Is the Modi govt out of touch with the pulse of the nation?

Doesn’t the government find it tragic that the farmers staying in rural areas, already in the gloom of two failed droughts which have damaged four consecutive harvests, have to bear the maximum brunt of growing inflation in this country? 5.61 per cent inflation may seem a moderate rise in isolation but any economist will tell you it’s a worrying statistic when the world prices are rising at just 0-0.5 per cent rate and when the India’s crude oil basket is at 12 year low of $28.73.

First, coming to the issue of pulses. Any administration is well aware that the pulses are the only major sources of protein the low income households. Each 100 grams contains 32 grams of proteins and several amino acids not made in the body, making it quintessential part of Indian meals. However a 50 per cent inflation rate makes it far beyond the reach of most Indians who on an average, are already shelling out 5 per cent of their household incomes just to buy pulses today!

Given this hyperinflation, one would assume that these high prices would become natural incentives for farmers to grow pulses thus helping increase supply and cool off prices at some point. But if you ask any farmer, he would tell you that growing pulses is an extremely risky choice. Complete failure of government in managing supply, delayed announcements of MSPs, and mafia that doesn’t let farmers get the best prices for their harvest are just some of the factors that lead to a complete breakdown of the pulses’ supply chain leading to such price shocks. The absolute neglect of the government can be judged from the fact that despite knowing all of this, only one in six farmers who grow pulses today get the benefits of the irrigation channels. This means that pulses which take about a fifth of all agriculture land contribute to just a tenth of all agriculture produce.

Growth is flat, exports are down, inflation is high, investment is down, industrial production is at historic lows.Sabka Sath Sabka Vikas?

— RAJEEV SATAV (@SATAVRAJEEV) January 13, 2016

Truth be told, a country which is cleary shifting its food habits to consume more proteins instead of carbohydrates produces much less pulses (17 MMT) than it consumes (27.1 MMT). The success of the UPA government schemes, primarily NREGA and National Food Security Act, has increased income levels of rural and low income households. These households today demand protein rich pulses and rightly so. In contrast, the per capita availability of pulses has significantly lagged this growing demand. When these matters were raised by the Congress party, Modi government was quick to issue a statement of making the country self reliant on pulses by 2020. What has the government done about this plan in the last 18 months? Does the government have any long term strategy to make the country self reliant on pulses? We need better quality of seeds for better productivity.

The rise in prices of onions is, in a way, much more surprising. The production of onions has dropped just by 2.5 per cent as compared to the last year while the inflation has been 50 per cent + as compared to the last year. When this issue was raised in Parliament, the Finance minister remarked that onion prices have “collapsed”. Can he please explain how inflation of 50 per cent + indicates price collapse to this government? Even if the government expects the Onion prices to “collapse”, then who does these price shocks actually help? Certainly not the farmer or the consumer; just the middlemen, the hoarders and the speculators.

The government seems completely confused on tackling the issue of food hyper inflation. The food minister said that his ministry doesn’t have any “concrete powers” and is “helpless” to check food inflation. Ministers from the Finance Ministry, the people who apparently do have “concrete powers”, don’t consider it important to be present when a related issue of drought was being discussed on December 7, during the winter session.

The same government was caught blaming the state government of Bihar for rising pulses and onion prices in the middle of elections. A low dollar exchange rate and low consumer prices of petrol and diesel would have helped cool off food inflation. These were the ideas that PM Modi and his government had preached during their 2014 election campaign and seem to have completely forgotten. How does a $100 reduction in international crude oil prices lead to just Rs 10 reduction in consumer prices of petrol and diesel? The finance minister response to this issue raised in Parliament was nothing but, at best, a weak defence and at worst, a mockery of the issue. BJP can conveniently forget their poll promises but the people have begun to teach it lessons.

Two months ago, the Finance minister, on October 14, 2015, talked about the using of price stabilisation fund and making available the pulses stuck at ports to help cool off prices of pulses. Would the government, voted on the plank of governance, explain if this is not a complete governance failure given that it’s been two months since this announcement, why there has been no respite for man on the street?

PM Modi stood up in Lok Sabha in February last year and said that his adversaries at-least acknowledge his political astuteness. What is required today of him is economic astuteness.
In 1964, when the country was facing successive droughts and we didn’t have enough foreign reserves to even import wheat, the then PM Lal Bahadur Shashtri imported seeds, motivated our farmers and brought about the green revolution to this country. Today, we again need to motivate farmers, cover them under crop insurance and severely punish hoarders. Genuine empathy for farmers and fixing supply chains is needed to check food inflation in this country, not long speeches and political maneuvering.

Given that the country is heading towards high inflation, low jobless economic growth, this question is worth asking: Is the Modi government out of touch with the pulse of the nation? or is it out of pulses for the nation?