The Constitution of India assigns predominant powers to the Central Government in both the policies & administration matters concerning price control. Vital levers of Fiscal as well as Monetary control are with the Central Government. It is primarily the Central Budget which impacts the prices of essential commodities. Formulation & administration of Import & Export Policies is in the hands of Central Government and it is a well known fact that one of the vital tools of price control, especially the food items, is proper management of ‘Import/Export Mechanism’. Railways are under the sole control of the Central Government and so are the Ports. Management of both these entities (inland transportation from production-centers to the demand-centers by the former and import-handling by the latter) has direct bearing on the price, because of not only cost factor but also because of demand-supply gap which depends upon the availability of stocks at the demand center at any point in time. Since UPA has been in power at the central level for the past six years, and therefore, the sole accountability for price rise rests on their shoulders only.
Let us have a look at the per kilogram prices of poor man’s basic food items; wheat flour more than Rs.20, rice more than Rs.30, sugar more than Rs.45, pulses ranging from Rs.70 to Rs.100(Arhar), Haldi Rs.180, Masalas ranging from Rs.60 (Lal Mirchi) to Rs.250 (Bari Ilayachi) and oils Rs.50-60 (ordinary), Rs.80 and above (refined). Sugar prices have doubled over a period of less than a month. An excellent analysis of UPA Government’s inept handling of sugar management both at policy level and at administrative level has been brought out in the article titled ‘Time to quit Mr.Pawar’ (The Economic Times –Chandigarh- dated 10 January, 2010) by Nidhi Singh. A couple of startling facts- under estimation of demand, inability on the part of Railways to timely ferry the stocks to desired destinations, inability of central government to prevail upon the Uttar Pradesh Government in getting the imported stocks processed and failure in timely imports or their price goof ups etc.- stated in this article fully expose the UPA Government.
The plea of UPA government that State governments have primary responsibility in the price control of essential commodities is bereft of any rationale in view of the fact that the quota control of food items vests with the central government. Since supply to the States depends upon the release of quota thus in the often occurring eventuality of demand being higher than the supplies, the prices are bound to rise. Whereas the States can’t be absolved of their responsibility to strictly implement the Hoarding and Black Marketing Act, but the impact due to shorter supplies vis-à-vis demand can in no case get neutralized by any degree of strictness under the Act against the local traders. UPA government has not taken any steps in taking appropriate policy initiatives or establishing an effective regulatory mechanism to ensure the price stability of food items, especially the ones which directly affect the life of poor families.
The Fair Price shops meant to help the poorer people in getting food items at reasonable price are often starved of supplies due to central government’s failure to ensure timely dispatch of ration supplies to the States. Situation gets further complicated when the prices suddenly spurt higher in the general market and the customers at the Fair Price swell quite higher, tempting the shop owner/manager to indulge in exploitation of the customers.
Central government had created a Warehousing Corporation (WCI) with the objective of proper storage of food stocks for maintaining consistent supplies to the market according to the demand in order to maintain price stability. Unfortunately the warehouses are not so well managed and the losses of stocks over a period of time have had a telling effect on the health of the Corporation resulting in defeating the very purpose of creating this entity. Equally pathetic is the state of affairs in the Food Corporation-Godowns (FCI). Thus a vital buffer/cushion for bridging the gap between demand & supply has got weakened for which central government shoulders complete responsibility.
There is a system of multiple-point control in the central government on issues connected with price stability; Department of Agriculture looks after crop production and the MIS(Market Intervention Scheme); Department of Food controls the FCI & the WCI and the release of subsidies to various agencies; Department of Commerce regulates the imports & exports; Department of Food Processing Industries promotes the food processing industries. Most of the time the internal squabbles amongst various departments take precedence over the public needs for expediency & quick decision making which substantially adds to the suffering of the people, especially the poorer ones. The attention of the central government remains limited to the coordination at macro level and the micro issues remain totally neglected.
India is a vast country having varied agro-climatic zones (tropical to alpine) to facilitate production of different food crops in accordance with the demand in the country. Central government operates a number of schemes to provide incentives in the form of subsidies and Minimum Support Price (MSP) to encourage the production of certain food crops keeping in view the demand-supply situation. Unfortunately, UPA government has not operated this tool prudently to ensure achievement of the objective of having this tool and consequently prices of food items have sky rocketed. Pulses (the poor man’s main protein source) and the Oils (an essential item of an Indian household-food) have to be imported while there is tremendous potential to grow both the pulses and the oilseeds to meet the total demand. Not enough has been done by the UPA government to use the levers at its command to do the needful in this vital area.
Can the UPA government still shirk its responsibility for failure to control the prices of food items, especially?
