The Hindu Business Line : Is it the right package?

THE CENTRE'S DECISION to dilute the norms of compulsory usage of jute in the packaging of sugar and foodgrains was only to be expected considering that the Supreme Court had lifted the status quo order in the Government's appeal against an earlier ruling of the Calcutta High Court Division Bench. It was only judicial intervention (the Calcutta High Court) that had prevented it all along from giving effect to its own earlier decision. Now, the logic of its own initial decision dictates that it give effect to it now that the highest court of the land has cleared such impediments as there were. At best, the Government can be faulted on procedural grounds in that it could have waited till a new dispensation was in office, now that the country is in election mode. But having said that, the new liberal norms will have little practical significance on the ground, at least in the near term. With sugarcane crushing season practically over, the rabi crop harvested and the kharif season still some months away, the order is unlikely to alter in any fundamental sense the demand for jute packaging material.

The latest episode is part of a larger phenomenon of conflicting interests of agro producers and the industrial users or final consumers of such produce. Historically, there has been a policy bias in favour of the producers. The state has given effect to this approach through such measures as enforcing statutorily a minimum support price for the produce, through monopoly procurement or through, as in the instant case, compulsory use of the agro produce. The objective clearly had been to secure a more advantageous market environment for the producers. The socio-political environment had over the years been supportive of such initiatives and the judiciary too had recognised this as a legitimate exercise of the legislature even if such measures have not always achieved the intended goals and, more often than not, intermediaries have skimmed away the resultant surplus. But the policy as such had survived in an era of state intervening in all aspects of production and consumption processes in the economy and maintaining a somewhat uneasy and a sub-optimal equilibrium between the forces of demand and supply.

This policy is, however, increasingly coming under strain in the atmosphere of liberalisation. Imagine a situation where a producer uses an agricultural product as an input but has to source it at prices that are not aligned to the market because of state intervention. Would it be right for the state to ask him to compete with global producers without a mechanism of compensation because the logic of liberalisation demands that he do so? Or if there is to be a mechanism of compensation, how is it to be administered? Then again if one set of producers is to be penalised with compulsory usage of an agro-input, how does it justify exempting another product that uses the same input? In the instant case, while producers of cement are exempted from compulsory use of jute in packaging, those engaged in producing sugar are not so fortunate. No matter which way the Supreme Court rules in the instant case, the broader questions that a half-hearted attempt at liberalisation inevitably triggers will continue to haunt us.

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