Watch Tower: Real Beneficiaries of Price Control

  • 28/04/2008

  • Central Chronicle (Bhopal)

Now the question arises who is getting benefited by these measures and who is getting hit? We all know that about two third of our population is dependent on agriculture for its sustenance. After ignoring the alarm bells of price rise for long, government is taking desperate measures now. Most of its measures are related to the prices and availability of food grains and other food items. Government reduced import duty on certain food items and restricted the export of food grains by duty restructuring. Government measures have shown some results and prices have come down to a certain extent. This whole process of containing price rise, however, leaves certain questions. Answers of these questions are important for not only a large section of population but for the future food security too. Most of the measures taken by the government are related with the trading of food grains and other food items. All these measures are supposed to bring down the prices and government is planning further such measures. Now the question arises who is getting benefited by these measures and who is getting hit? We all know that about two third of our population is dependent on agriculture for its sustenance. Life of this population can become better only when it gets good value of its products. Today globally the prices of food grains have increased and if the Indian farm produce is exported then this large population is going to be benefited. Today the price of wheat in global market is one and half times than the prices in Indian market. By government restrictions the Indian farmer and the two third population of India is being deprived from getting better remuneration. By applying these measures, government is benefiting only urban population of the country at the cost of the rural majority. Even it could be understandable and acceptable if these measures would have brought prices down the way government envisaged. If we look at the figures then we will find that now trader is buying wheat from farmers at the prices which are 40% lower than previous prices. Consumer, however, is getting same thing only at 10% reduction. This clearly shows that benefit is going to the traders and middlemen only. Recently central government asked four state governments to import wheat for targeted PDS. Central government will give same subsidy which it gives to FCI. When this subsidized wheat will come in the market then the prices of local wheat will also go down. All these measures are indirect taxation on farming. When government can give subsidy to imported wheat then why cant it subsidies the Indian wheat for BPL consumption? When the prices of food grains are much higher in open and international market then why government is continuing with MSP mechanism and benefiting only traders and babus by their collusion? Why government wants farmers to remain dependent forever on the government dolls like loan waiver schemes? Why it is not allowing them to be benefited by the global food grain price rise? Now reports are coming that government is thinking of banning future trading in farm produce. There are allegations from left parties that large scale betting is going on in commodity market which is affecting the prices. The easiest way out for the government is to ban it as there is no lobby to oppose it. Leftists are opposing it only on ideological ground. Every 3-4 years there are scams in share market. Hundreds of people have lost crores of rupees in these scams. Did government put a ban on share trading? Then under whose pressure government is thinking of banning future trading in agricultural commodities despite the opposite advice given by Dr.Abhijit Sen committee. Its report clearly says there is no proof to suggest that future trading is affecting the prices of the commodities in open market. In fact it has put the onus on price rise on government intervention in the form of MSP mechanism. There are larger aspects of the situation too. Prices of other commodities like steel, cement etc were also increasing in last two years. Government, however, did not take such type of measures which it is taking for farm produce. Why government has not put ban on the export of iron ore despite the warnings by the experts that in future country may have for its own consumption? Naturally on other fronts, government of the day work under influential economical lobbies. Larger interest comes in the picture only when it is farmers and their produce. All the steps taken by the government are going to affect Indian farming in the long run as they will make farming still less remunerating. More and more people will move out of farming as they will see that while staying with the farming they are the losers. It is very clear that successive governments have tried to do only patch work in agricultural sector. It is system of governance which is at fault and creating the problem. Government does not want to change its system as it requires lot of political will and any change will work against the lobbies of vested interests. Still it wants to be seen as doing something. Hence it is taking all these steps that in fact won't give desired results and farmers too will feel alienated. Vivek Maheshwari