December 22, 2015
Saugata Roy speaks on the issue of price rise
I would like to speak on this Price rise issue in the fag end of the session on the discussion initiated by P Karunakaran.
I shall not cast my net so wide. All I will say that he had said that inflection is under control. The fact is led by a spike in food prices specially pulses consumer price index based inflation for November rose 5.41 percent from 5 percent in October. So whereas general inflation may be under control food inflation is rising that is the cause of concern for common man.
Sir I think there is something wrong with the macro management of the economy because worldwide commodity prices are falling. Oil prices have fallen; crudeoil is now being sold less than 35 dollars per barrel. So in India every price should have fallen. Still we see the cost of some essential commodities rice particularly pulses and also some times sodium some time tomatoes will start 60 rupees per kg.
The whole problem is that the government has not passed on the benefit of oil price on to the consumer. Rather the Finance Minister is taking the petroleum sector as a milch cow to get more excises out of the same. If he had the lower price of petroleum products this inflation would not have touch this level. This is wrong macroeconomic policy.
Sir the price of Arhar Dal which is commonly use by people rose to 200 rupees per kg. Now we have to remember that the retail and wholesale inflation where food inflation in this fiscal was down. But the inflation in pulses is undesirable in a country where average Indian spends 5 percent of his food expenditure on pulses. Because pulses are the only vegetable proteins available to the poor people. Now supply constraints, due to lower production and higher demand – due to rising incomes more people are buying pulses in rural areas – has led to the spike in prices. There have been three consecutive monsoon shocks affecting the Kharif season output and weather disturbances in March 2015 affecting the Rabi crop. Global pulses price are elevated and the rupee is weak. Because the rupee has fallen to 67 rupees per dollar. That means it is costly to import today. The macro management is again wrong.
Sir not only Arhar, Moong and Urad have been selling on higher side at Rs 112 and Rs 152 per kg whereas Gram Dal was retailing last month at Rs 75 per kg. This is the highest price recorded in the last ten years.
Now at this point I must mention why is the pulse price so high? Let me mention that India has become self sufficient all food items in the last 10 years. We only import two items – dal and edible oils. For pulses Rs 10 to 25000 Cr are spent every year for import. For edible oil we spend Rs 30000 Cr.
Now does the Government have any plans to improve the production of these things? Unfortunately it is true that there is problem about pulse production. In West Bengal for instance, the farmers they are spreading the dal seeds after the Kharif crop has been harvested. So they do not do separate cultivation for dal. The other problem is that this dal is not seen as a commodity to be produced because there is a fixed procurement price for rice and wheat. So if the farmers produce more rice and wheat can get money through procurement prices. There is no proper mechanism for proper procurement of dal.
Sir, we had the green revolution in wheat. We have a revolution in rice production. Today 100 million tonnes of rice are produced in the country nearly 100 million tonnes of wheat are produced in this country which is why the Government can give the whole thing in a food security system. But production of dal is about 15-17 million tonnes. We have not given enough attention to the cultivation of dal if I may mention that.
Now let me come to Ram Bilas Pawas Ji. What has the food ministry done after the dal prices started rising? They introduced zero import duty for dal. Also they set up a price stabilization fund at a cost of Rs 500 Cr. Also they said government will import 500 metric tonnes of Tour dal. Now this is a drop in the ocean.
The political base of the BJP consists of traders in different cities. And wherever a BJP government is in power, they think it is a good opportunity to raise prices and make money. Some traders are responsible for this.
What are the main places we import pulses from? The biggest import centre last year was Canada, followed by Australia and Russia. Most of the dal comes from Vancouver. But it is so far away that it takes time for the dal to come.
There is a motivation… Due to a shortfall of monsoon this year there was a shortage of pulses because the import was delayed. Actually, against a demand of 23 million tonnes, our production will be around 17 million tonnes. If we had imported pulses on time, we would not have faced this crisis.
Ramvilas ji also cannot do anything because import is not in his hand. Import of dal is totally left on the private traders and these people delay the import till the prices can rise further. Government must thus ensure import takes place in time, that too from countries that are closer to India, like Myanmar or African countries.
The ideal step should be to produce more pulses in the country. The farmers are unwilling to grow pulses due to production and price risk and also declining profitability. A high fluctuation is prices has meant that farmers are seldom sure of getting stable returns. This has led to large-scale substitution of areas of pulse cultivation with other high-value crops which give comparatively higher returns.
Growing pulses is additionally risk-prone as they are monsoon-dependent. Pulses are generally grown in areas where there is no irrigation. Barely 16 per cent of the total area has access to irrigation thus making it highly dependent on monsoon.
On the one hand we want more agricultural production. And on the other hand, Mr Jaitley is cutting the plan outlay on agriculture. In 2013-14, agriculture budget was Rs 17788 crore and in 2015-16 the agriculture budget was Rs 11647 crore. So, compared to 2013-14 actuals, this year’s BE has come down substantially. Unless you spend more on agriculture, how can you ensure you will be self-sufficient in any crop? Unless you introduce the modern technological methods to grow crops, you cannot increase productivity.
What has the Minister insisted on? He instructed the States to carry out dehoarding. Sir, out of 17 million tonnes of production how much has dehoarding yielded? Only 1.33 lakh tonnes. This is lying in government godowns and only 26000 tonnes were disposed off. What is the point of dehoarding if you do not distribute the stocks after that?
Rise in price of pulses is often followed by onions and vegetables like tomato. My fear is, unless the government takes a positive policy to increase the productivity of edible oils, prices of edible oils will also rise. We are concerned for the poor man. Pulses are the only protein. Now we are depriving our countrymen of the main vegetable protein. It has become a luxury instead of a necessary item to build the bodies of our children. Even milk prices rose.
I ask the Minister to be a bit harder on traders; do not leave import to private traders. I am sure Ramvilas ji is doing his best. We must keep the interests of the common people of the country in mind.
