BIG ACTION! Crackdown by Modi govt on prices of essential commodities like pulses - LANDMARK ORDER issued

In a consistent effort to crackdown on prices of essential commodities like pulses, Government of India has issued a landmark order where it has imposed stock limits on pulses applicable to wholesales, retailers, millers and importers. The Removal of Licensing Requirements, Stock Limits and Movement Restrictions on Specified Foodstuffs (Amendment) Order, 2021 has been issued with immediate effect from today i.e. 2nd July 2021.

Under this order, stock limits have been prescribed for all pulses except Moong until 31st October 2021 for all States/UTs. Stock limit will be 200 MT (provided there should not be more than 100 MT of one variety) for wholesalers, 5 MT for retailers and it will be the last 3 months of production or 25% of annual installed capacity, whichever is higher, for the millers. Lastly, for importers, the stock limit will be the same as that of wholesaler for stocks held/imported prior to 15th May 2021 and for stocks imported after 15th May 2021, stock limit applicable on wholesalers will apply after 45 days from date of customs clearance. It has also been stated that if the stocks of entities exceed the prescribed limits, they have to be declared on the online portal (fcainfoweb.nic.in) of Department of Consumer Affairs and have to be brought within the prescribed limit within 30 days of the notification of this order.

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As a result of a series of consistent actions taken by the Government of India, a declining trend in the prices of pulses and edible oils is being witnessed. Additionally, in the past 6 years, the highest ever total production of major pulses amounting to 255.8 LMT took place in 2020-21 with Gram (126.1 LMT) and Moong Dal (26.4 LMT) particularly breaking all of their past records of production. Since the entire country has been reeling under the impact of the pandemic, the Government has been committed to adopting timely measures and has substantially alleviated the concerns and anguish of the common man. This development has been received with widespread relief by all the sections of the society.

Taking its vision for an ‘Aatmanirbhar Bharat’ forward, the Government of India has formulated a multi-pronged strategy to ensure that the prices of essential commodities like pulses remain controlled. As a part of the Price Monitoring Scheme under which the central government assists the state/UT governments in setting up price monitoring centres, there has been a 50% increase (57 centres in 2014 to 114 centres in 2020) in the number of such price monitoring centres. Incidentally, within the first three months of 2021 itself, 22 more centres have been added. This step will ensure that the reporting of data on prices from all across the country becomes more representative.

As a part of a large-scale digitisation effort, with a commitment to improve the quality of price data, a mobile app was launched by the government on 1st January 2021 to report on prices on a daily basis from the price monitoring centres while showing an actual market location and a dashboard has been developed to generate analysis of price trends and projections. Also, the services of a marketing agency are being utilised to assess the ground level situation.

A mechanism for retail intervention was introduced in 2020-21 to enhance the immediate impact of released pulses from the buffer to cool down retail prices. Moong, Urad and Tur Dal were offered to the States/UTs for supply through retail outlets such as FPS, Consumer Cooperative Society outlets etc. Costs related to milling/processing, transportation, packaging & service charge of NAFED were borne by the Department itself. Additionally, during October, 2020 and January, 2021, 2 LMT of Tur Dal was disposed of through Open Market Sales to control the prices. Furthermore, pulses have also been supplied for welfare and nutrition programmes at MSP for Tur and at 5% discount on MSP in case of Chana.

More recently, guided by the principle that buffer should be built through increased procurement from farmers during bumper production and released to cool down during periods of volatility, effective interventions in the form of increased procurement and increased buffer stock targets were made for price stabilisation. Targeted size of pulses buffer to be maintained in FY 2021-22 under the Price Stabilisation Fund (PSF) has been raised to 23 LMT and chana buffer has been increased to 10 LMT. Also, under the PSF, procurement of 1 LMT of summer moong at MSP is being undertaken in Madhya Pradesh as the quantity offered by the state for procurement under Price Support Scheme (PSS) exceeded the quantity approved for it. This move will increase the income of the farmers as they will receive remunerative prices for their produce and ensure that they do not reduce their area of cultivation for that crop during next season.

In March-April, there was a sustained increase in the price of pulses. The need for an urgent policy decision was felt to send the right signal to the market. For the first time ever, a mechanism has been adopted to declare the real time stock of pulses all over the country, for keeping a check on the undesirable practice of hoarding, which leads in turn to artificial scarcity and price escalation. In order to enable real-time monitoring of the prices of the pulses and ensure transparency, a web portal has been developed by the government to declare the stocks held by different stockholders. States/UTs were requested by the government on 14th May 2021 to register and declare the pulses stocks of Millers, importers, dealers and stockists under the EC Act, 1955. This step has received a positive response as so far there have been 7001 registrations and stocks worth 28.31 lakh MT have been declared.

Parallelly, to enhance the domestic availability and smoothen the inflow of pulses import, changes have been made in import policy by shifting Tur, Urad and Moong from restricted category to free category for the period from 15th May 2021 to 31st October 2021. Additionally, 5-year MoUs have been signed with Myanmar for annual import of 2.5 LMT of Urad and 1 LMT of Tur, with Malawi for annual import of 1 LMT of Tur, and MoU with Mozambique for annual import of 2 LMT Tur has been extended by another 5 years. These MoUs will ensure predictability in the quantity of pulses being produced abroad and exported to India, thus benefiting both India and the pulse exporting country.

Moreover, to soften the prices of edible oils, a mechanism has been institutionalized involving nodal offices of the Customs department, FSSAI, Plant Quarantine division to monitor the speedy clearance of food commodities like Crude Palm Oil (CPO) at shipping ports. Also, to protect the interest of consumers, the duty of CPO has been cut by 5% from 30th June 2021 until 30th September 2021. Pertinently, this reduction is only valid until September as the government is committed to protecting the interest of its farmers as well. This reduction will bring down the effective tax rate on CPO to 30.25% from the earlier 35.75% and will, in turn, bring down the retail prices of edible Oils. Further, the duty on Refined palm oil/Palmolein has been reduced to 37.5% from 45%.

A revised import policy for Refined Bleached Deodorized (RBD) Palm Oil and RBD Palmolein has been put in place from 30th June 2021 under which they have been removed from restricted to free category. To further support streamlined and smooth processes at the ports, particularly to speed up clearances delayed due to COVID-19, Standard Operating Procedure for faster clearance of consignments of imports of pulses and edible oils have been prepared. The average dwell time for clearances of consignments has come down to 6.9 days from 10 to 11 days in case of pulses and 3.4 days in case of edible oils.

Despite the disruption of the supply chain and other economic consequences due to the pandemic, the government has proactively taken all possible steps to ensure easy access and uninterrupted supply of essential commodities to all of its citizens across the nation. It will continue to work in mission-mode to cater to the needs of its people and take its vision of ‘Self-reliant India’ forward by not only focusing on building its domestic capability but by aligning its policies like the National Oilseeds Mission with foreign trade.