January 1999


Price Rise : Who are the real culprits?


Within a month of the BJP government coming to power the prices of essential commodities began to skyrocket. Within the last six months the prices of vegetables have gone up 82%, edible oil 30%, foodgrains ab6ut 20% and even the price of salt shot up to Rs. 25 per kg in Delhi. The annual inflation rate (official) at end August was 300% higher than at the same time last year. The most glaring has been the rise in prices of onions which had gone up some 700% to reach a price of Rs. 60 per kg in some parts of the country. Ordinary vegetables like tomatoes were selling at Rs. 40 per kg, potatoes at Rs. 20 per kg and even the price of tur dal has reached Rs. 54 per kg. In the next few months the price of rice is expected to rise again.

And what is the attitude of the government ? Vajpayee, while speaking to a reporter (Nov. 7) said, that it was not illegal, under the law of the land, to hoard. He described the hoarders' "itch to make profits out of shortage as a normal business ritual." Ex-Chief Minister of Delhi, Sahib Singh Verma lectured that the "poor do not eat onions." Meanwhile, under World Bank instructions, the BJP has diluted the provisions of the Essential Commodities Act, preventing action against hoarders. It even sought to totally scrap this act, but due to the assembly electi6ns it has temporarily postponed the attempt. It made a big pretense of selling onions through the PDS, but the fraud was soon exposed... in Delhi consumers, after hours of waiting, found that the bulk of the onions had been siphoned off by corrupt officials; and in Rajasthan it began selling onions through ration shops at Rs. 26 per kg, while students of Jaipur distributed onions at a mere Rs. 17-per kg.

The BJP has falsely sought to put the blame for the price rise on natural-calamities. But while onion production has dropped by about 15%, prices have risen by 700%. Next, it pretended that the price rise helped the farmer. But, inspite of the gigantic rise in 6nion prices, the farmers during the April '98 rabi crop got less than what they received during the November'97 kharifcrop. The reality is that is not just the unseasonal rainfall that is responsible for the massive rise in prices of essential commodities, but primarily the government - big trader - international agribusiness combine that is robbing the Indian people to make windfall profits. It is they who resort to rumour­mongering in order to create panic buying. It is these robbers who are out to destroy the country and its people in order to make crores overnight. Let us then see the modus operandi of price manipulation by these gangsters.


Politics of Onions

Onions were one of the few vegetables that even the poorest use in their food. Cheap, and easily available, it adds not only a little taste but food-value to the poor man's diet. Now, even this has been wrenched out of his reach by unscrupulous traders and a criminal government.

As far back as June '98, the Department of Consumer Affairs in the Food and Civil Supplies Ministry warned of food shortages and strongly recommended banning food exports. But the Commerce Ministry over-ruled the recommendation, and between April and August '98 NAFED exported 2 lakh tonnes (i.e. as much a 5% of the year 5 total production) even as prices were shooting up in the domestic market. Party to this deal was NAFED chairman, Ajit Kumar Singh - a Congressman.

Meanwhile the traders began reaping in their crores, aided and abetted by the government. The government not only allowed exports but even prevented imports in order to keep prices high within the country. Even though on September 10 the government decided to import 13,000 tonnes of onions, the move was stalled by minister Sompal, who kept saying that there was no need for imports as "the rise in prices will benefit farmers." Finally, only on October 13 were imports freely allowed by putting onions on OGL (Open General Licence). But then again, when 425 tonnes was imported (at the rate of Rs. 16 per kg), the government did not give clearance for 36 days, allowing the bulk of the onions to rot. In addition, the delay in allowing imports led to a rise in the international price of onions from $245 per tonne to $373 per tonne giving big profits to the international dealers.

Such anti-national actions of the government, have only benefited a handful of big traders and international dealers, leading to enormous waste and the fleecing of the people of our country. No doubt, the windfall profits would have helped finance the BJP's election campaign.... but, as far the farmer goes, they gained little, having been paid barely Rs. 4 to Rs. 5 per kg by the traders and NAFED.


Rice -Prices set to rise Again

At the heart of the paddy crop disaster is not only the damage caused by floods but a scam where government agencies, at great cost to the farmer and consumer, allowed traders windfall profits.

