The adverse impact of even drought on agricultural production was treated with indifference with assurances that the government had piled up huge stocks of foodgrains, which will take care of supply and prices of farm commodities. Forward trading in agricultural commodities was not only allowed but applauded as a “reform” measure. When the Congress leadership realised that the opposition parties were making a political issue of food inflation, the first reaction was to blame it all on Agricultural Minister Sharad Pawar, who is only an alliance partner. When that too did not work to its advantage and the government headed by Prime Minister Manmohan Singh was attacked for its failure to control food inflation, a Chief Ministers' conference was convened to discuss the problem.

The conference saw an attempt to put the responsibility for food inflation on the state governments because agriculture comes under their jurisdiction under the Constitution. This was not wrong because supplies from buffer stocks of food grains for public distribution are held by the Central Government; nor were the needs of the states taken care of. These was also default in respect of import of pulses and cooking oil which was required to check the rise in prices of these commodities in the domestic market. Tinkering with prices of sugar by the Central Government too had led to steep rise in its prices. The gross mismanagement of prices showed up so glaringly in the Chief Ministers' conference that Congress President, Sonia Gandhi was constrained to call for the Food Security Act to be brought up on the agenda to tackle food inflation. .

The call for Food Security Act cannot be expected to make any impression as a measure to control food inflation. There has been further rise in prices of agricultural commodities in the wake of the chief ministers' conference and Mrs. Gandhi's call for a food security act. This is only a populist move which can fructify only after a long time when the coming agricultural year will have to reckon with hopefully better irrigation facilities and rains in non-irrigated areas as well as rebuilding of a system which will ensure public distribution of food for vulnerable sections of the population in rural as well as urban areas. The existing PDS is in a shambles. It will also take a long time for the Food Security Act to be passed in Parliament and to be notified before it can be implemented.

It is not at all surprising that what the UPA government intends to do will not be able to tackle food inflation and ensure food security. It may not be out of context to take note of the Prime Minister's stand at the CM's conference on this problem. The call for controlling hoarding and black market in foodgrains is without legal sanction and there are no regulations on private trade in foodgrains. On the contrary, the Union Government has been releasing large quantities of foodgrains from the buffer stock to private traders for open market sales while supplies to the States under the public distribution system have been inadequate.

The Prime Minister said: “I think our distribution system is hopelessly outdated, with the exception of a few states, and it needs a complete overhaul. The state governments should give focused attention to developing market intervention mechanisms which can act as a supplement to the public distribution system.” He said there were adequate stocks of rice and wheat to maintain food security. “The Rabi prospects are very encouraging. Post -monsoon rains have been good. All this augurs well for our ability to stabilise food prices at a reasonable level”. He also urged the chief ministers to introspect why more attention is not being paid to highly cost-effective means of raising productivity and production.

What Dr. Manmohan Singh really said was that the need is to stabilise food prices at their present high level which is beyond the reach of not only those below the poverty line but also of the lower middle classes. Secondly, he made it clear that he will allow the market forces to function freely, which includes forward trading also side by side with the public distribution system. Further he believes modernisation of Indian agriculture for increasing production and productivity lies with the latest research from developed countries, including the US. He did not say a word about increasing irrigation and land development as well as strengthening of domestic extension services for small farmers which have been grossly neglected in the last two decades.

The PM also ignored the clamour for fixing support prices of agricultural commodities at levels higher than what are determined on the basis of cost of production. But the UPA government has gone for reckless accommodation of populist pressure on farm prices. The spokesmen of rich farmers too have been encouraged to demand and secure prices which surpass even export prices in the global market. This has hurt the small farmers and farm workers who are struggling to eke out a bare existence.

Another critical issue in India's farm sector is the fall in its share of gross domestic product and incomes. The reform policy-makers are of the view that the fall in the share of agriculture in generating gross domestic product is a positive development in the structure of Indian economy! It is indeed the starting point for the Indian economy to become modern and India to become a player in the global order. According to the 1991 census, however, there was already a movement of work force away from agriculture. The GDP share of agriculture in the last two decades of economic reform policy has already come down from about 25 per cent to 17.4 per cent in 1990-2000. It went down to 15.9 per cent in the next five years. The change in the base year to calculate the structural change in the Indian economy to 2005, it is expected, may show some similar but bigger result in this direction. The fall in share of agriculture in GDP has, however, not led to the transfer of working people to urban industry and services which have been the focus of economic growth after India won political independence. The result has been increasing poverty in rural areas even as a thin upper crust of skilled workers and professionals has won salaries and perks of global standards. The sharp structural imbalance of society is the cause of growing tensions - economic, social and political - and law and order problems which the ruling elite is now trying to curb with a heavy hand. (IPA Service)