(Weekly Organ of the Communist Party of India (Marxist)
August 02, 200
Targeted Price Rise
A most cruel attack is being mounted on the livelihood of millions of aam aadmi through the continuing relentless rise in the prices of all essential commodities. This is happening at a time when the Wholesale Price Index (WPI) is in the negative and Consumer Price Index (CPI) is growing at a rate of over 10 per cent. This mismatch, in itself, has serious implications and reflects a deep structural defect in our economy.
Clearly, therefore, this is a `targeted' price rise, ruining the life of the aam aadmi, due to the faulty policies of the government which seeks to further compound the miseries of the people by `targeting' (read: denying) both the public distribution system and other subsidies. On the other hand, consumers of non-essential commodities, i.e., mainly producers, benefit from a negative WPI. This mismatch is also because of a deliberate bias in the weightage given to the commodities that are considered in the calculation of the WPI. Food and other articles of essential consumption have a weightage of only around 20 per cent in the WPI. The reality, of course, is the exact opposite. The 77 per cent of Indian people who survive on less than Rs. 20 a day spent most of their meagre earnings on food. It is this section that is being targetted for such a cruel assault on their livelihood.
There has been a massive jump in the prices of all essential commodities including cereals, pulses and vegetables by nearly 50 per cent between June 2008 and 2009. In the month of July, this trend has considerably accelerated. This is particularly true with arhar dal which shot up from Rs 68 per kg on July 4 at Kendriya Bhandar to Rs 76 on July 10. As we go to press, the price is close to Rs 100 a kg in the open retail market. Similar is the fate of all other dals. In a country where `dal roti' is the staple subsistence diet, such price levels are pushing millions into levels of absolute poverty.
prices of vegetables show no different trend.
The vagaries of the monsoon and the fears of a fall in the
foodgrains and cereals is compounding
the situation. So far, the
monsoon has led to a reduction in paddy transplantation in 13.66 lakh
This is a shortfall of nearly 25 per cent. But the problem is not
delayed rainfall alone. In states like
Unless there is a very firm intervention by the government, the aam aadmi cannot be protected from a further erosion of livelihood conditions. The UPA-2 government, unfortunately, has not, so far, taken any decisive action on this front. What is required immediately is to universalise the public distribution system and distribute all essential commodities through this network. The current thinking of the government, as reflected in the budget, however appears to be to the contrary. In the name of `targeting', the definition of the BPL is being so manipulated that crores of people will be left out from receiving foodgrains and other essential commodities at affordable prices. As we noted in these columns earlier, the Food Security Act proposed to be legislated, in fact, deprives the poor of even the existing benefits that they are receiving under the Antodaya scheme.
been a feeble tendency in sections of
the government to explain this mismatch between the WPI and the CPI and
abnormal hike in the prices of essential commodities due to hoarding. It is the government's responsibility to
regulate the market and keep a vigil on
hoarding. The central government tries to pass the buck on to the state
governments saying that the latter are
primarily responsible for this. The fact
of the matter is that it is the central
government that will have to take the
responsibility in ensuring that such
manipulation of prices through hoarding is not permitted.
The reality is that such a price rise is
occurring universally in all the states
This unprecedented price rise is primarily due to the fact that large-scale encouragement is being provided to speculative trading in the commodity exchanges through future trading in essential commodities. The Forwards Market Commission of India, in its fortnightly reports, informs that the total value of trading at the commodity exchanges between June 1 and June 30 this year was Rs. 15,64,114.96 crores. The corresponding figure for 2007 was Rs. 2,21,888.06 crores. In other words, within these two years, the total value of trading in the forward markets jumped by over seven times. This is a gigantic volume of speculative trading. Clearly, such trading is far outstripping the stock of the commodities or the capacity of production in the country. Therefore, the only way profits can be made from such huge value of trading is to ensure that the prices of these commodities relentlessly rise, mercilessly burdening the people.
In this year's budget, the UPA government far from tackling this phenomenon of speculative trading has done the exact opposite of encouraging it further by abolishing the commodities transaction tax. If the trend of relentless price rise in essential commodities is to be contained and the livelihood of aam aadmi protected, then the UPA government must ban all futures and speculative trading in essential commodities.
The protests organised by the Left parties inside the Parliament and outside through popular struggles must be intensified in the days to come to at least ensure that the status of the aam aadmi is not further assaulted by such a cruel rise in prices of essential commodities.