This year, as the crop in Punjab began to be harvested in September, storm clouds developed. As the mandis have no proper storage facilities the farmers were desperate to immediately dispose off the crop. The government departments are obliged to purchase all the rice brought to the mandis at the MSP (Minimum Support Price - Rs. 470 per quintal for the high-grade veriety and Rs. 450 per quintal for ordinary paddy). But just at this crucial moment the procurement agencies disappeared; The rains that hit north-India in mid-September is believed to have wiped out over one million t6nnes of paddy in Punjab. In the first three weeks of October procurement barely totalled 2.3 million tonnes compared to 3.7 million tonnes in the same period i~ 1997-i.e. just 62% of the previous year's amount.

Meanwhile, the traders (millers), eying a lucrative export market in the current year, due to big crop failures in South-East Asia, swooped in on the desperate farmers who were forced to sell their crop at distress prices as low as Rs. 300 per quintal. The procurement agencies thereby pushed the farmers into the clutches of these vultures who, this year bought as much as 43.6% of the total market arrivals -i.e. 2.6 million tonnes, compared to 1.9 million tonnes in the previous year. Thus the millersitraders made huge profits aided and abetted by the government.

But the scandal does not end here. The plot deepens, involving not only the BW', but also, none other than the ex-Prime Minister. During his election to the Lok Sabba, Gujral built his political base in Punjab, by ordering an unprecedented relaxation in the quality standards of paddy to be procured in the wake of rain damage. As much as 3a lakh tonnes was purchased, which is till today rotting in the gowdowns, as the rice-eating states have refused to lake this sub-standard grain.. Now, this is being sought to be pushed into the TPDS and sold to the poor. What is even more criminal, the present Barnala ministry has, on October 28, '98, again allowed purchase of such sub­standard rice as part of government policy.

The result of this, SAD-BJP action is that millions of PDS-dependent people will now have to buy poor quality rice at higher prices, while exporters/traders will sell good quality rice making huge profits.



The current price rise in food items is just the beginning of what the people of the country will face in the future. It is a result of government policies that seeks to open up entire sectors of the economy to the sharks of international finance capital and their local compradors. Bowing to W6rld Bank/IMF dictates all governments have systematically been throwing open the agrarian economy to the vagaries of the market. What the Congress (I) and UP initiated since 1991, the BJP has taken to its logical conclusion. In fact, for all their nationalist sounding noise they are aggressively pushing international agri-business interests in India.

On the one hand, their policies are leading to ruination of agriculture and impoverisation of not only the peasantry but the country as a whole. On the other hand, it is creating a powerful big faimer/trader combine that is getting more and more interwoven into the global economy,

Even according to government data, agriculture is stagnating and poverty increasing. Foodgrain availability per capita has dropped from 510 grams daily in 1991 to 461 grams daily in 1995-96. The growth in production of foodgrains has dropped from 2.6% per year in the earlier two decades to 1.7% in the present decade (i.e. below the population growth-rate). According to an 'Expert Group on Poverty' (GOI, 1993) the percentage of the rural population below the poverty line (2440 k.cal) increased from 66% in 1987-88 to 70% in 1993-94 (see EPW, Sept. 28, '98). The present massive increase in prices of essential commodities will hit the rural poor the most as over 50% of the rural population comprise agricultural labourers and marginal farmers, who have to purchase the bulk of their food items. But, also to be badly hit will be the urban population, including large sections of the middle classes.

But those that gain will be the big farmers-trader combine together with international agri-business. While earlier the big farmers and big traders formed two district lobbies, of late these two power groups are coalescing. It is reported that over the years some bf the Indian big farmers have become more of a landowner, allowing small farmers to till the land, while he has concentrated on the trade aspect. Similarly some large traders have backward-integrated to acquire land and have it tilled by small farmers. The distinction between a section of the big farmers and the trader is blurring, and so the big farmer parties of the Akali Dal / Bansi Lal / Chautala types find less problems in aligning with the BJP.

And as the crisis deepens the big traders' profit increase. This year agricultural production is expected to actually fill by as much as 5 million tonnes. With ecological devastation of forests by the government and forest contractors, and salination of the land by unscientific green revolution-type farming, agricultural production is unlikely to increase much even in the future. And infact, the Worldwatch Institute already predicts that India will have to import 45 million to tonnes of grains by the year 2030.

If is this catastrophic situation is to be avoided, it can only be through an agrarian revolution in the country, where food production becomes the focus of policy. ... not to meet the desires of profiteers, but, the needs of the people. By the redistribution of land on the basis of 'land to the tiller' and the scientific development of agriculture, sufficient can be produced to meet the entire needs of the country without getting caught in the import/export vortex. If the country is to be saved from the present criminals who g6vern policy, an agrarian revolution is the only alternative.

- November, 1998




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