Thursday, January 14, 2010


The food prices have become prohibitive. There is definite sign in the society of less tolerance as the cost of pulses and vegetables have hit the roof. There is a strong possibility in the country of developing riot like situation out of hunger. The tolerance limit of Indian population for inflation is 10% maximum. In case we compare year to year rise in price from last year inflation has reached almost 19% up in food commodities. This is really intolerable for middle class and below. Why food prices have gone up so suddenly? Was it only due to drought condition and lower rainfall alone? The government has been holding Monsoon responsible for the rise in food prices! Is it the only cause of high food prices? We do not believe that. According to us failure of Monsoon is one of the main reasons no doubt. But it is not the only reason. The Government cannot be held responsible for the failure of Monsoon. It has no power to control failure of monsoon. It has no role to in ushering in draught. But Government’s failure was in not taking timely steps in abolishing import duties in food products. When they realized that failure of monsoon could hit the agriculture it was too late. Sugar prices went down as soon as import duties were lowered. The Deputy Chairman of planning commission, Montek Singh Ahluwalia recently said that Prices of Food product would come down in January 2010. No special measures are required to be taken. This observation is in variance with the observation of C Rangarajan, .chairman of prime Minister’s Advisory council who suggested RBI to take effective steps to recast CRR.

Hunger may engulf around one billion people unless common people of developed nations contribute personally in cash. The appeal for help has been circulated already by none other than UNO. Is there any remedy to bring down the food prices in India? Yes, government may consider a few urgent steps .Montek admitted that cost of vegetables are matter of concern but he said “rice and wheat can be kept stored but it is impossible to store vegetable longer”. He is right but we have a suggestion that to bring down the cost of vegetables, eggs and fish the state governments can withdraw inter state movement taxes, if any. Beside the state government can directly negotiate prices of Fish and eggs through Government and supply to retail venders. We are sanguine if Assam Government directly deals with Andhra government and with the main suppliers, the cost of fish and egg would come down immediately. If effective steps are taken immediately then States do not have to wait till January end. The Bengal Government has taken similar steps and the prices of potato have come down to Rs. 9/- a kg and is expected it would be Rs 7/- a kg soon when most of the Indian state are selling at Rs22 a kg.

The Public distribution system of our country need to be revamped and strong measures is taken to augment agriculture sector. The private sector should be allowed to import food grain and stock commodities for four months to distribute as per direction of states. It is now apparent that a famine like situation may develop and devastate our country. Assam would not be an exception to this scene. Assam never experienced famine in the past. But. The time has changed. Assam has now negative growth rate in agriculture sector. It might trigger famine like situation unless government steps in. Assam Government has taken some steps but are those enough? Certainly not. Had the steps taken by Government would have been successfully implemented there would not have been such rise in prices. Agriculture is the state subject. All the individual states have responsibility to augment supply of food staff. Yes, it is a fact that State Government cannot import food staff or it cannot bring down the tariff rates of imported staff. But it can certain tackle two most important issues. The state Government can abolish all the interstate taxes and rates, if any, on the movement of food commodities. Food commodities while traveling from Punjab and Hariyana get costlier by 15% to 18% by the time it reaches Mandis OF Delhi situated only few miles away. The eggs and fish get costlier while traveling from Andhra and from UP (Luckhnow) to Assam.

This is the time Government of India should consider declaring internal emergency on the basis of food shortages. It should urge state government to abolish all rates and taxes on agricultural commodities atleast for six month. Perhaps central government would not be able to handle the situation alone as the agriculture is the state subject. The commission on agricultural product is also as high as eight to twenty percent. The wholesale commission and retail commissions are as high as 30% percent. This issue is very much political sensitive. But respect6ive government must muster enough courage to tackle the issue in case states want to avoid riot like situation DURING NEXT YEAR. The government should have adopted proactive policy instead of reacting to helpless situation as is being done now.
If these policies would have been taken four five months earlier prices would have come down as the sugar prices have come down.

