Admitting that inflation posed a serious threat to the growth momentum affecting the poor and vulnerable sections, prime minister Manmohan Singh today favoured waiving mandi, octroi and local taxes, which impede the smooth movement of essential commodities.

Addressing chief secretaries of states, Singh said that though the economy has been on a high growth trajectory for the past few years, inflation posed a "serious threat to the growth momentum".

"There seems to be a strong case for waiving mandi taxes, octroi and local taxes, which impede the smooth movement of essential commodities," he told the top bureaucrats.He said there was a need for a "paradigm shift" in the institutional arrangements, for improving the availability of various commodities to meet the higher levels of domestic consumption.

Referring to the internal security situation, he said it was "tense in some parts of our country".

He said there has been an unacceptably high level of violence in areas affected by Left-wing extremism and in the Kashmir Valley.

Singh also said that serious concern had been expressed in many responsible circles about the "lack of ethical conduct and probity in our public life".

The prime minister said though major anti-poverty programmes have achieved considerable success, the "quality of delivery of service has not been always as good as it could be, as it should be".

Noting that the recent spurt in prices has been driven by an increase in the prices of vegetables, fruits, milk, meat, eggs and fish, Singh said this posed a different kind of problem, as these commodities were not held in public stock.

"Some of the increase in the prices of relatively superior food products like milk, eggs, meat and fish is partly attributable to rising income levels," he said.

Singh said the lasting solution for price inflation lies in increasing agricultural productivity and production not only of cereals but also of pulses, oilseeds, vegetables and fruits and augmenting the supply of milk and milk products, poultry, meat and fish.

Observing that much of what needed to be done in this regard was in the domain of state governments, he said that the functioning of the Agricultural Produce Market Committee Acts needed to be reviewed on an urgent basis.

Besides strengthening the public distribution system, storage facilities have to be augmented and supply chains needed to be strengthened and dovetailed with organised retail chains for quicker and more efficient distribution of farm products and more remunerative prices for farmers, he said.

"Central Government will continue to provide substantial support in this direction, each state has to work out a suitable plan of action suited to its requirements and its capabilities," the prime minister said.

He said though various social sector programmes for the empowerment of the poor and the disadvantaged have met with reasonable success, "there is a perception that the schemes do not provide the intended benefits to them in full measure on account of leakages and at times tardy implementation."

Singh also asked the chief secretaries to explore ways and means by which the infrastructure deficit in the states could be bridged.

"While we have made some progress in the last six-and-a -half years in improving our infrastructure and tried new models like the public private partnership, much more needs to be done and it has to be done on a priority basis," he said.