20 April 2008
Unprecedented Price Rise Of Commodities
Finance panics, crashes and manics are nothing new, but their magnitudes and the speed at which they arrive are indeed qualitatively a different and politically more dangerous phenomenon. The sense of vulnerability or economic insecurity is arguably greater today than in the earlier periods. The central government is under criticism from its UPA allies as well as the opposition parties on the issue of rising prices of essential commodities. None in the government can explain the inflationary trend in detail today.
There has been an enormous increase in the prices of commodities during the last one year. Different ministers in the UPA government are trotting out varied excuses for not being able to control inflation. The leaders of the ruling party say, ‘the price rise and food shortage are the result of global factors; nothing to do with us’. The Left parties allege that allowing the entry of multinationals and corporates in the agricultural sector are the main cause for alarming price rise. They demand measures on a war-footing to control the price rise, to ban the export of essential commodities and on-line trading practices.
Through the reform periods, we have pushed millions of small farmers to shift from food-crop to cash-crop. The acreage under food-crop has reduced across these years. And we also exported millions of tonnes of grains. We exported at prices cheaper than those we charged poor people in the country for the same grain. The idea was that we had a huge surplus of grains and could well afford to export which were not true in real sense. All leaders propagate in the public meeting that agriculture in India is not just a food producing machine, but is the backbone of the livelihood security system for nearly two-thirds of our population. Grain outputs have been stagnating for over a decade and now the gap between supply and demand is growing. The reason for this fall in the availability of food grains is that our farm output is just not growing; In the last ten years when agriculture was growing at a low 2%, there was in fact zero growth in food grains. This stagnation is hitting us all now.
The Left parties have urged the Prime Minister to hold a meeting with Chief Ministers to ensure strict implementation of Essential Commodities Act so that action can be taken against hoarders and black marketers. Similarly, the Union Agriculture Minister can call a meeting of the State Agriculture Ministers to discuss measures for controlling the spiraling prices of food grains. Experts feel that the money being spent on importing wheat, oil and other commodities at exorbitant rates could have been saved if sufficient funds had been allotted for developing rainfed areas.
The Union Agriculture Minister has said the price of wheat and edible oil has risen sharply because many countries have started cultivating grains like corns and shifted oils towards production of biofuel. But the opposition parties have charged that India too is using agricultural land for biofuels. The Indian governance has been strong on assurances and weak on performance. Therefore the results have not been commensurate with the growing needs and aspirations of the Indian masses especially the poor. Economic development does not depend only on fiscal and monetary reforms or other related economic adjustments in foreign trade and import and export policies. Price rise would become the most potent electoral weapon in the hands of political parties in the next few months when several State Assembly elections are due.