A new inspector raj

The current crackdown on the pulses trade may do more harm than good in the long run.

By: Express News Service | Updated: October 24, 2015 2:48 am
Dal price, Pulses rate, Pulse stockholding, Pulse price hike, dal price hike, the indian express Pulses imports are usually undertaken in bulk vessels carrying over 50,000 tonnes, whereas stock limits of 300-350 tonnes per importer is what many states have fixed.

The government has reasons to be concerned over spiralling dal prices — even more so when arhar at Rs 200 per kg has become a major campaign theme in the ongoing Bihar assembly elections. But that does not justify the kind of desperate measures it has resorted to. Not only have states been allowed to impose stockholding limits on traders, but these have been extended to even importers, processors and larger retailers. These actions, apart from reeking of short-termism, lack a basic understanding of the way the commodity business functions. Pulses imports are usually undertaken in bulk vessels carrying over 50,000 tonnes, whereas stock limits of 300-350 tonnes per importer is what many states have fixed.

Will any importer contract fresh consignments with such restrictions, which would require the pulses to be sold the moment they are discharged from vessels — a practical impossibility? Similarly, a dal mill processes anywhere from 10 to 100 tonnes of raw pulses daily. For smooth running, it needs to maintain at least seven to 10 days of stocks. But suddenly, we are seeing raids and stocks being seized, when these may have even been pledged with banks for securing working capital.

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But administrative ignorance that could backfire — imports grinding to a halt or dal mills closing obviously doesn’t help anyone — is only one part. Of larger importance is the message that is going out.

Till recently, the government was talking about the need for states to reform their agriculture produce market committee acts, allowing barrier-free movement of produce both within and outside the country, and setting up warehouses, cold chains and on-farm storage structures. But today, the same government has rediscovered the lexicon of the 1960s and ’70s. States are now being advised to “intensify anti-hoarding operations” and crackdown on “black-marketers and profiteers”. Not surprisingly, even millers and legitimate stockists — who ensure that the produce harvested over two to three months is stored to ensure the market is supplied around the year — have not been spared from the recent “surprise inspections”.

While Bihar may be the immediate provocation for going overboard, the government should well bear in mind that the pulses problem isn’t going to go away once the elections are over. As has been pointed out repeatedly, pulses defy easy solutions. Unlike edible oils, sugar or wheat, which are easily importable, there is very little production of pulses outside India. For the same reason, the solution to bridging the growing supply-demand gap can only lie in augmenting domestic production — more so in irrigated
areas where rice, wheat and sugarcane have become the default cropping options.

Cracking down on the pulses trade, the government may be doing more harm than good in the long run.

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