Quash levies to curb inflation: FM tells states

Union Finance Minister Pranab Mukherjee on Wednesday urged state governments revise all local level taxes in a bid to bring down prices as the Centre continues to face heat from all fronts over rising inflation figures.

Mukherjee held a meeting with Finance Ministers of states and union territories to get their inputs for General Budget 2011-12 here on Wednesday.

High food prices caused, in part, by severe drought conditions last year, certain supply bottlenecks and rising incomes, have been driving food inflation in India, he said.

The Finance Minister admitted that the events in the food economy in the last two years, indicate that the required supply response to the initiatives in the agriculture sector have not materialised adequately.

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 also reform the the Agriculture Produce Marketing Act (APMC).

He 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.