Ideally we would have preferred a debate under a resolution which has a provision for voting. The Parliament must go beyond a mere debate. The government must seek a parliamentary referendum on the handling of the price situation in the country. But since there is reluctance by the Government to do so, we wish to use the forum of the House to highlight the insensitivity and incompetence of this government in handling the price rise.
The government is not serious in its economic management. Yesterday’s Rail budget, which is the first amongst this session’s economic business, only provided comic relief to this country. The Rail Minister was concerned with sports stadiums, mineral water bottling plants, medical institutions and Indo-Bangladesh relations etc. and not about core business. I remember a Tata Steel promo which said “We also make steel”. Is the PMO helpless in dealing with the situation? A confessional statement has been made in the editorial of the “Congress Sandesh” which says “some practical difficulty in coordination among the PMO and various Ministries are natural in coalition Governments” There has always been a collective responsibility of the Cabinet. A cabinet cannot pull in different directions. A government cannot plead helplessness on the ground that the Ministers are not listening to the Prime Minister. The NCP’s journal Rashtravadi has editorially commented that people won’t die or suffer if they don’t eat sugar. Such is the insensitivity of those in power. This can only be compared to Marie Antoinette’s comment “If they don’t get bread, let them eat cakes”.
The Approach of the Government
The general approach of this government on the price situation has been disastrous. Has the government run out of ideas on how to deal with the situation ? Can’t the government look beyond its nose and anticipate shortages and rely either on imports or stocks to tame the market? Is there a manipulation of policy resulting in price rise or is the government feeling helpless to deal with the situation and only searching for alibis to justify its failure? It appears that the government has adopted a ‘do-nothing approach’ and wait for the market situation to solve the problem on its own.
Factual Situation
The wholesale price index is not reflective of the actual price situation. The WPI shows inflationary increase at 8.56%. The CPI for industrial workers shows 14.97% increase and for agricultural workers there is 17.41% rise. The food price index indicates a rise varying from 17 to 19%. We have just emerged from a slow down. The purchasing power is low. A Slow down normally see a recessional trend or a fall in prices. India saw a food price inflation during the downturn. We are certainly moving towards a double digit inflation. This inflation is UPA’s unlegislated tax on the consumer. The price in the retail shops is even higher than the one in the mandis. The actual price indicates that in December 2009 there has been 27% increase in prices of processed foods, 70% in potatoes, 45% for onions, 45% for Dal, 14% for cereals etc. In its present policy of Dal, the government is emulating Sachin Tendulkar . Dal prices have scored a century, sugar prices have already hit a half century. Instead of being proactive and dealing with the situation, the government is in search of false alibis.
Drought
The government claims 18 million tons fall in Kharif crop because of the uneven monsoon. Why it has been a silent spectator? During the drought in 2002 , there was a 40 million tons fall in food grains. The market was flooded with 60 million tons of foodgrains and the inflation was restricted in 2002-2003 to 3.4%. Today it has touched double digits.
Future Trading
Future trading and commodity exchanges were perceived in an economy of surplage .
Shouldn’t the UPA have reviewed this policy in an economy of shortages? Obviously, if there is a Rs.4.5 lakh crores future trading on the commodity exchanges with only one percent actual delivery, it will build inflationary expectations in the economy.
State Governments
It would be improper for the Centre to blame the States, particularly the Opposition States. Of all crack downs on hoarding, 83% took place in non-UPA run States and only 17 % in other States. This was clear from the documents placed before the Chief Ministers.
Sugar Economy
Obviously the mill owners have a say in government’s sugar pricing. The whole concept of abandoning the State advised prices was conceived in order to hurt the farmer and benefit the mills. 49 lakh tons of sugar has been exported at Rs.12.50 per kg. Sugar has been imported in this country at Rs.36/kg. Why should 10,000 tons of sugar be allowed to be exported on 15.2.2010 when the economy is facing shortage. What about 9 lakh tons of sugar lying in the ports of Gujarat waiting to enter and be processed for consumer use ? Sugar Price hike is a result of policy manipulation.
MSP increase in price rise
The government has repeatedly come out with a false alibi that the MSP increases from the UPA government have contributed to the price rise. The MSP increase is intended to benefit the farmer against rise in fertilizers cost, transport cost, fuel prices, power cost and the cost of living. It is intended to incentivise certain crops In the short term it can result in increase in price but in
the long term it results in increased production through increased acreage of cultivation of certaincrops and brings the prices down.
High consumption pattern on account of NREG
This country has always had distribution of ration to the weaker sections under Food for Work and Antyodya schemes. These subsidies were created in order to eliminate starvation and give a right for food to the weaker sections. Merely because these are now converted into NREG scheme , they can not result in shortages by itself.
Increase in oil prices
The oil price increase has still not been transferred to the consumers. In the last few months its impact in the market has not been felt. Obviously it has not contributed to the price rise. In any case if international oil prices go up, the duty components have to be rationalized so as to keep the pricing revenue-neutral. The excise duty, sales tax and customs duty contribute to more than half the oil prices. If duty structures remain the same , every increase in global prices
unjustly increases the revenue collection of the State. If the State were to adopt a revenue neutral policy, obviously the impact of oil prices could be absorbed .
WPI or Consumer Price Index
The wholesale price index does not factor in the services, and substantial number of food items. It does not represent the actual increase of prices in the market. The consumer price index is closer to reality. The difference between the two is more than substantial. Most countries in the world have abandoned WPI in favour of CPI. It is important that the Indian consumer also realizes the actual impact of the price rise rather than be confronted with some imaginary or unreal figures.
