People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 12

March 23, 2008



Stop This Price Rise

THE rise in the prices of essential commodities continues relentlessly. The recent protests organised by the Left Front with the participation of many MPs and MLAs from West Bengal, Kerala and Tripura joined by CPI(M) workers from nearby states, once again, highlighted the abject failure of the UPA government in containing this price rise.

Both on the floor of the parliament and outside, the CPI(M) has been demanding that the government must immediately take three steps to contain this run-away inflation. First is to ban futures/forward trading in the 24 essential commodities identified by the Commission for Agricultural Costs and Prices. Even the parliamentary standing committee has separately demanded ban on futures trade in 25 agricultural commodities. The UPA government�s official analysis that the price rise is due to increased liquidity in the economy is erroneous in the sense that it misses the basic point. The rise in prices of essential commodities is primarily taking place due to widespread speculation in the forwards market. The global rise in the prices of foodgrains is also mainly due to such speculative trading. Under pressure from the Left, the government has so far removed pulses, rice and wheat from the forwards market. However, unless all essential items, including edible oil, are prohibited from speculative trading, this price rise cannot be combated.

Secondly, the decision of the government to drastically cut the supply of foodgrains for the public distribution system (PDS) network to the states is compounding the problem further and fuelling further rise in prices. As pointed out through these columns earlier, the supply of foodgrains to Kerala has been cut by a whopping 82 per cent and for West Bengal by 44 per cent. Compared to last year, 139 lakh tonnes of foodgrains supply to West Bengal has been cut. In Kerala, for the 49.4 lakh APL ration cardholders, the centre used to release 1,13,420 tonnes of rice. This has now been drastically cut to 21,334 tonnes, i.e., by nearly 90 per cent. Kerala gives 35 kg per month of rice to each APL cardholder. This would require 1,72,900 tonnes. Instead, a little over 20,000 tonnes is being released by the centre. In Tripura as well, there has been a substantial reduction in the supply of foodgrains. This is the surest way to dismantle the PDS further jeopardising food security. Further, this is bound to put pressures on the price front as well.

The official explanation given by the government in the parliament is that these reductions are due to the fact that many states are not utilising the allocations made to them. While this may be true of some states, none of the Left ruled states comes under such a category. All across the country, it is only the Left ruled states where the PDS functions efficiently. The delegation of the Left leaders which met the prime minister has urged upon him to intervene and restore the original supplies of foodgrains to the states.

Thirdly, this price rise which is eating into the vitals of the vast majority of our people can only be arrested if the public distribution system is universalised and expanded to distribute all essential commodities. Instead, the UPA government appears hell-bent to supply foodgrains only for BPL categories and is aiming to completely eliminate the APL from the PDS system. This would be disastrous. Apart from creating severe problems of food insecurity to vast sections of our people, this would add to the already soaring inflationary spiral.

These three immediate steps must be initiated by the government if it is serious in its desire and effort to stem this price rise. This protest by the Left is only the beginning of the strong popular pressures that are bound to intensify in the days to come to compel the UPA government to take these immediate and other required measures to arrest this price rise.