Comprehensive plan alone will check price rise
The Union Government's moves to check hoarding in a bid to contain the price of essential items like food grains and vegetables and combat the adverse impact of a poor monsoon are welcome, though it must said that hoarding by private traders is not the only cause of the rise in prices. Governments in the past have contributed to the phenomenon by regularly raising the procurement prices for wheat and rice to levels that exceeded the inflation rate. As a result, farmers sold large quantities of food grain to the Government-owned Food Corporation of India, which in turn many times failed due to systemic loopholes to provide the commodity to the market at the right time. On top of that, there have been directives from Governments that the procurement prices should not fall, which meant that more and more grains arrived in the ill-managed FCI godowns. We have had reports of how grains rotted in the godowns. The FCI ended up, though unintentionally, as a ‘hoarder'. The new Government will have to address this issue. Meanwhile, it has taken three steps that can supplement the other efforts including the one mentioned above. The first is that it is considering making hoarding a non-bailable offence and having fast-track courts to try hoarders. A crackdown on hoarders has begun. This should be sustained because hoarding is not going to end with the stabilisation of prices and the blowing over of the current crisis. As a long-term measure, therefore, the tweaking of laws and making changes in the Essential Commodities Act to combat hoarders cannot be faulted.
The second step the Government has taken is to ask States to do their bit since the Centre does not control the procurement of all essential items. Indeed, outside of food grain procurement, it has no control over other products that have a direct impact on food inflation. For instance, there is no central procurement of vegetables and milk — two items that are the most vulnerable to price fluctuations for a variety of reasons. The State Governments have a major role to play, and it would be wrong of them to pass the buck on to the Centre, as some non-NDA regimes have begun to do. The Rs 70,000 crore irrigation scam in Maharashtra, in which funds to enhance irrigation facilities allegedly got siphoned off, is a classic instance of how a State contributes to food inflation. The scam left vast tracts of cultivable land bereft of irrigation and led to a shortage of produce — which in turn added to the wholesale and retail increase in the price of food grains. The third measure the Union Government has decided upon is to establish a price stabilisation fund to absorb the sudden increase in prices of essential commodities and ensure that the end consumer does not have to bear the brunt of the increase. This is in line with the suggestion Prime Minister Narendra Modi had made during his campaign speeches, and must be implemented at the earliest.
It is possible, as senior Ministers of the Government have been saying, that the increase in prices of essential commodities is a temporary phenomenon. There is a cycle of rise and drop in prices, and the pre-monsoon time is one such phase when prices generally go up. This is small consolation to those who are hit the hardest by the rise. The Modi regime, which has come on the promise of containing inflation and prices of essential commodities, has its task cut out.