UNION FINANCE Minister Pranab Mukherjee on Wednesday held discussions with the State Finance Ministers as part of his pre budget consultations, and asked them to play their part effectively in controlling inflation.
Addressing the State Finance Ministers during a Pre-Budget deliberations here, Mukherjee said: "There is a need for you to urgently look into supply management of items that are driving the current round of food inflation, in particular local factors that are widening the gap between wholesale and retail prices."
Mukherjee said that the Central Government has taken measures to facilitate imports and, where required, restrict exports to ensure the supply of essential commodities.
"Bottlenecks in supply chain have to be removed. States have to take steps to ensure agriculture grows and create efficient distribution and marketing infrastructure," he added.
While advocating a cut down on wastage, Mukherjee urged them to review all local level levies like ''mandi tax'' and ''octroi duty'', which add to prices of food articles and impede smooth movement of essential commodities.
He said that there is strong case to review and reform the Agriculture Produce Marketing Act (APMC) in States where it has not been addressed so far.
Mukherjee further said that the government-regulated markets are not only imposing taxes and facilitating large commissions and fees for the middlemen, but also preventing the retailers to integrate their enterprise directly with the farmers.
Recalling his last Budget speech, the Finance Minister said that the Government had outlined a four-pronged strategy to encourage agriculture covering (a) agricultural production; (b) reduction in wastage of produce; (c) credit support to farmers; and (d) a thrust to the food-processing sector.
He said that the basic intention was to consolidate on gains already made in green revolution area while directing resources for productivity gains in other areas, namely the Eastern region and specific crops like pulses.
Mukherjee further said that there has been a conscious effort to improve growth in agriculture credit in the past few years, which has helped investments in the sector.
He said that the ''Minimum Support Prices'' have also been revised periodically to ensure remunerative prices to the farmers and this has enhanced their returns as well as the capacity to invest for improved productivity.
However, it has also resulted in strengthening of cost-push factors in inflation.
On the fiscal front, Mukherjee said that in addition to growth in States'' own taxes due to improved economic performance, the States have received higher share in Central taxes from the 13th Finance Commission.
"The 13th Finance Commission has substantially augmented grants-in-aid to the States. The 13th Finance Commission has also laid down a roadmap for fiscal consolidation," he added.
Expressing hope, Mukherjee said that this increased availability of resources with the States would enable them to adhere to the roadmap suggested by 13th FC without putting any adverse pressure on their development spending.
While summing-up his remarks, the Finance Minister said that the issues that he had highlighted have to be tackled collectively without entering into any blame game.
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