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New strategies urgently needed to reduce food prices

Wednesday, 25 June 2014 - 6:00am IST Updated: Tuesday, 24 June 2014 - 10:06pm IST | Place: Mumbai | Agency: dna

With the prices of staple dietary items like onion, potato and tomato increasing by the day, common people across the country are hard put to afford these essential food items. Coming soon after the ascendancy of the BJP-led government at the centre, such a repeat price rise in food articles (witnessed during the previous UPA government) risks snapping the honeymoon normally extended to the new dispensation. 

If the spurt in prices of vegetable items is not enough to exacerbate the woes, the Railways have slapped an across-the-board hefty hike of 14.2 per cent in all passenger classes with an additional 6.5 per cent in freight. This hike in train fares and freight is bound to increase the  transportation costs of foodgrains, food produce and industrial intermediates such as steel. Ironically, the cost of sending cargoes through train remains still lower than truck haulage charges on trunk routes by private transport operators!

It could be argued that the move of announcing train fare and freight hikes  -- coming close on the heels of the unexpected spike in wholesale price inflation -- was not a shocker.  Prime Minister Mr.Narendra  Modi already told his party rank and file earlier at the Goa conclave that the previous government had left the treasury empty. And that bitter economic pills must  be administered to propel the economy to recovery.

On coming to power, the  BJP government  was lucky to find that the  consumer price index inflation for May stood at at 8.28 per cent on a year-on-year basis - a figure  lower than the 8.59 per cent for April. And the index of industrial production (IIP),  on the negative zone for months on end, showed the first signs of green shoots by logging growth of 3.5 per cent in April. Exports in April revealed a surprising early bounce, after three consecutive declines.

This is what the Union Finance Minister  Arun Jaitely posted on Facebook on June 16: “The state government(s) should take effective steps to ensure that speculative hoarding is discouraged”. His counterpart, the Agriculture Minister Radha Mohan Singh, was not far behind in stating that “production of onions, potatoes and tomatoes is higher this year than last year. A shortfall in supply is either due to hoarding or mismanagement by onion –producing States”.

Official data show that in 2013-14 onion production is 192.98 lakh tonnes as against 168.13 in the previous year. Potato crop production 46.6 lakh tonnes compared to 45.3 lakh, and tomato 191.03 lakh tonnes as against 182.27 lakh tonnes.  India exported 13.58 lakh tonnes of onion in 2013-14 against  18.22 lakh tonnes the previous year.   Still, the authorities found it expedient to slap high minimum export price (MEP) on onion to discourage exports.The Food Corporation of India (FCI), sitting over a mountain of rotting grain far beyond the threshold of safety, has been directed to offload five million tonnes of rice.  The Centre has also asked states to exempt perishables such as fruits and vegetables from the state-administered Agriculture Produce Marketing Committee (APMC) Act so that growers can sell their produce directly to the consumers bypassing mandis and middlemen!  Aside from all, a disbursal drive by the state machinery would be stepped up to ease the supply position.

The move to shift the onus on the states and to resort to reform measures for grappling with supply shortfalls - and discouraging exports - is a tried, tested and failed strategy for containing food inflation! Any repeat of the same strategy by the new government can only spell disaster for the economy and the people. 

A free-lance journalist based in Delhi.


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