The Hindu Business Line : Time to turn focus on small farmers

Ground reality
Faulty land use policy, in general, and lack of due incentives to foodgrain growers were the main factors behind the debacle on the price front.

G. Srinivasan

New Delhi, April 14

As inflationary blues get intensified day by day, the United Progressive Alliance (UPA) Government appears increasingly beleaguered with the mere use of fiscal tools by cuts in import duty on a slew of essential consumption items and promising to stay on course with a tight money policy on the monetary front.

The Cabinet Committee on Prices (CCP) headed by the Prime Minister, Dr Manmohan Singh, is meeting for the second time on Tuesday in a fortnight after it met last on March 31, and announced duty reductions on edible oils, butter, ghee and maize and banned export of non-basmati rice and pulses and administrative measures to let State Governments impose stock limit, but letting inter-State movement in imports off the hook so that supply constraints do not surface.

As manufactured prices such as steel and iron and cement too became dearer, the Government clamped ban on cement export on April 11 and tomorrow’s meeting would take a call on steel.

The Finance Minister, Mr P. Chidambaram, said in Washington on Sunday that the Government has sacrificed revenue by “some rather extreme fiscal measures.. as well as monetary measures that will have a negative impact on growth itself”.

For Mr Chidambaram, who is always buoyed by India’s growth story and only in January 2008 nudged banks (after the RBI’s review of monetary policy) to lower interest rate to sustain growth impulses in the economy, it is not pleasant to lay out how a tight money policy would have an adverse impact on growth. With inflation at 7.41 per cent for the week ended March 29, 2007, the Finance Minister’s utterance of “balancing growth and price stability” is understandable and politically perfect.

Policy analysts say that the lag effect of even the provisional figures is two months and the latest 7.41 per cent inflation level might be an understatement, given the runaway rise in prices of vegetables and fruits leave aside staple items.

In fact, the World Bank President, Mr Robert Zoellick, recently stated that “since 2005, the prices of staples have jumped 80 per cent. Last month, the real price of rice hit a 19-year high; the real price of wheat rose to a 28-year high and almost twice the average price of the last 25 years.” No wonder, Indian leaders ascribe the recent bout of inflation as imported even as they have lulled us all into a sense of complacency by not addressing the concerns of foodgrain growers, analysts argue, adding that faulty land use policy in general and lack of due incentives to foodgrain growers were main factors behind the debacle on the price front now.

According to experts, use of prime agricultural land for commercial crops such as horticulture, floriculture, sugarcane to encourage food processing industries and the attendant fiscal relief accorded to them over the years have now come home to roost.

On top of the Centre-advised minimum statutory price (MSP) to cane growers, the States competed with one another in disbursing higher MSP to sugarcane growers that resulted in a glut situation on the sugar front for successive years, when growers of paddy, wheat or corns felt that they got only a raw deal for all their exertions. Organic food of exotic varieties with premium price potentials and use of land for industrial policies have also discouraged staple food growers from toiling in their land with antediluvian tools and farming conditions.

Crop pattern

With kharif crop sowing imminent, the Government can re-engineer crop pattern by providing more spurs to staple crops such as rice, wheat, oilseeds, maize and other corns. But the Government policy of imposing ban on export items when it senses domestic supply constraints, as in the case of groundnut oil, while not applying the same to groundnut or maize is faulty, because if maize and groundnut get exported even when rice and wheat prices soar, on what will the aam admi survive?

Nowhere in the world, including trade-distorting heavy farm subsidisers such as the US, the Government never grudged providing support to farm sector lest the people of the nation should be consigned to live on imported grains. But here, the policy support of providing direct and tangible relief to foodgrain growers on inputs such as water, power and fertilisers and help them to discover price in the market through institutional mechanisms has never been attempted in a rational manner.

With the result that it is interest groups or middlemen or traders grab the gains, leaving the small farmers high and dry.

It is time the authorities realised the importance of the small kisan to redeem his honour and reward his toil by a purposeful plan of providing succour to goad him to grow what is required in the country for mass consumption and alleviate his never-ending sufferings.

Then only, the demon of inflation could be conquered, instead of letting its spectre haunt our daily lives.

With the result that it is interest groups or middlemen or traders grab the gains, leaving the small farmers high and dry.