Food prices will come down in January: Montek

Seeking to allay concern about the skyrocketing food prices, Planning Commission deputy chairman Montek Singh Ahluwalia saiys that the government is taking steps to control the inflation, and that he expects food prices to come down in January.

Addressing the media on the second day of CII's national leadership meet in Kolkata through a video conference – he could not make it to the event – he mainly blamed hoarders and speculators for the price rise; and ruled out an immediate intervention by the Reserve Bank of India.

Ahluwalia's comment came a day after C Rangarajan, chairman of the economic advisory council to the prime minister (EAC), suggested that the RBI could tweak the cash reserve ratio to suck out liquidity from the system.

''I am of the view that you would see a decline in food prices in January. What is seen now is a speculative build-up,'' Ahluwalia said. He argued that the impact of drought was less than what was initially feared.

Ahluwalia admitted that the rise in vegetables prices – including potatoes and onions, the mainstay of lower-income households - was a matter of concern, and said the food and agriculture ministry would take appropriate action. Unlike rice or wheat, of which it holds stocks, the government cannot make potato and vegetables more affordable through ration shops.

He also said that with international prices often ruling higher than domestic prices, large-scale imports were not practicable. "As food prices have increased steeply in global markets, the scope of containing them through imports gets restricted, unless it is subsidised. But subsidising imports is a debatable issue, with farmers opposing the idea. The government is looking at all options to tame inflation in food prices," Ahluwalia said.