Thaindian News

New Delhi, Jan 19 (IANS) Finance Minister Pranab Mukherjee Wednesday asked state governments to review local levies like mandi tax and octroi duties, and reform agriculture produce marketing act to help control soaring inflation. “All local level levies like mandi tax and octroi duty, which add to prices of food articles and impede smooth movement of essential commodities, should be reviewed,” Mukherjee said during his meeting with finance ministers of different states and union territories to get their inputs for the General Budget 2011-12.

He asked state finance ministers to “urgently look into the supply management of items that are driving the current round of food inflation, in particular the local factors that are widening the gap between the wholesale and retail prices”.

“The bottlenecks in the supply chain have to be removed,” he said.

The finance minister also urged state governments to review and reform the Agriculture Produce Marketing Act (APMC) in states where it has not been addressed so far.

“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,” Mukherjee said.

“This leaves no incentive for the farmers to upgrade and inhibits private investments in the sector and farmers and consumers both lose out in the process,” he added.

According to latest data, annual food inflation was nearly 17 percent and inflation based on wholesale prices was 8.43 percent, much higher than the comfort level of 4-5 percent.

In his pre-budget consultations with state finance ministers, Mukherjee expressed hope that the differences on the proposed goods and services tax (GST) will be resolved in the very near future, a statement issued by the finance ministry said.