The war that the government has declared against hoarders is rich in irony—because the government itself is the biggest hoarder of food in the country.
Mint reported on Friday that Prime Minister Manmohan Singh has appointed a group headed by Gujarat chief minister Narendra Modi to examine whether the draconian provisions of the Essential Commodities Act—a 1955 law to ensure that unscrupulous traders do not limit the availability of essential commodities to consumers—need to be used to go after hoarders. This is the 1970s all over again.
Illustration: Jayachandran / Mint
The United Progressive Alliance has implemented the perverse policy of sitting on food stocks at a time when food inflation is sky-high. The Food Corporation of India (FCI) currently holds rice and wheat far in excess of the minimum buffer stocks, even as the first reports from the field suggest that we have had a good rabi crop this year. FCI already has 16 million tonnes of excess wheat stocks and 12 million tonnes of excess rice stocks in its godowns—and this surplus will grow once the winter wheat and rice harvests are procured.
To be sure, food inflation is not just a result of high prices of rice and wheat. Other items such as fruit, milk and pulses have also become more expensive, partly because of a poor monsoon and partly because demand for food has increased because of higher incomes and the National Rural Employment Guarantee Scheme. The government does not maintain buffer stocks of these perishables. This newspaper has for long argued that the eventual solution to structurally high food prices has to come from the supply side through higher farm productivity.
Yet, there is little doubt that the government has mismanaged its market intervention programme. It could surely have released more grain into the open market to cool down prices and manage price expectations among people. The direct responsibility for this rests with Sharad Pawar, who is in charge of agriculture, food and public distribution, and not with state governments as he has so conveniently suggested recently.
Indian agriculture needs a New Deal to adapt to multiple challenges such as rising demand as a result of rising incomes and erratic rainfall due to climate change. But in the meantime, the government needs a credible and effective plan to manage supplies in the market, through imports and the release of food stocks from FCI godowns.
The hoarder is a straw man who can easily be set up and knocked down as part of political posturing, but the government surely knows that the way it has managed its food hoard is the bigger problem.
How should the government better manage its food stocks? Tell us at email@example.com