June 17, 2006

By Gyan Pathak

India, under the rule of the UPA government has lost self-sufficiency in food grains even at national level that was achieved with great efforts of many well intentioned people from all walks of life including agricultural scientists, politicians in the earlier governments, and farmers of the countryside. People were hoping for the next level of achievement, that is self-sufficiency at the household level, but the greed of wealth creation has cost us dearly. Erratic monsoon is simply an alibi of the Manmohan Singh government.

It was just before the Congress led UPA took over the reins at the Centre in May 2004, India was second largest exporter of rice and the eighth largest exporter of wheat. The then BJP led NDA government had allowed these exports for their greed of wealth creation for the benefits of few at the cost of the nation. At that time, the export policy was bitterly criticized for the fear of losing self-sufficiency. People were aware at that time of the intention of the then government to scuttle the status and effectiveness of the Food Corporation of India (FCI). Governments were after the FCI for even longer period, especially after the implementation of the new economic policy in 1992 and subsequent WTO agreements.

Let us recall how the BJP-led NDA government had distorted the earlier practice of export of food grains. Exporters used to secure the entire quantity of food grains form FCI. It had facilitated exports of around 30 million tonnes (mt) over the last three years. However, in the year 2003 - 2004, a new food grain export policy was introduced. That was the last year of the NDA rule. The government enabled the exporters to undertake direct grain purchase and claim reimbursement of the cost they incurred on freight and other 'WTO compatible' rules.

All these policy changes were done in the name of surplus food grains in the National pool. FCI had never been enabled to handle the buffer stock and a situation was deliberately created to impress upon the people that the country was facing the 'problem of plenty'. FCI did not have even the storage capacity, what to talk about efficient handling.

When UPA government came, some more follow up actions were taken. It gave free hand to Private traders and MNCs to procure food grains. And this year the government has failed to procure its total requirement of wheat even for the Public Distribution System, and has gone in for wheat imports totaling 35 lakh tonnes.

In the new policy framework, the private traders and MNC angencies like Central Warehousing Corporation purchased about 60 lakh tonnes of wheat at slightly higher prices than the government agencies. Government agencies could procure only 92 lakh tonnes, even when it increased bonus on Minimum support price.

Who gets benefit, who are at loss

Who are getting benefits of all these policy changes? Who are at loss? And many more questions are haunting the public mind.

Even during the procurement season, the rate of flour was running in between Rs 13 and Rs 14 per kilogram in the open market. Now the prices are running anywhere between Rs 15 and Rs 18 per kilogram for average quality flour.

With the hoarding of food grains became legalized, private traders and MNCs has purchased wheat in a great quantity. Now they are in a position to sell it at much higher rates in domestic as well as in the international market. In case of exports, the traders and MNCs will get export subsidy and other reimbursement.

Now a high level meeting chaired by Union Food and Agriculture Minister Sharad Pawar on Friday, June 16, 2006, decided to purchase food grains from traders in the domestic market, and then if there will be a need, the government would go for imports. This will give further profits to traders, not farmers or other people. It is obvious here that the stock purchased in this manner would cost more to the exchequer and that would be treated as food subsidy to the people of the nation while it would actually go to the big traders and MNCs pockets.

The government has decided in the meeting a more erroneous policy, that one the one hand does not rectify the earlier mistakes, and on the other opens the door for more trouble in the future. According to the decision, it was agreed to have a long-term policy to first procure food grains for the PDS at the minimum support price set by the Agriculture Commission for Costs and Prices. In case the government fails to get its requirement for the PDS at MSP - as this year - then it would buy its specific balance requirement from the market at commercial rates. The higher subsidy involved would have to be borne by the Centre. It was suggested in the meeting that imports should be the last resort.

It is crystal clear that the government is moving in a direction that may make the country more insecure creating unavailability of food grains at affordable prices to the common man.