Arrest price rise


The unrelenting rise is the prices of essential food items and vegetables is the most serious economic challenge for the government now. Food price inflation is above 15 per cent consecutively for the second week and there is no sign of it softening. The actual prices in the market are worse than the figures. Potato prices have doubled in one year and those of onions and pulses have increased by more than 40 per cent.

All items are becoming unaffordable, with even the most lowly ones mocking the buyers. The agriculture minister has said that price rise will continue and the Planning Commission says there is unlikely to be any relief till December end. The prime minister’s economic advisor says the worst is yet to come. The wholesale price index which is hovering above one per cent now might go up to six per cent by March. The food prices are expected to rise further in tandem.

Continuous rise in the minimum support prices of agricultural commodities and an inefficient supply chain from the farm to the consumer have always been unhelpful factors. While MSPs ensure protection for farmers, an imperfect implementation of the regime has led to much of the gains not going to them and the cost being paid by the consumer. These are long-term issues but the immediate cause for the price rise now is the expected fall in kharif production due to poor monsoons and destruction of crops due to floods in some states. The kharif production may be short by 21 million tonnes. Rice and coarse grain output would be badly hit. The government expects the rabi crops to do better but that is months away and cannot provide immediate relief. It has sufficient exchange reserves for imports. Rice imports and the scrapping of import duty on rice may help but the situation on the ground is very grim now.

While the PDS needs to be strengthened to protect the weaker sections, who will be the worst hit, measures to check hoarding and speculation are needed to keep the prices in the open market in check. Even the middle-class and well-to-do sections are badly affected. There is no sign of any pro-active initiative by the government to check malpractices which create artificial scarcity and profiteering. Finance minister Pranab Mukherjee has said states also have a responsibility in keeping prices in check but passing the buck will not help the consumers.

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