Aam Admi martyred by Food Inflation watched by Maa Mati Manush

Some time ago it was being suggested by the know-alls that the reason for the rising food prices in India is the increasing purchasing power of the rural people who have benefited immensely from MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act ).

The reason being put forward for the massive increase in the price of essential commodities was the success of the “pro–poor” schemes of the government which reflected in increased demand for food. How ridiculous is that? The most badly hit by the sky rocketing food prices are the aam admi ( maa mati manush ). A similar callous and preposterous statement was made at the World Economic Forum, Davos, by the Deputy Chairman of the Planning Commission, Montek Singh Ahluwalia, when he stated that the recent increase in petrol prices was justified. He did not stop at that. He went on to say that diesel prices would also be decontrolled and increased in the near future. We still do not know what Mamata Banerjee, who touts herself as the messiah of the poor and the marginalised, and her party, TMC, thinks about these issues.

The real reasons that are behind the northwards journey of food prices are very different from what we are being made to believe. The common man is facing the brunt of the neo-liberal policy pursued by the UPA II government of which TMC (the champion of maa mati maush) is the second largest partner. TMC has so far never spelt out its economic policies. Does it have one? Do they know that each political party has to have an economic policy based on which it frames its policies which are then pursued by its government? 

As measured by the WPI (Wholesale Price Index) the inflation rate in India has been rising continuously over the past three years. The overall inflation has been driven by the inflation in food.

 WPI Inflation ( year – on year )

2006-07	2007-08	2008-09	2009-10
7.99	5.97	9.07	14.52

Source: Office of the Economic Adviser, Ministry of Commerce and Industry, GoI

The latest data reveals an overall inflation of 8.4% in December 2010 while the food inflation stood at 17.05% in the week ending 22nd January 2011. In India where the population is growing at a rate of 1.3% per annum, the demand for food will naturally grow. However, neither food production nor its availability has grown commensurately. The annual per capita cereal availability, in India, in 2008-09 was only around 165 kg. What is intriguing is that the amount is the same as was available in 2000-01. During the same period, i.e. 2008-09, the per capita cereal availability in China was over 290 kg and in the US it was over 1000kg. As if, this was not enough. During 2009-10, despite high GDP growth the per capita cereal availability in India fell to 161 kg.

Even though the know-alls insinuate that the higher purchasing power of rural India is driving the food inflation upwards, the reality is dreadfully different. Both the income and consumption growth is getting disproportionately concentrated with the 10 to 15 percent of the creamy layer of the population. This section of the population is the sole beneficiary of the GDP growth. According to the Arjun Sengupta Commission report, 77 percent of the Indian population spends less than Rs. 20 per head per day. How someone with such meager purchasing power drive the consumption level high is any body’s guess.

The immediate reason causing the sudden surge in the prices of specific food items, like onions, is illegal hoarding to create a simulated scarcity to fleece people. Speculative activity or future trading has also created pressures on the market. Unscrupulous traders, powered by a bumbling government, are responsible for this.

The PDS, which can play a very critical role in moderating such food price escalation and controlling inflationary expectations and tendencies of hoarding, has been deliberately weakened. In most states, the role of the ration shops, state agencies like the NAFED etc. and consumer cooperatives in food distribution, have been whittled down.

Food production, in India, has not kept up with the growing population. Agriculture is in deep crisis. The government is not doing enough to raise agricultural productivity. There has been a deceleration in agricultural growth. The reason for this could be that the economists who are running the government apparently believed that the food demand would not, or may I say should not, increase much even in periods of significant income growth and among a population that has some of the worst nutrition indicators in the world. And may be because of this they did not see any need to work towards increased supply of food. The annual average farm growth which was 4.72 percent in the 8th Plan Period (1992 – 97) has slowed down to 2.13 percent in the 10th Plan Period (2002 – 07). “The primary answer to food price inflation lies in improved agricultural production,” said C. Rangarajan, Chairman of the Economic Advisory Council to the Prime Minister. The cuts in fertilizer subsidy and hikes of diesel prices are also contributing to the rising food inflation.

The know-alls argue that the only solution to the problem of high food prices is to bring in FDI in retail. They would like us to believe that this will reduce wastage in storage and costs of transport of food items, cut out the intermediaries in distribution and provide food more effectively to consumers at lower prices. However, this argument does not hold water. If the traditional supply chains are so deficient, why is it that such enormous hike in food prices did not happen earlier? Despite equally rapid GDP growth and the same system of distribution that is now being faulted, why was food inflation relatively low in the period until 2006?

If the problem is inadequate cold storage facilities and inefficient distribution network from the farm to the market, why proactive steps were not taken to correct the ills? The government would like us to believe that the only solution to these problems is the involvement of corporate retail (FDI).

International evidence indicates that corporate monopoly in food trade typically increases distribution margins rather than reducing them. The stalwart leaders of the ruling Congress make it a point to talk about the aam admi at every given opportunity. They would want us to believe that their “pro-poor” policies have worked wonders to the lives of the have-nots of this country. But the stark reality is that they are trying every trick in their knowledge to pave the way for FDI in retail food market. Corporate retail will drive the small retail out of business. If Wal-Mart and other global and local corporate are allowed to enter the retail sector, many farmers will be driven off land, into debt or suicide. The much talked about Second Green Revolution, as envisaged by the government, will be brought about by Monsanto and Wal-Mart, will undermine our farmers’ livelihoods and our food sovereignty.

TMC in general and Mamata Banerjee in particular have not said much on this burning issue, which directly affects the lives of the poor, other than blaming the state government. Has anyone ever heard Ms. Banerjee spell out what she would do, if she became the chief minister, to control the rising prices? Has anyone ever heard her enunciate what she would do to assuage the untold sufferings of the common man who are the worst sufferers of escalating food prices? Has any one ever heard her defining her party‘s policies in allaying the difficulties faced by the small and marginal farmers? She makes a big show of her empathy for maa, mati manush at every opportunity that she gets. Scandalous amount of money is spent in putting up banners and hoardings to pay homage to maa mati manush. Books are written and paintings are done. But when it is time for her to come out in support of that same maa mati manush she is busy calculating her chances of becoming the chief minister. Hence she cannot afford to take a position which might antagonize her coalition partner and ruin her chances of making a grand entry to the seat of power. What is more worrying is the lack of any particular economic policy of this party.

We, therefore, need to be very careful while electing our next state government. We have to elect a party which has a very clear economic policy. We have to keep in mind, while electing, that the government is genuinely pro-poor and will work for the welfare of the common man and not pander only to the privileged few. The people of West Bengal should be very vigilant and keep opportunistic political parties at bay. Parties like the TMC, which are not governed by any ideology or programmes, are out to fool the public to further their own narrow agenda. We should be on our guard and not allow these opportunists to mess up our lives and livelihoods.