of consumers and ultimately we are going to be consumers/importers, so take harnesses off importing. On the other hand we are huge producers, so no way we should discourage local produce. So we should put all commodity imports in OGL and adjust duties accordingly, so that import prices are always in consonance with local produce and on the other hand, whenever local prices jump too much over local prices, importers automatically import thus equalizing prices rather than wait for ministers to declare policy after a few months and getting a huge spike in prices meanwhile.

Ensure new capacities in warehousing through incentives. Build huge infrastructure for loading & unloading bulk commodities at ports, ensuring faster & automated loading & unloading of bulk commodities at ports (free commodities without bagging).

Put monies in farmers hand, thereby ensuring higher rural buying power through warehousing receipt finance. Ensure that farmers can go to Commodity Consolidators (presently not available) and get receipts of small quantities issued. Consolidators to deposit commodities in larger lots to Warehousing Corporations (presently available), such receipts to be financed by all banks compulsorily, thereby ensuring that warehousing finance is provided to small producer, rather than only large trader.

All commodities to be traded on Commodity exchanges, thereby leading to better price discovery. Price Spiralling upwards due to Commodities Trading to be avoided by legislating a fixed percentage of trading volume to be made delivery settled rather than Cash settled and demat accounts for commodities to be made more prevalent. This will raise trading bar for those who are only speculating.

Huge Penalties to be imposed on failing to deliver on Commodity Exchanges. Today this is only a slap on the wrist. Anyone can pay a penalty today and refuse delivery of a commodity to an exporter/importer who has used the Commodity Exchange for actual hedging of an underlying trade transaction. Target is to avoid huge fluctuations in commodity pricing.

A National Taxation policy like GST to be applied asap with central legislation that no state will impose any additional taxation like mandi/apmc fees etc. e.g. in Punjab in addition to 4% VAT, 7% additional tax is there on Rice Paddy, a common food for the poor man.

Would like to have comments on my post.

India crop yield is much behind west....even behind china. We need a second green revolution. Mandarins need to wake up and find out what are other countries producing per acre. Then study reasons. Collaborate with other countries and raise yield of each crop. Its a long term & slow process. Will not produce immediate results required by our knee-jerk reacting politicians.

the sudden surge in prices is partially due to the erractic monsoon and partially due to shift of yield by farmers akin to less MSP they receieve for essential commodities .perhaps,the benefits made from rising prices isn't reaching them (the farmers).furthermore ,the shopkeepers or middleman are selling the existing stocks(that were bought at previous prices )at existing prices to benefit (unfairly)from the situation.this can be curbed by:-

1. bringing in single authority (other than FCI or more responsible management by them) that will monitor the:- movement of stocks ,authorising the warehouses for grain storage ,recording the respective movements ,keeping farmers informed regarding  commodities prices and latest techniques to increase yield ,et al.

2.its tough but not to impossible (considering the development in it sector in our country )to maintain database  of stocks available with various stockist or wholesalers and they made to keep record of supply made by them to small retailers which would be subjected to sudden audits .so that stock holding can be brought under check.

rest already  have been mentioned by other participants . SIMPLE and TRANSPARENT MECHANISM is the key to end expoitation of less informed and informed but helpless  people falling prey to poor management and  unfair market practices.

A lot of friends have given a lot of very good ideas. I really appreciate.

The problem is all this positive thought process can at best land nowhere near where actions are required to implement. 

Let one powerful person pay through his salary and savings for one wrong decision or inaction and see how quickly things start to fall in place. Absolute power with zero accountability can corrupt most if not all.

If the economy expands then price also will. Expanded economy means more people coming out of poverty and demanding goods and services. So supply has to keep in pace with demand which usualy don't and rise in price results. Importing goods early can foreseeing demand is probably the only way out.

Now there is credit crunch, interest rates are high for companies to borrow and do business, so supply is not going to expand with demand. We all are in a wice.

I think the main reason why there is a price rise in food items across the country is due to climate change and inturn which resulted in erratic monsoons which completely affected the agricultural activities of Indian farmers, due to which there was less production that happened interms of food items, and this made the surge in price rise, if government is able to tackle this with the help of cloud seeding and similar other techniques to induce artificial rain, then in this manner we can be able to tackle problems, would like to know what other things can government do from users.

During 60s, 70's and 80's when entire world reeled under inflationary pressures, India could effectively contain inflation with the country. Later as we opened out our market to world trade, it is but natural that prices; especially of commodity items, will tend to go up.  

Of course, it has its plus side and also negative impact. The positive side is that producers will get higher price for their products. But then it naturally will impact badly on the local consumers. Therefore, the government has to do a balancing act which is not going to be easy.  

However, government should take following measures on a war footing:-

1. Ensure increase in production of essential commodities so as to keep the supply outdo the demand, local plus export.

2. Make rules and ensure curtailment of undue profiteering by middle men.

3. Make the Public Distribution System more effective, by the Central and State.

4. Bring up the value of rupee against Dollar and other major international currencies.

5. Take effective measures to improve per capita income of our citizens.

One big difference between India and US is that in US everything is corporate. The advantage with corporates, put enough pressure out comes a solution and here is the best part, the solution gets implemented in a short while. The result US imports a lot of crops but inflation remains at 1%(we see 40%). Go to any Wallmart shop in US to see how fresh those vegetables are and their price barely changes through out the year. 

I firmly believe the government instead of holding on to everything and making it look like they are saving the farmers from death. They can open corporate sector for this. There are many stages in farming and selling these essential goods. Stuffs like managing yield(quality and quantity), fertile land maintenance, warehousing yield, tranporting the produce, managing farmers(providing insurance, provide rental equipment, provide trucks for transporting produce, Ensuring steady income), Chains to sell the goods, food processing, export control and quite a bit more.

All this management cannot be done by an organization that depends on rain statistics 3 years old. It can be done by organization that can estimate and prepare for rain next year. Open this stuff up to corporates see how they do it. There is no way our government can compete with the corporate giants. Government then just put some governing rules. Stuffs like pesticide content should not be this high, Export only after local demand is met and lots of other rules. And what, before you know it inflation is under control. More so we can expect deflation of these things in a few years, because corporate sector will know the consumption patterns exactly and will find solution to match that.

Apart from the other reasons, one of the most important reason of continuous price rise is the downfalling value of indian rupee in the international market...

By signing the Gatt summit, we have not only the opportunity of bigger market of the whole world to earn more foreign currency but also to control the balance of payments within the country side....

what the food grain is doing with FCI...laying eggs....?

What 300 crores of foreign currency reseve is doing...hatching eggs of FCI's grains.....?