People's Democracy

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


No. 12

March 21, 2010



Price Rise: Govt Now Has No Remorse Either


EVEN the pretext of showing remorse at the unprecedented burdens being imposed on the vast majority of Indian people due to relentless rise in the prices, particularly of essential commodities, has now been officially given up by the UPA 2 government. Summing up the budget discussions in the parliament, just before it was adopted in Rajya Sabha (having been adopted a week earlier in Lok Sabha), the finance minister brazenly informed, �I will not be surprised if it (inflation) reaches double digits in March itself.� He then went on to justify that India has lived with higher rates of inflation in the past and therefore this is no big deal. The finance minister is only echoing the president of India who, in her address to the joint session of parliament, had said that price rise was only �inevitable.� By pleading helplessness, the government is not just abdicating its responsibility of providing some relief to the people. Worse, it is blatantly declaring that in order to provide further gains and super profits to its social base of the ruling classes the common people or the aam aadmi has to suffer by bearing the burden for providing such gains to the rich. Therefore, for the shining India to shine brighter, suffering India will have to endure greater suffering.

Through these columns we have shown how the current budget shamelessly transfers huge amount of resources to the rich in terms of direct tax concessions and various other tax concessions for the corporates and high end income tax payers. The aam admi, on the other hand, has been burdened by an increase in indirect taxes. A burden which amounts to double the quantity of direct tax gains given to the rich. Combined with the hike in the prices of fuel and fertilisers the misery of the vast majority of our people has only been compounded further. Incidentally, the boom in the Sensex, among other factors, is mainly due to these gains that have been offered and are accruing to the rich.

As a result of the budgetary proposals that are inflationary in nature, the wholesale price index has already touched a sixteen month high of 9.89 per cent at the end of February. This rise was primarily driven by the hike in the fuel prices and is bound to accelerate when the realisations of the increase in excise duties will come in March. The inflation rate for primary commodities has dropped from its high of nearly 20 per cent to nearly 16 per cent in February as against the 7 per cent during the corresponding month in 2009. Fuel prices have shown a significant increase of 10.19 per cent. Inflation for cereals and pulses (the mainstay of nutrition for a vast majority of Indians) on a year to year basis stood at 11.69 per cent and 35.58 per cent. Sugar prices have shown the highest rise with the year on year inflation rate being 55.45 per cent.

Therefore, far from considering any of the concrete measures that the Left had suggested both in the parliament and in the massive protest rally outside the parliament on March 12, to contain this price rise, the UPA II government is brazenly going about consolidating its class basis by providing greater gains to the rich. The Left had sought a ban on all speculative trading in essential commodities, particularly futures and forward trading. This, however, is not done since it directly dampens massive profit generation for speculative traders. On a year to year basis, the total value of trade in agricultural commodities in the commodity exchanges during the fortnight ending January 31, increased by a huge 64.14 per cent. The cumulative value of trade in agricultural commodities during the year from April 1, 2009 to January 31, 2010 grew by a whopping 102.59 per cent, in absolute terms valuing over Rs 10,13,379.97 crore. Now, any forward trading can make profits only when the prices of these commodities are higher than what they were when the trading initially took place. Such huge volumes and value of trade can only happen if the prices continuously rise generating super profits. The people are paying higher prices to feed such profits.

Yet another measure that we had suggested was to release the excess of foodgrains lying in government godowns for sale through the public distribution system. The Economic Survey this year informs us that as against a buffer norm of 200 lakh tonnes of rice and wheat, the government had in its godowns 474.45 lakh tones. If this excess which is rotting in the godowns and for which the government is diverting a sizeable portion of the food subsidy for its storage and handling costs, is released through a strengthened PDS then this in itself could have acted as a major dampener for rising prices.

By refusing to undertake any of these measures and by brazenly justifying the hike in fuel and fertiliser prices, the government has unambiguously signaled that the vast majority of the Indian people will have to shoulder the burden of pampering the rich so that UPA 2 could politically consolidate itself.

Inflation is the classic economic instrument that shifts income distribution in favour of the producer while burdening the consumer. This is the case under capitalism. However, in instances where crony capitalism dominates, like in our country, it is not the producer but the middleman who rake in these profits. The prime minister has repeatedly bemoaned the hold of crony capitalism in our country. Yet, typically, it is this very crony capitalism that his government�s policy feeds and strengthens. The Indian farmer who produces to feed the country continues to commit distress suicides unable to bear the burden of debt. The consumer, on the other hand, is increasingly being pushed into destitution and penury with these rising prices. It is this middleman --- the perpetrator and the beneficiary of crony capitalism --- who rake in massive profits.

Clearly, it is only through the strength of a popular mass movement that the UPA 2 must be forced to reverse this policy direction that continues to impose unbearable burdens on the people. The massive protest led by the Left parties on March 12 will now have to be followed by an unprecedented Jail Bharo in every district of our country on the 12th of April. It is only the powerful militant expression of popular mass protests that can force the UPA 2 government to change this disastrous direction of economic policy which is making the vast majority of the Indian people incapable of having any decent human existence.

(March 17, 2010)