The prices have risen uncontrollably. The government has been unable to anticipate
shortages on the supply side. It continues to inflict the misery on the consumer particularly with food inflation at its highest. The Government must learn the basic dicta of governance.
The government is not serious in its economic management. Yesterday’s Rail budget, which is the first amongst this session’s economic business, only provided comic relief to this country. The Rail Minister was concerned with sports stadiums, mineral water bottling plants, medical institutions and Indo-Bangladesh relations etc. and not about core business. I remember a Tata Steel promo which said “We also make steel”. Is the PMO helpless in dealing with the situation? A confessional statement has been made in the editorial of the “Congress Sandesh” which says “some practical difficulty in coordination among the PMO and various Ministries are natural in coalition Governments” There has always been a collective responsibility of the Cabinet. A cabinet cannot pull in different directions. A government cannot plead helplessness on the ground that the Ministers are not listening to the Prime Minister. The NCP’s journal Rashtravadi has editorially commented that people won’t die or suffer if they don’t eat sugar. Such is the insensitivity of those in power. This can only be compared to Marie Antoinette’s comment “If they don’t get bread, let them eat cakes”.
The Approach of the Government
The general approach of this government on the price situation has been disastrous. Has the government run out of ideas on how to deal with the situation ? Can’t the government look beyond its nose and anticipate shortages and rely either on imports or stocks to tame the market? Is there a manipulation of policy resulting in price rise or is the government feeling helpless to deal with the situation and only searching for alibis to justify its failure? It appears that the government has adopted a ‘do-nothing approach’ and wait for the market situation to solve the problem on its own.
Factual Situation
The wholesale price index is not reflective of the actual price situation. The WPI shows inflationary increase at 8.56%. The CPI for industrial workers shows 14.97% increase and for agricultural workers there is 17.41% rise. The food price index indicates a rise varying from 17 to 19%. We have just emerged from a slow down. The purchasing power is low. A Slow down normally see a recessional trend or a fall in prices. India saw a food price inflation during the downturn. We are certainly moving towards a double digit inflation. This inflation is UPA’s unlegislated tax on the consumer. The price in the retail shops is even higher than the one in the mandis. The actual price indicates that in December 2009 there has been 27% increase in prices of processed foods, 70% in potatoes, 45% for onions, 45% for Dal, 14% for cereals etc. In its present policy of Dal, the government is emulating Sachin Tendulkar . Dal prices have scored a century, sugar prices have already hit a half century. Instead of being proactive and dealing with the situation, the government is in search of false alibis.
Drought
The government claims 18 million tons fall in Kharif crop because of the uneven monsoon. Why it has been a silent spectator? During the drought in 2002 , there was a 40 million tons fall in food grains. The market was flooded with 60 million tons of foodgrains and the inflation was restricted in 2002-2003 to 3.4%. Today it has touched double digits.
Future Trading
Future trading and commodity exchanges were perceived in an economy of surplage .
Shouldn’t the UPA have reviewed this policy in an economy of shortages? Obviously, if there is a Rs.4.5 lakh crores future trading on the commodity exchanges with only one percent actual delivery, it will build inflationary expectations in the economy.
State Governments
It would be improper for the Centre to blame the States, particularly the Opposition States. Of all crack downs on hoarding, 83% took place in non-UPA run States and only 17 % in other States. This was clear from the documents placed before the Chief Ministers.
Sugar Economy
Obviously the mill owners have a say in government’s sugar pricing. The whole concept of abandoning the State advised prices was conceived in order to hurt the farmer and benefit the mills. 49 lakh tons of sugar has been exported at Rs.12.50 per kg. Sugar has been imported in this country at Rs.36/kg. Why should 10,000 tons of sugar be allowed to be exported on 15.2.2010 when the economy is facing shortage. What about 9 lakh tons of sugar lying in the ports of Gujarat waiting to enter and be processed for consumer use ? Sugar Price hike is a result of policy manipulation.
MSP increase in price rise
The government has repeatedly come out with a false alibi that the MSP increases from the UPA government have contributed to the price rise. The MSP increase is intended to benefit the farmer against rise in fertilizers cost, transport cost, fuel prices, power cost and the cost of living. It is intended to incentivise certain crops In the short term it can result in increase in price but in
the long term it results in increased production through increased acreage of cultivation of certaincrops and brings the prices down.
High consumption pattern on account of NREG
This country has always had distribution of ration to the weaker sections under Food for Work and Antyodya schemes. These subsidies were created in order to eliminate starvation and give a right for food to the weaker sections. Merely because these are now converted into NREG scheme , they can not result in shortages by itself.
Increase in oil prices
The oil price increase has still not been transferred to the consumers. In the last few months its impact in the market has not been felt. Obviously it has not contributed to the price rise. In any case if international oil prices go up, the duty components have to be rationalized so as to keep the pricing revenue-neutral. The excise duty, sales tax and customs duty contribute to more than half the oil prices. If duty structures remain the same , every increase in global prices
unjustly increases the revenue collection of the State. If the State were to adopt a revenue neutral policy, obviously the impact of oil prices could be absorbed .
WPI or Consumer Price Index
The wholesale price index does not factor in the services, and substantial number of food items. It does not represent the actual increase of prices in the market. The consumer price index is closer to reality. The difference between the two is more than substantial. Most countries in the world have abandoned WPI in favour of CPI. It is important that the Indian consumer also realizes the actual impact of the price rise rather than be confronted with some imaginary or unreal figures.
The prices have risen uncontrollably. The government has been unable to anticipate
shortages on the supply side. It continues to inflict the misery on the consumer particularly with food inflation at its highest. The Government must learn the basic dicta of governance.
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