The question has been raised if central government is in a position to take effective steps to tackle the situation as the agriculture is a state subject. We would like to remind them that it is the central Government who ushered in green revolution despite the agriculture being a state subject. Why then in such emergent situation central Government would not be able to handle the situation NOW? The central Government can compensate the state Government for abolishing rates and taxes on movement of food products within the states, if any.

The questions have been asked as to why agriculture has gone down so badly in India after stable productions for

THOUGH DROUGHT IS A TRUE STORY YET INVESTMENT IN AGRICULTURE WAS TOO LOW. In India the subsidy amount is very high and investment is too low. The investment in Agriculture is only 20% of Agriculture GDP. The Government has always considered increasing the subsidy but did not care enough for the enhancement of investment. The procurement prices were revised from time to time. The cultivator should get fair price no doubt. But market should be allowed to settle the Fair prices when subsidy have been given .More importantly the role of middlemen could be controlled. The need of the Day now is to see that AGRICULTURAL COMMODITIES FLOW DIRECTLY FROM Cultivator to market without much intervention of the middlemen. Perhaps elimination of middlemen would be impossible task for State Government due to political compulsion .This is the reason why in some of the states large scale grocery stores have become unsuccessful despite involvement of big industrial houses...

Addressing WORLD ECONOMIC FORUM’ in New Delhi recently, Mr. Pranab Mukherjee admitted:
“The massive investments in agriculture sector and infrastructure would be required without which it would not be easy for Asia's third largest economy to compensate for the loss in exports through domestic demand. It is not easy for us to diversify the market overnight and make up the loss so we shall have to wait for some time," he said.

India at present is facing the very harsh situations where poorest of the poor of our country have to go to bed hungry. But at this crucial time when the country expects some stringent steps from the government’s side, it is defending itself by saying that food crisis is a global problem. Some how the central Government has waken up now to take effective steps. The Government assured that none should be worried about the availability of food grains for the government would continue to import food items to meet any supply shortfall and scarcity food.
We wrote earlier also that .Assam’s population survived famine like situation in the past mainly due to frugal food habits and due to non dependence on outside supplies. With the increase in population food habits have changed and dependence on outside supplies have increased. The government must strengthen public distribution system, crack nexus of middlemen in fish supplies and develop storage space for sufficient food grains and help small growers to produce green vegetables, rice and fish. THE ARRANGEMENT CAN Be MADE TO BRING IN FISH FROM Andhra government’s fishery department and distribute to retailers at pre determined price and also distribute through area wise Kiosk of Assam’s fishery department.
The Economic Advisory Council to the Prime Minister advocates the role of corporate sector in agriculture and says that activities other than food grain production like commercial crops, horticulture etc. have contributed most to agricultural GDP. The council recommends removal of subsidies related to grain procurement and REVAMPING of Public Distribution System.
"We are in the midst of the most severe food crisis in the world’s history," Brown said. "This is not your mother’s food shortage... but a chronically tight food situation, a serious and long-term problem.’’
From Africa to Asia, countries are scrambling to buy or lease land overseas to grow crops and feed their people. China, which has to feed the world’s largest population, has taken the lead by contracting land in Tanzania, Laos, Kazakhstan, Brazil and others. India has set its eyes on Uruguay and Paraguay, while South Korea is looking for farming deals in Sudan and Siberia. Libya and Egypt for their part have been negotiating deals to lease land in Ukraine. Assam Government must protect Farm land. The large entrepreneurs must be encouraged to0 cultivate in collaboration with local land lords and cultivators. Agricultural sector of India is mainly covered by small and marginal farmers, so our government should promote small scale agriculture. Corporate sector could be ushered in as an experiment in joint sector basis where land lord and cultivators becoming partners with corporate HOUSES on a selective basis. Can Assam can experiment with this model and outshine Hariyana and Punjab.

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