The Hindu Business Line : Pro-farmer or pro-consumer: Govt would like to be both, but can it?

It is difficult to fathom whether the Government is pro-farmer or pro-consumer. Over the past week, the Union Commerce Minister, Mr Kamal Nath, batting for farmers in India, pulled out of the talks at the World Trade Organisation in Geneva, saying that the developed world was refusing to make deep enough cuts in subsidy payments to their farmers.

The contention of Mr Kamal Nath and the developing countries is that the US and countries in Europe compensate their farmers so heftily (a total of over $300 billion a year) that they are able to sell their wheat or corn or milk at often a third of the cost of production.

If the subsidies were pared, the argument goes, prices at the farm gate would rise. This would open up the prospects for produce from the developing world to compete. Indian farmers, for instance, would get a much higher price for their cotton in world markets should the US reduce hand outs to its farmers.

If Mr Kamal Nath and the developing world win the battle, one would expect global prices of cotton, sugar and wheat to go up. Given the newly established linkages with commodity markets round the world, prices in India will also rise in tandem. The Government will be delighted with its pro-farmer badge.

Cut to the consternation in New Delhi over rising inflation. In a determined bid to be pro-consumer and protect the millions from the blast of rising food prices, a fortnight ago the government clamped down on exports of pulses and cereals, whose prices had risen disconcertingly.

Kabuli channa and masur dhal see higher prices in the months when merchants procure to meet export demand; that is what makes farmers happy. With the gates now shut on exports, prices are now beginning to turn tail.

The Government would like to believe that with these measures it is only crushing the margins made by speculators, but that is being wishful. Those in the trade do get hurt first, but the ricochet doubtless will hit farmers.

How, again, will consumers in this country react when food prices go up in response to Mr Kamal Nath's efforts at the WTO? Will the Government clamp down on exports of grain and other food articles to world markets that Mr Kamal Nath may have just succeeded in opening up? Or would it order imports at inflated prices but provide enough subsidy so that the consumer at home does not have to pay any higher a price?

That would be an irony, for instead of the US or EU tax payer, whose contribution now keeps food prices low, it would then be the Indian tax-payer who would have to shoulder the burden.

This is a high stakes game that the Government is playing. It looks good to be seen as pro-farmer: the farmer, always the underdog in the political sweepstakes, has the power to deliver a large block of votes.

But the consumer has the larger numbers, all one billion of them versus some 110 million farmers, and evidently the louder voice on the streets of the capital. No government would, therefore, like to be seen as being harsh on this segment either.

The trouble is it cannot be pro-farmer and pro-consumer at the same time. Or can it feign both?

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