But BJP wants to continue scheme

Facing criticism for rising prices, the Modi Government has blamed public expenditure on schemes such as MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) for fuelling food inflation. Curiously, the BJP wants the job scheme to continue, with the focus mainly on agriculture.

According to the agenda note circulated for Friday’s Conference of State Food Ministers with the Centre, food inflation is caused by both demand and supply factors.

“On the demand side, the important factors that have contributed to inflation are Government’s increased public expenditure such as MGNREGA, rising per capita income, population growth and changing dietary pattern,” it said.

In the interim Budget, ₹34,000 crore was provided for the job scheme in 2014-15. This is slightly higher than the ₹33,000 crore set aside in 2013-14. The scheme assures 100 days of employment for rural households. Anyone failing to get work for 100 days will get an unemployment allowance. This, it is said, has changed consumptions pattern in the rural areas.

Supply side issues

On the supply side, the agenda note says fluctuations in agricultural growth have affected domestic availability of essential commodities for mass consumption, especially pulses, edible oils, seasonal vegetables, dairy products. It also blamed the “creation of artificial scarcity by hoarding or black marketing”.

The note also says that seasonality has a major impact on vegetables. However, the abnormal price rise seen last year was mainly due to lower production and hoarding. “Even though the production of onion as well as potato was higher in 2013-14, compared to 2012-13, the reason for the current price rise in these commodities may be due to manipulation of market forces,” it said.

The note said that as on June 24, wholesale and retail prices of rice, urad dal, moong dal, masur dal, potato, onion and mil were high.

The figures, collected by the Price Monitoring Cell under the Food & Consumer Affairs Ministry, reveal that in the last three months, the retail price of potato jumped by over 66 per cent in Chennai, 41.6 per cent in Kolkata, 15.4 per cent in Mumbai, and 15 per cent in Delhi. Kolkata saw onion prices going up by 50 per cent while the surge in Chennai and Mumbai was 33.3 per cent and in Delhi, 14.3 per cent.

(This article was published on July 3, 2014)
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