Once again, Rahul Gandhi criticised the Narndra Modi government on the issue of price rise both inside and outside the Parliament. With pulses reaching Rs. 170 and tomatoes being sold at Rs. 100 per kg, Congress came down heavily on PM Modi accusing him of breaking all records on price rise. The common man has been affected with the rising prices of essential commodities and food retail inflation at 7.55 per cent, a 21 month high. It appears that this government is not concerned about reducing prices. In the inexplicable world of India’s food math, production of pulses slipped down by 12 per cent in 2014-15 compared to the previous year. As a result, prices of these essential items have soared up by more than double across the country. The government is crawling to retrieve the situation, especially because an important election is scheduled to be held in Uttar Pradesh next year. It’s a kind of an onion moment – where merciless spikes in onion prices in the past led to political disturbances.
Modi government celebrated its second birthday a few days back. While addressing the people, the PM spoke about Make in India, Connect India, Digital India, but he does not talk about price rise. Not once did he mention about pulses, potatoes and tomatoes. There were allegations that Government is helping big pulses traders.
The farmer toils endlessly and gets a minimum support price of Rs. 50. Then, he goes to the market and buys his own dal for Rs. 200 per kg. The very same government has waived Rs. 52,000 crore of the corporates. However, so far this government has failed to address the farmers and housewives of the savings amounting to Rs. 2 lakh crore it has made from the slump in the crude prices.
Under NDA reign, price of pulses and vegetables have gone over the roof. In 2014, the price of tomato was Rs. 18, which has shot up to Rs. 55 in 2016. Urad and tur dal were priced at Rs. 70 and 75 in February 2014 which has gone up to Rs. 160 and Rs. 180 this month. There was a gap between the minimum support price for tur dal.
Naturally, India is the largest producer and consumer of pulses in the world. It consumes around 23 million metric tons (MMT) of pulses. This is an aggregate of a variety of pulses including gram (chana), tur or arhar, moong, masoor and urad. Pulses are the main source of protein for a very large number of people in the country – each 100 grams contains about 32 grams of proteins and several amino acids not made by the body. So, it is an essential part of Indian meals. But, India’s production of pulses has stagnated at around 18-19 MMT for several years now.
This balance has been maintained at a huge cost to the people. A population growing at the rate of about two per cent per year in the past decade should have quickly overtaken the pulses rate of growth that was less than half of that. This has not happened because the amount of pulses consumed per person has relentlessly declined over the past several decades. This year, the balance has been rudely and dramatically upset. In 2014-15, production of pulses was clocked in at 17.4 MMT – a decline of 2.4 MMT or 12% over the previous year. This was caused by various factors including unseasonal rains, pests, and unprofitable prices offered to farmers even as import duties were waived.
The minimum support price for tur dal given to the farmers was Rs. 45 whereas its price in the market was Rs. 75. Now, the MSP has risen to Rs. 50, but the price of the pulses has reached Rs. 180. So, there is a gap of Rs. 130 in the NDA government. “During the Congress government the difference between the MRP (Maximum Retail Price) and the market price was Rs. 30, but today it is Rs. 130. Pulses are a top component of India’s spiralling inflation. The government has raised imports and placed buffer stock on the market to help consumers. But the main problem is that India produces a miniscule amount of pulses compared to many other countries.
Apart from these factors pertinent to food and vegetable, overall inflation at a broader level always have a “lag” effect which is around 18 to 24 months. The central bank has done really good work in last one and a half year, due to which inflation may drop by 1 or 2 percentage points. Moreover, problems of inflation are not purely “monetary problems”. In an economy like ours where wages are getting better and more people are crossing poverty line and have started aspiring for better food, it’s a fight for “availability”. Suppose our production of fruits, vegetables, milk and eggs increase by 1% per year. While, the people who want to consume these commodities increases more than 1% due to better wages, better need for nutrition, better education as well as aspirational status among them which results in more people chasing fewer quality goods resulting in higher prices. These supply side problems won’t be resolved immediately. You need years to solve such problems. Whatever you sow today, you will reap in future. What UPA has sown in 1st term, they reaped at the end of 2nd term.
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