People's Democracy

Institute An Inquiry Into Wheat Imports

Brinda Karat, CPI(M) MP and Polit Bureau member has written the following letter to the prime minister regarding wheat imports.

I WRITE to you regarding the government decision to import wheat at prices much higher than those prevailing in the Indian market. Since the rabi wheat crop at an estimated 74.5 million tonnes has been better compared to last year, it was possible for the government with a more farmer-sensitive procurement policy to have met the requirements for the public distribution system through domestic procurement. In April-May, the government paid Indian farmers 850 rupees per tonne of wheat. Now it is prepared to pay foreign traders 1600 rupees per tonne of wheat.

As stated by government the present import requirement is 13.06 lakh tonnes of wheat. A quick calculation at the declared prices of import of 5.11 lakh tonnes in July at 325.59 dollars per tonne and 7.95 lakh tonnes at 389.45 dollars per tonne shows that the government paid foreign traders 1934.88 crore rupees for 13.06 lakh tonnes. For the equivalent amount of wheat Indian farmers were paid 1110 crores rupees. The government thus paid 824.88 crore rupees less to Indian farmers. Even if the price of transport charges and other expenditures are added, the price of imported wheat is much more than that given to Indian farmers. Can such a policy ever be defended?

The second issue is the questionable methods for imports. It has been declared that government will be importing 50 lakh tonnes of wheat this year. Obviously such an announcement will tend to further push up prices in a market, which is manipulated by big traders. In May, the government floated a tender for 5 lakh tonnes of wheat and the price of wheat per tonne was stated to be 263 dollars. This order was cancelled by the government on the grounds that the price was too high. However just two months later in July, the government imported the same amount at 325.59 dollars a tonne leading to a loss of 127. 93 crore rupees. Shockingly this was compounded by a further import order for almost 8 lakh tonnes at an even higher rate of 389.45 dollars which meant a further loss of 412 crore rupees. Thus the faulty policies of import have led to a loss of 540.09 crore rupees. What were the reasons for cancelling the initial order? What were the reasons for staggering the tenders when this only benefits big traders to push up prices? I request you to institute an enquiry into the matter.

The privatisation of procurement in the name of helping farmers get a better price has proved to be beneficial not to farmers but to multi-national companies and Indian corporates. More importantly it also results in an erosion of food security. I request you to reconsider such policies so that Indian farmers can get a better price for their produce and the needs of the public distribution system can be met through domestic procurement by official agencies.