NEW DELHI: Wary of the political fallout of rising prices of key food items, government on Thursday scrambled to control damage.

The Cabinet Committee Prices (CCP) decided to allow import of sugar and more wheat, and banned export of pulses in an attempt to enhance supply of commodities in the domestic markets.

The decision came amid growing criticism of the government for its failure control the spiralling prices, and was seen as an acknowledgment of the severity of the problem.

The meeting itself saw Prime Minister Manmohan Singh agreeing with railway minister Lalu Prasad and others that the issue could erase all the good work that the government had done.

There was consensus on starting a dehoarding operation, and taking steps to check speculation in the commodity futures market.

Announcing the measures, finance minister P Chidambaram tried to buffer the government against the rise in prices of vegetables and fruits, saying that it was seasonal in nature.

There was little doubting government's anxiety, however. Already reflected in Congress’s "solidarity with common man" pitch on Wednesday, it was evident from the fact that the agriculture ministry sent three notes to CCP — explaining the present situation, as also the remedial measures.

The finance ministry, too, submitted two notes — one proposing import of urad daal, gram and sugar; and the other on macro economic perspective on prices and growth prognosis, confirming the government was fully in the damage-containment mode.

In an indication of urgency the matter has acquired, by the time the CCP meeting ended the government appeared to have firmed up a decision to import 10 lakh tonnes each of wheat and sugar, and 45,000 tonnes of urad and gram.

The fear of being hoisted by the price petard has already led the government to take a fresh look at two of the measures it had prided itself on — reducing food stock, and encouraging the commodity futures business.

The government had justified the reduction in food stocks to reduce its subsidy bill. Rising prices have forced a relook.

With wheat stocks falling below the buffer norms, the government is now realising the effect of its policy and has decided to put in place a longterm roadmap factoring in the shift in consumption and production patterns.

The CCP also tried to address the criticism that the commodities futures had contributed to the price rise, entrusting cabinet secretary B K Chaturvedi to initiate steps to put an end to speculative transactions, even as a bill to strenghen regulation is pending parliamentary approval.

When the decision to import 10 lakh tonnes comes through, government will have imported 45 lakh tonnes of wheat since the price issue burst on the scene.

Finding the additional quantities, however, may not be easy, considering the global shortage. It is also fraught with the risk of inflaming the markets.

Chidambaram later told reporters that the details would be made public in a day or two.

In addition, the government decided not to restrict import through government agencies like State Trading Corporation but also allow private players — especially flour mills and bakeries — to import wheat directly.