INFLATION AND FOOD PRODUCTION COST-INDIAN AGRICULTURE ON CROSS ROADS

It has been said umpteen number of times that Indian agriculture system as it works to day is a no-win situation for both the farmer as well as the consumer. As food inflation is intimately linked to production cost, during the last one decade the cost of agricultural inputs has climbed steeply, in spite of billions of rupees of subsidies supposed to be doled out by the federal government. Almost 700 million people stay in rural hinterlands, close to the agricultural production areas working against all odds to raise food crops for the entire nation and with average size of land holding estimated to be less than 2 acres per family what can one expect from the agricultural activity which depends heavily on regular rainfalls. Land productivity being abysmally low, being fraction of what is achieved even in African countries, agriculture is not and has never been a viable pre-occupation for many. Absence of a long term agriculture policy which makes some sense, the drift is clearly visible with thousands of farmers choosing the suicide route for salvation. As this subject has several dimensions, a detailed discussion here is out of place but reference to the article cited below gives some insight to the problem India is suffering from.

"The key reasons for the escalation in the cost of producing food in India are the rapid increase in farm input prices and long-term structural deficiencies such as low productivity, fragmented landholdings, and declining public investments in agricultural infrastructure. The prices of various farm inputs, measured by WPI inflation rate, were subject to significant increase over the years. On an average basis, the WPI inflation rate (Base: 1993-'94) of light diesel oil has recorded an increase of 18.28 per cent between 2003-'04 and 2008-'09. During the last two years also, together with fertilizers and electricity, the prices of most of these farm inputs have increased substantially. As regards labour cost, according to the estimates provided by the Commission for Agricultural Costs and Prices (CACP), between the second half of 2008 and second half of 2011 the agricultural wage rate at the all India level has increased sharply by 74 per cent. The rise in the wage cost ranged from 43 per cent in Himachal Pradesh to 102 per cent in Odisha. A multi-pronged approach is needed to tackle the increasing cost of food production. Estimates show that more than 40 per cent of the total variable CoP in Indian agriculture consists of labour. Due to reasons such as high non-farm wages, aspirational migration, educational attainment, and the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) farm labour has become scarce and costly in rural India. Some of the sensible ways to overcome the labour shortage are increased mechanisation of the farm operations, including that of small land holdings through group farming method; extending the provision for taking up asset creation works on private agricultural land under MGNREGS to more beneficiaries; and making agricultural operations a part of MGNREGS on an equal cost sharing basis between the farmer and the government"

Will there be salvation for this country ever? Sadly the federal government seems to be banking on its FDI policy to get foreign investors for helping the farmers of this country! If during the last 65 years of Independence the country has not been able to provide the farmers even with simple infrastructure for carrying out the farming activities efficiently, will this nation become permanently dependent on imports of vital foods like pulses and oil seeds? The argument that the country is exporting food grains and sugar cannot gloss over the fact there are about 300 million people in the country who are considered impoverished, malnourished and hungry with inadequate access to food. As the report above points out there has to be a serious re-look at the agricultural policy to provide a conducive environment for the farmers of this country to produce food economically and help consumers to access the same at affordable prices.

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

AN OVER BEARING GOVERNMENT-BASHING THE CITIZEN

Inflation is supposed to eat into the real buying power of people and all responsible governments try hard to rein in such distortions in the economy. India is no exception to this bitter reality. Inflation affects different people in different ways, the affluent families not feeling the pinch to the same extent as those in the low and middle income groups of population. Economic liberalization in India two decades ago has unleashed a force that is influenced more by international developments than by any ameliorative policies of the national government. In a democracy every citizen has a right to protest against the policies of the government elected by him if they are found to be heaping misery on him. While the suffering citizens do expect the government to be sympathetic to his woes, bashing him for raising his voice against price rise especially of staple foods, is not an acceptable behavior of a responsible official of the very same government. Here is the controversial "admonition" from a senior minister in Indian Government who expressed his displeasure against citizens railing against price rise. 

"Answering a question on the burden on the common man, the Home Minister referred to the different segments of the population and the schemes that benefit the different segments.  He referred to higher MSP (as benefiting the farmers); MGNREGA (as benefiting the rural poor); mid-day meal scheme (as benefiting millions of children); and he referred to PMGSY (as benefiting thousands of villages).  He referred to the price of crude oil and how the Government was constrained to first raise petrol prices and then how it was reduced twice to benefit the middle class.  He then said (as can be seen from the exact text of the answer): "You mentioned high food prices.  Yes food inflation is high.  But higher procurement prices will reflect in slightly higher food prices.  But higher procurement prices benefits millions of farmers.  If you increase the price of sugarcane, sugar cannot be cheaper than before.  If you increase the price of procured wheat or procured paddy, rice and wheat for the consumer cannot be less. Sometimes, and I have written about this once, we are prepared to pay fifteen rupees for a bottle of water but we will not bear one rupee increase in the price of a kilo of wheat or a kilo of rice.  We are prepared to pay rupees twenty for an ice cream cone but won't pay a rupee more for a kilo of wheat or rice." 

Here is a comment by an enraged citizen after hearing the above statement which aptly reflects the revulsion among the masses.

"Tea Re.1.00 Soup Rs.5.50 Dal Rs.1.50 Meals Rs.2.00 Chappathi Rs.1.00 Dosa Rs.4.00 Veg Briyani Rs.8.00 This is actual price list. These items are meant for "POOR PEOPLE" & is available at Indian Parliament Canteen. The salary of those poor people is Rs.80,000.00 per Month!! PLUS HEFTY BONUS IN SCAMS.... Pls forward to all Indians (this all money comes from our pocket, TAXES YOU PAY)" 

Probably the minister, drunken with absolute power felt that he is not answerable to the people who elected him as his survival in the government depends more on paying obeisance to people not answerable to the constitution of India where accountability is the last thing that counts in public life. With luxurious life given on a platter to the "elected" representatives in the name of "serving" people, there seems to be a disconnect between common man and their representatives as reflected by the comments quoted above. Whether it is the salary, perks, living facilities, transport, communication facilities the "leaders" seem to be united in granting these privileges liberally to them selves unanimously with hardly a few seconds deliberations! Probably it is time that the present constitution is thoroughly over hauled to return the real power to the people of the country in the true sense.

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com