Supplies Department forming process begins

KATHMANDU, July 21: The government has initiated steps to set up Supplies Management Department (SMD), a new institution that has been prescribed for addressing supply bottlenecks and adding strength to its market intervention for fighting price rise. [break]



In this connection, the Ministry of Commerce and Supplies held a meeting with senior officials of Ministry of Agriculture, Ministry of Home, Department of Commerce and other government agencies on Tuesday to chalk out plans for creating the new set-up.



"As strong market monitoring, intervention and action will be key for its success, the meeting laid emphasis on effective coordination among different government authorities," said Ganesh Dhakal, who heads Supplies Division at the ministry.



The government is setting up SMD after its efforts to rein in food prices through a small unit at Department of Commerce (DoC) failed to deliver results. The establishment process has been geared up after the budget laid emphasis on the need of new institution to make government´s market intervention more effective and fruitful.



At present, the government has been mobilizing state-owned entities such as National Food Corporation and National Trading Corporation for distributing edible oil, sugar and rice at cheaper rates than regular market prices. Centralized distribution system and low scale of intervention have failed to compel private distributors to lower commodity prices.



The meeting mainly stressed the need to make the new institution powerful enough for acting strongly against cartel and syndicate -- two crucial non-economic factors that have fueled price rise, causing the inflation to soar to 12 percent for 2008/09.



Ministry of Commerce and Supplies also formed a separate committee with director general of DoC as coordinator to recommend steps that the government must take to check rising food prices.

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