Annexure

STATEMENT REFERRED TO IN REPLY TO PART (b) OF RAJYA SABHA UNSTARRED QUESTION NO. 2935 FOR 20/08/2010 REGARDING FOOD INFLATION

Steps taken by the Government to contain price rise in essential Commodities are briefly stated below:

A. Short term Measures:

1. Fiscal Measures

(i) Reduced import duties to zero – for rice, wheat, pulses, edible oils (crude); and butter and ghee.

(ii) Reduced import duties on refined & hydrogenated oils & vegetable oils to 7.5%;

(iii) Allowed import of raw sugar at zero duty under O.G.L. up to 01.08.2009 by sugar mills (notified on 17.04.2009) extended up to 31.12.2010. Furthermore, import of raw sugar has been opened to private trade up to 31.12.2010 for being processed by domestic factories on job basis.

(iv) Allowed import of white/refined sugar by STC/MMTC/PEC and NAFED up to 1 million tons by 01.08.2009 under O.G.L. at zero duty (notified on 17.04.2009). Furthermore, the duty free import of white/refined sugar under OGL has been opened to other Central/State Government agencies and to private trade in addition to existing designated agencies. The cap on the quantity to be imported upto 31.03.09 has also since been removed vide notification dated 27^th November, 2009. The Government has extended it upto 31.12.2010 without any quantitative cap.

II. Administrative Measures

(i) Removed levy obligation in respect of imported raw sugar and white/refined sugar.

(ii) Banned export of non-basmati rice, edible oils (except coconut oil and forest based oil) and pulses (except Kabuli chana).

(iii) Export of edible oils has been allowed w.e.f 20^th November, 2008 in small packs upto 5 kgs, subject to a limit of 10,000 tons upto 31.10.2009.EGoM in its meeting held on 20.11.2009 decided to further allow export of edible oils not exceeding 10,000 tons during the period from 01.11.2009 to 31.10.2010.

(iv) Imposed stock limit orders in the case of paddy, rice, sugar, upto 30.9.2010; In order to discourage non-household sector consumers from stockpiling sugar and to ensure adequate availability of sugar in the open market for actual consumers, the Central Government has issued a notification dated 22.08.2009 imposing stockholding limit on bulk consumers: it has been provided that w.e.f 19.09.2009 no person, establishment, or industrial unit using or consuming more than 10 quintals of sugar per month as a raw material for production or consumption or use, in any manner, shall keep stock, at any time, sugar exceeding 15 days of such use or consumption.

(v) Using Minimum Export Price (MEP) to regulate exports of onion (averaging at $220 per tonne for August 2010) and basmati rice ($900 PMT);

(vi) Maintaining the Central Issue Price (CIP) for rice (at Rs 5.65 per kg for BPL and Rs 3 per kg for AAY) and wheat (at Rs 4.15 per kg for BPL and Rs 2 per kg for AAY) since 2002.

(vii) Futures trading in Rice, urad and Tur suspended by the Forward Market Commission in the year 2007-08 and continues during 2010-11. Futures trading in sugar were suspended w.e.f. 27.5.2009 upto 30^th of September, 2010.

(viii) Permitted sugar factories to sell processed raw sugar in the domestic market and fulfill export obligation on ton to ton basis.

(ix) Proportion of sugar production requisitioned as levy sugar was increased from 10 to 20% for 2009-10 sugar season to ensure adequate levy sugar supplies under PDS.

(x) For the month of August, 2010, 17.0 lakh tons of non levy sugar have been made available which includes 13.37 lakh tons of normal non-levy sugar and 3.13 lakh tons of sugar processed from imported raw sugar during May, & June, 2010. Estimated availability out of imported white/refined sugar during the month is about 0.50 lakh ton. Besides, levy sugar quota of 2.20 lakh tons also been released. Thus, for the month of August, 2010, 19.20 lakh tons of sugar have been made available.

(xi) An additional allocation of wheat/rice @10 kg/family/month of January and February 2010 has been made to the accepted number of AAY, BPL and APL ration cards. This is in addition to existing allocation while the wheat will be allocated at MSP price; rice will be allotted at MSP derived price.

(xii) Specific adhoc additional allocation of 30.66 lakh tonnes of foodgrains has been made for all cardholders wef 19.5.2010 with validity for lifting up to 20.11.2010@ of Rs.8.45 per kg for wheat and Rs.11.85 per kg for rice.

(xiii) Recently, the Government has also decided on providing, an additional allocation of 4.57 lakh tonnes of foodgrains per month for APL families at the prevailing APL CIP. This is applicable initially for a period of six months to those States where APL allocations are below 15 kg per family per month.

(xiv) OMSS interventions:

(a) Allocation to State Governments under OMSS (Domestic) for release of 20.00 lakh tonnes of wheat was made to check inflationary trends in food economy from October 2009 to March 2010. The State/UT Government were asked to distribute wheat released under OMSS (D) to household consumers and small processors of wheat.

(b) In addition to above, a quantity of 10 lakh MTs wheat was also allocated for sale to bulk consumers through open tenders by FCI from October,09 – March,10. Another 10.81 lakh tonnes of wheat from the expected savings from retail allocations was allocated for bulk consumers through tender sale.

(c) In order to check inflationary trend in prices of Rice, a quantity of 10.0 lakh tonnes of rice was allocated during October 2009 to March 2010 to State Governments for distribution to retail consumers.

(d) On 18.1.2010, NAFED was allotted 37400 tonnes of wheat and 17000 tonnes of rice from the un-lifted quantity of OMSS allocations to state Governments. Similarly, NCCF was allocated 32684.21 tonnes wheat and 11000 tonnes rice for sale to retail consumers.

(e) On 16.2.2010, another allocation of 5 lakh tonnes of wheat was made for tender sale to small processors by FCI.High Level Committee of FCI has formulated guidelines for tender sale to small processors. The reserve price fixed for tender sale of wheat to bulk consumers undertaken by FCI.

(xv) The Government also contemplating bringing legislation on Food Security.

(xvi) Experimented with popularization of Yellow Peas through sale in the Retail Outlets of NAFED, Kendriya Bhandar, NCCF and Mother Dairy in Delhi.

(B) Medium Term Measures:

In the medium term, Government has taken initiatives such as the National Food Security Mission (NFSM), Rashtriya Krishi Vikas Yojna (RKVY) to improve production and productivity in agriculture.

*****