People's Democracy

Curb The Price Rise

Sitaram Yechury

THE approaching festive season with both Diwali and Eid coming close on the heels of each other would not be much of a cause for celebration for a vast majority of Indians. This is because the prices of all basic items that go into the preparation of festival sweets have gone up alarmingly compared to last year. The price of besan, the basic ingredient for making sweets particularly laddoos, has gone up by 60 per cent (Business Standard, October 11, 2006).

The prices of various essential commodities have increased in a range from 12 to 84 per cent. This, mind you, is the wholesale price. At the retail level, the consumer may well be paying much more. 

As discussed in these columns earlier, the prices of essential foodgrains like dal, have also shot up alarmingly. At the wholesale market, the prices of urad dal, wheat and chana have gone up 84 per cent, 68 per cent and 23 per cent respectively compared to October 2005. This data is from the national commodities and derivative exchange (Ncdex).

This is precisely the point that we have been making. By allowing futures trading in essential commodities, the government is permitting speculative transactions that keep on raising the prices. It must be underlined that the people who participate in the Ncdex are not the farmers but traders. The produce from the farmers has already been acquired obviously at prices much below what is being quoted at the exchange. Because of the speculative transactions on the exchange, and the consequent rise in prices, the common consumer ends up paying higher prices. The net result is that the farmer does not benefit from these high prices and the consumer has to bear the burden of higher prices. It is the trader who makes a killing in the bargaining.

Thus, it would be naïve to presume that a higher market price of essential commodities means a higher remuneration for the farmer. Such deliberate disinformation is being spread by vested quarters who advice the consumers that they should not complain about the high prices since the farmer requires higher incomes, the lack of which is leading them to commit distress suicides. On both counts – farmers’ remuneration and the causes for distress suicides – these pundits are wrong.

As discussed above, these high prices do not convert themselves into higher remuneration for the farmers. The main cause for the continuing and growing distress suicides is the inability of the farmers to repay the debt they have sunk into. Unless this is addressed in right earnest, one cannot even approach the issue of prevention of such suicides. 

Since this UPA government assumed office, we are informed that institutional credit to the agricultural sector has doubled. This is good but not sufficient. Inspite of this, nearly two-thirds of our farmers cannot access institutional credit and hence, therefore, are trapped by the local moneylender whose exorbitant interest rates virtually cripple them. Given the low price he gets for his produce, the inability to repay the debt keeps mounting leading ultimately to distress suicides.

If prevention of such suicides are the concern, then the government must simultaneously ensure the availability of institutional credit to the farmers at low or no interest and guarantee a minimum support price that shall, at least, ensure a livelihood. It is not surprising, therefore, that the packages offered by the prime minister and the finance minister have not made any dent on the rise of suicides. The packages have not addressed these two vital issues.

On the top of such misery comes this price rise which the common Indian cannot simply afford. Even the price of milk has gone up to Rs 18.50 a litre in the national capital compared with Rs 14 last year in the open market. If this price rise has to be contained, then it is inevitable that futures trading in essential commodities must be banned with immediate effect. Further, the distribution of all essential commodities must be undertaken by the government through the fair price shops. Instead, the government is busy seeking to further curtail the already emaciated public distribution system. Crores of people below the poverty line are yet to receive their cards for purchasing subsidised rice and wheat. 

If the festivals have to truly be the time for celebrations, then this price rise must be arrested and the prices of essential commodities brought down. All concern and talk of the aam admi is meaningless if these measures are not immediately undertaken by the UPA government. 

Stronger pressures through popular mass actions must be brought upon this UPA government to ensure the protection of India’s vast majority of people from such cruel and crippling price rise.