People's Democracy

Editorial

DROUGHT & PRICE RISE

Act Urgently

THE onslaught on the livelihood of the overwhelming majority of our people is bound to intensify as an alarming drought situation is arising in large tracts of the country.  This will compound people's misery who are already groaning under the relentless rise in the prices of all essential commodities.  As we have seen in these columns earlier, the mismatch between the Wholesale Price Index (WPI) and the Consumer Price Index (CPI) continues to widen.  While the former turned negative at minus 1.61, the latter, particularly for food items, is rising by over 10 per cent. 

On top of this comes the drought situation which, apart from causing a direct devastation in large parts of rural India, will further impact upon the price levels of essential commodities due to shortfalls in production.  Speaking to the state chief secretaries on August 8, the prime minister said that the country is facing "a difficult situation...  Agricultural operations have been affected in several parts of the country causing distress to farmers and their families.  A deficit of more than six million hectares has been reported in paddy, which is the worst affected crop." 

According to official sources, in the first two months of the monsoon, the rainfall deficiency is already over 25 per cent.  In the worst drought year of the last two decades, 2002, overall deficiency in rainfall for the entire four-month period was only 19 per cent!  As we go to press, two-thirds of all districts in the country had received deficient rainfall.  A total of 141 districts in six states have been declared drought-affected.  24 of the 35 states/union territories received scanty or deficient rainfall. 

As a result, only 58 per cent of the normal area for paddy cultivation has been sown - a shortfall of over six million hectares.  Area under oilseeds is five lakh hectares less than last year.  Major decline is there in groundnuts.  Sugarcane coverage is short by over one lakh hectares.  The Centre for Monitoring Indian Economy (CMIE) has projected a 4.7 per cent fall in India's agricultural production in 2009-10.  This comes over a 1.5 fall in 2008-09. 

Clearly, this serious situation is bound to impact upon the livelihood of the vast majority of the people by pushing up the prices of essential commodities even further.  Under these circumstances, speculative trading and hoarding of essential commodities will continue to raise the price levels even further. The prime minister had said, "We should not hesitate to take strong measures and intervene in the market if the need were to arise." 

Already even before the impending drought conditions arose, speculative trading in essential commodities was playing havoc with the prices.  In the month of June 2009 alone, the cumulative value of trading in the commodity exchanges, according to the report of the Forward Markets Commission of India was a staggering Rs 15,64,114.96 crores.  This has grown by over 14 times from Rs 2,21,888.06 crores in June 2007.  Such a colossal leap in speculative forward trading is directly contributing to the rise in prices of essential commodities. Unless prices rise, profits cannot be made.  If profits cannot be made, the quantum of speculative trading will not rise so sharply.  Therefore, if these prices are to be controlled and if the prime minister is serious in "taking strong measures� and to "intervene in the market", then such speculative trading in essential commodities must be immediately banned.  Unless this is done, the concerns expressed by the prime minister will remain resoundingly hollow. 

On the issue of rising prices, the prime minister had said, "Of late, we have seen a rising trend in the prices of certain essential commodities like pulses, sugar and some vegetables. In order to contain increase in prices of essential commodities, the central government and the state governments will have to work together and activise the public distribution system, which is an important safety net especially for the poor and helps cushion them against price rise.  We will also have to ensure effective enforcement of stockholding limits and strong action against hoarders and black marketers". 

While offering "full support" to the state governments in their efforts to tackle the looming drought situation and to contain the price levels of essential commodities, the prime minister had said, "In no case should we allow citizens to go hungry".  If this has to be done, then the UPA-2 government must immediately ban speculative trading in all essential commodities and include the distribution of oilseeds, sugar and other essential items through the ration shops and, most importantly, universalise the public distribution system. 

Popular pressure has to be mounted to ensure that the UPA government translates into action the above measures in order to ensure that people do not go hungry.  In the final analysis, it is the strength of popular struggles that needs to force the government to act urgently and efficiently to ensure that the life of the aam aadmi does not become more miserable.