As food shortage and inflation grip the world in a pincer move, India despite its remarkable development record in the last decade, finds itself facing an unprecedented 7 percent high that will not be easy to get even with.
By the first week of April 2008, inflation had skyrocketed to a 39 month high of seven percent, as prices of food items including cereals vegetables edible oil, sugar, metals and various manufactured goods continued to surge and threw household budgets out of gear and triggered adverse reaction from the stock exchanges.
The inflation rate, based on whole sale price index had shot up by .32 percent in the week ended 22 March from 6.68 percent in the previous week. It had last touched 7 percent which is a psychologically sensitive issue-three years ago in November December 2004. Reports indicate that retail prices of gram, sugar mustard oil, vegetable oil and onion had risen by over 11 percent in National Capital Region. Grappling with price rise in the recent past weeks the Manmohan Singh government had announced the scrapping of customs duties in all crude edible oils and ban on exports of non-basmati rice in order to rein inflation. The impact of the decisions was not visible the week after when this report was written, but Asian Development Bank said the impact would be felt only in a month's time at the retail level.
The spiraling price rise has had the political parties worried no end. Be it India or China or the less developed countries in Africa or Latin America. Anger over high food and fuel costs has spawned a rash of violent unrest across the globe in the past six months. From the deserts of Mauritania to steamy Mozambique on Africa's Indian Ocean coast, people have taken to the streets. There have been tortilla riots in Mexico while villagers have clashed with the police in India and hundreds of poor have marched for lower food prices in Indonesia. Experts attribute several reasons for the spiraling cost of living record price of oil driven by strong demand and insecurity in major production areas have pushed up fuel pump costs, making anything that has to be transported to market more expensive. Rising consumption of livestock fodder and other foods by China and Indian and the use of land and crops for bio fuels have boosted demand. Erratic weather has trimmed harvests in some growing regions.
With political parties in India in no mood to overlook the severe inconvenience to the people in India, the Congress led United Progressive Alliance government has initiated steps to rein in inflation, but there is no surety that they will bring any relief in a hurry. The opposition Bhartiya Janta Party has claimed that UPA government had grossly mismanaged the food economy and pushed the country into an era of food insecurity. The BJP also warned of a worsening situation on the price-rise front. In fact according to the opposition, price rise is expected to turn out to be the single most important election issue for the number of state assembly elections coming up beginning with Karnataka and leading up to the Lok Sabha polls in May 2009. Taking a dig at Prime Minister Manmohan Singh who is an economist, the party ridiculed the UPA for failing to manage the food situation despite having a well-known economist at the helm of affairs. The Left parties, supporting the UPA government have not been polite either and have threatened to launch an agitation soon against the high prices.
Agronomists like Dr. MS Swaminathan who is heralded as father of the Green Revolution in the country in the 1970s, feels: given our current per hectare output, there is scope for at least 50 percent increase in yields. If we use the technology currently available in the country. According to Dr Swaminathan, statistics bear this out in the case of rice, where for example the average rabi crop yield is 3.12 tonnes per hectare in 2006 almost double the average the farmers were getting in the 1970s, according to data from International Rice Research Institute Manila. In wheat India has till recently more than doubled its production but both crops are much less than what China has been able to produce in the corresponding period. The agronomist feels the stagnation in food grain output is a public policy failure that can be reversed.
Government's policy of minimum intervention post reforms had led to a systematic neglect of the agriculture sector and the countryside. Overall government expenditure in rural development dropped from an average of 14.5 percent in 1986-90 to 5 percent in 1995-2000. in hindsight, it is now agreed that among other things, this led to an increasing disconnect between what farmers were doing to grow their conventional crops and what agricultural scientists were doing in their laboratories giving the go by to the prevailing network of extension services that has led to a probable gap of 200 percent in samples produced in research stations and demonstration stations. Even at this late stage, when food prices have been rising steadily for more than four months now, a review of the food situation would underline that procurement would be crucial to government's efforts to maintain buffer stocks and supplies for the large number of welfare schemes that have been expanded in the last few years. The outgo of foodgrains, even it is on paper for welfare schemes like mid-day meals and food for work is going to be around ten lakh tonnes a month. These commitments arise out of the common minimum programme and even if they are not accurately monitored, provisions to be made.
Another head like public distribution system for low cost food grain availability earmarked for below poverty line consumers, has met with criticism from both Finance Minister and Agriculture Minister in recent months, but political considerations will make sure that these cannot be wished away. On the other hand the farmers are now unwilling to part with their crop to sell to government agencies, unless it is at par with rates offered by private buyers. The only other option that the government may resort to--import--is a very expensive one with also the possibility of being given the short shrift of receiving sub-standard, unfit for human consumption. In other words then, India and its present government are poised to be taken in by the devil or the deep sea.
Even if one were to trust the belief that the public has a short memory, this one situation will be very difficult to face or forget or wish away.
Shibani Dasgupta, NPA
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