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Special cell on inflation
PM puts onus on CMs to curb price-rise
Tribune News Service

1 pc CST cut

New Delhi: The Union Cabinet today gave its approval for initiating the process of phasing out of Central Sales Tax (CST) with reduction in the CST rate from 4 per cent to 3 per cent with effect from April 1, 2007. This phasing out will be effected taking necessary non-monetary and monetary measures for the purpose and making the necessary amendments to the Central Sales Tax Act, 1956, and the Additional Duties of Excise (Goods of Special Importance) Act, 1957, finance minister P. Chidambaram told mediapersons after the CCEA meeting. — TNS

New Delhi, February 22
As the prices of essential commodities continued to maintain an upward curve, despite several fiscal and monetary measures, Prime Minister Manmohan Singh on the eve of the Budget Session of Parliament sought to pass the onus of curbing price rise on the state governments.

“State Governments have an important role in checking the rise in the prices of essential commodities through a set of administrative and regulatory measures,” the Prime Minister said in a three-page letter to chief ministers, who belong to various parties.

The letter is being perceived by political analysts as a calculated attempt by the Congress-led UPA Government to counter the anticipated onslaught of the opposition in Parliament on the spiralling rise of prices in essential commodities.

Inflation has already recorded a two-year high at 6.73 per cent and there are apprehensions that it could cross the 7 per cent mark. The latest inflation figure will be released on Friday.

Pointing that the Centre had taken a series of measures to ensure price stability and augment availability of essential commodities, Dr Singh said “you may like to put in place an appropriate mechanism for regular intensive monitoring of the prices of commodities in order to promptly detect any short-term fluctuations and take necessary corrective action.”

“The State Governments have a major role in checking prices of essential commodities by curbing malpractices, profiteering and hoarding. An efficient functioning of the Public Distribution System will ensure availability of essential commodities to low and middle income consumers who are particularly sensitive to any rise in prices,” he said.

Listing the various steps initiated by the Centre, including import of 5.5 million tons of wheat, allowing duty-free import of pulses, reduction in duties on palm and sunflower oil, ban on export of milk products and sugar and reduction of import duties for a range of manufactured products, the Prime Minister said the increase in the prices of some of these commodities has also been fuelled by speculation in the market.

Dr Singh also informed them that the Centre had decided to set up a special monitoring cell in the Cabinet Secretariat, in addition to the existing institutional mechanisms in various ministries, to keep a daily watch on the price situation and provide support to state governments as required.

“The state governments can approach the cell directly for any issue requiring quick solution and for removing any bottlenecks in the availability of essential commodities.

Meanwhile, the Cabinet Committee on Prices, chaired by the Prime Minister, reviewed inflation, including rising onion prices and decided to take further measures like cut in taxes and improving supply of essential commodities.

The CCP reviewed the prices and decided that the government will take all the steps - fiscal, monetary and supply management- to moderate inflation, finance minister P Chidamabaram told newspersons after the meeting.

Earlier, agriculture minister Sharad Pawar briefed the CCP about the scheduled arrival of new crop of essential commodities including fruits, vegetables, wheat and pulses.

When asked whether the futures trading in agricultural commodities could be banned to contain inflation, finance minister said the Parliamentary Standing Committee has finalised its report on the issue.

The final view will be taken by Ministry of Agriculture, which will then bring it to Cabinet or CCEA, he said.

Asked whether continuous rise in retail prices of onions worried him, he retorted “I have no magic wand to control onion prices”.

Mr Chidambaram expressed hope that like sugar, pressure on other commodities including wheat and pulses, would ease with the arrival of fresh crops.

He said inflation, which had touched 6.73 per cent early this month, was mainly the result of supply constraints and increasing prices in international commodity markets.

As regards increasing prices of other items like cement, Mr Chidambaram ruled out any intervention by the government, sayings it was more a case of demand-supply mismatch.

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