People's Democracy

Editorial

Bizarre Ways of UPA Govt

BIZARRE are the ways of governance of this UPA-II government.  There was much expectation that the union cabinet, which met last week to consider the alarming situation caused by relentless rise in the prices of all essential commodities, would come out with some tangible measures that would provide relief to the people groaning under this onslaught.  Nothing of this nature happened. Instead, media reports suggest that there is a frenetic exercise of `passing the buck’.  The high-profile Congress general secretary hinted that the compulsions of a coalition government prevented the undertaking of effective measures to contain this price rise.  The spokesman of the Nationalist Congress Party, whose chief is the minister for agriculture, shot back with references to successful coalition governments in Italy! 

While the agriculture ministry is, indeed, responsible for many a decision that impacts on the production and availability of foodgrains, the decisions of other ministries like finance and commerce also impact on the prices.  The former, along with the Reserve Bank of India, determines the quantum of money that is currently in circulation through monetary policy measures.  The commerce ministry determines the export-import policy that has implications on the availability of commodities in the domestic market.  Therefore, it is the collective responsibility of the union cabinet to take appropriate measures on the basis of a scientific evaluation and analysis of the causes that are making the prices gallop.  In discharging this collective responsibility, the union cabinet has miserably failed.  Worse, it appears to be completely at loss to comprehend the causes.

It would be wrong to conclude that the cause for this current price rise is a supply-demand mismatch alone.  Take the example of onions in Delhi.  Alarmed at the astronomical rise in the prices of onions, its supply was nearly doubled from 730 tonnes on December 20, 2010 at the Azadpur Mandi to 1144 tonnes on December 21.  The wholesale price fell from Rs 55 to Rs 50 per kg while the retail price increased from Rs 75 to Rs 80 per kg.  Clearly, there is more to this price rise than mere supply-demand mismatch. 

In the last nine months of 2010, the wholesale price index for vegetables rose by 67 per cent.  The retail prices have soared much higher, making chicken  cheaper than onions!  Marie Antoinette, who infamously screamed during the French Revolution that if people cannot get bread, why don’t they eat cakes, would, indeed have been a happy person now in India. 

What happened with sugar in the beginning of 2010 is happening with onions at the beginning of 2011.  The exports were encouraged through incentives despite warnings that there could be shortfall in the supply of these commodities.  When the prices started to soar, exports were banned and imports were encouraged by eliminating all import duties.  Yet, the prices did not begin to climb down.  The same traders that benefited from export incentives are now benefiting from duty-free imports.  Is this a reflection of the bizarre ways of this government, or, is there a scam waiting to unfold? 

During the same period of the last nine months of 2010, the cumulative value of trade in the commodity exchanges in the country rose by a phenomenal 51.37 per cent to stand at Rs 78 + lakh crores.  The cumulative value of trade in agricultural commodities alone rose by nearly 8 per cent to stand at Rs 9 + lakh crores.  The rise in the value of trade in the forward/futures markets obviously reflects high profitability.  It is such speculative trading, which today is internationally recognised, that is relentlessly pushing up the prices of all essential commodities particularly food prices.  Despite continuous demand  by the Left parties, this UPA-II government refuses to prohibit such speculative trading. 

Unless such speculative trading is banned, the excess foodgrain stocks rotting in central government godowns are released to the states for sale through the public distribution system and the budgetary hikes in the prices of petroleum products are rolled back, no relief for the aam admi is possible. 

The bizarre ways of this government can be seen in other areas as well.  The new telecom minister, holding additional charge, has completely negated the CAG report which estimated a loss of Rs 1.76 lakh crore to the exchequer in the 2G spectrum sale.  If the CAG report is baseless, as the minister claims, then why did A Raja resign from the union cabinet in the first place?  The issue is not finding fault with calculations.  That there is a massive scam has been proved by the fact that at least two companies that procured 2G licenses, unloaded a part of their shares to international telecom operators at prices that are 10 to 12 times more.  The scam lies in the fact that the licenses were sold in 2008 when the mobile telephone population was 30 crores at the 2001 prices when the mobile telephone population was only 40 lakhs. 

It is high time that this UPA-II government must be forced to take urgent measures suggested above to contain this relentless rise in prices that is pushing, additionally, crores of people to survive below the poverty line and speedily uncover the manner in which a colossal loot of our country’s resources has taken place.  Further, the government must be forced to recover the losses and put these huge sums of money to provide the much-needed food security, education and health for our people. 

(January 12, 2010)