Raids on hoarders need to be carried out with diligence

It is would be interesting to note that ahead of Diwali, food safety officials and civil supplies department suddenly become active to ensure that laws are abided in the commodities sector. What is more surprising is not the way these raids are conducted but their timing. The activism of the law enforcers before Diwali in the North and Onam, Ugadi and Pongal in the South has been consistent over the years.

Undoubtedly, law enforcement raids are most effective when they involve good intelligence and planning. On the other hand, most raids are blind and executed without adequate information.

Obviously, the raids-to-prosecution ratio is pathetic as raids are conducted without proper analysis of market information. Both Union and State Governments often promise a crackdown on hoarders and black marketers to curb artificial price rise. However, most often the theatrical raids are conducted to cover institutional impotence and incompetence in the middle of the trouble (scarcity & seasonal price rise).

Sometimes, raids by the government machinery are also done to settle personal scores. For example, in 1995 a State Civil Supplies Minister in Gujarat backed by the oil traders lobby had ordered raids on the edible oil tanks of the National Dairy Development Board (NDDB) charging them with hoarding. The fact was the Minster was enraged by the fact that he was advised to check with the Union Ministry when he sought details of stocks from the prestigious institution.

In recent times sugar, pulses and onions have become the commodities of choice for the raids. Commodities whose prices are on rise and the supplies of which are getting scarce become the targets of the raids. The agencies that suspect hoarding should monitor stock movements, trade flows and the historical consumption patterns with appropriate intelligence and market information so that the impact of the raids do not create panic in the market.

Currently, the effectiveness of income tax raids are more profound in the economy due to analytics and software support that has been put in place over the last few years.

It is time that State agencies involved in commodities should use more analytics and information for better effectiveness of the raids.

In a market economy there cannot be any bigger disaster than vanishing stocks from the shelves due to fear. Intelligent raids should be the last resort to bring semblance of logic rather than creation of fear psychosis in the commodity market.

The writer is a commodity commentator.

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