June 23, 2006

 

India frees wheat, sugar imports to check inflation

 

 

The Indian government has given approval for wheat imports by private companies, eased restrictions on sugar imports and suspend exports of pulses on order to rein in inflation, Finance Minister P. Chidambaram said Thursday (Jun 22).

 

"In addition (to the government-owned import-export company State Trading Corp), private sector companies--especially flour mills--will be able to import wheat," Chidambaram told reporters after the Cabinet Committee on Prices of the federal government met this morning to discuss ways to cap spiralling food prices.

 

The minister said the government will announce the details of the move Friday.

 

The government has decided to allow sugar imports under the Tariff-Rate Quota system until September, which is the end of the current sugar production season.

 

Details of the tariff rate and quota for sugar imports will be announced later, the minister said.

 

The government has also decided to temporarily ban pulse exports to rein in price rises, he said without elaborating.

 

With these measures, we "believe inflationary expectations will be damped and a measure of restraint will come in the market," Chidambaram said.

 

India's rate of inflation accelerated to 4.72 percent on year in the week ended Jun 3, from 4.68 percent the previous week, the latest Ministry of Commerce and Industry data showed.

 

The central bank expects inflation to range between 5 percent and 5.5 percent this fiscal year to March 31, 2007.

 

The prices of fruits and vegetables are seasonal in nature and are expected to "adjust themselves", Chidambaram said.