At the next election, an issue that will undoubtedly figure prominently will be the plague of rising inflation. After flaunting the prodigious growth of the Indian industry as one of their biggest successes, the UPA must now resolve the darkest blemish on their track record. Last year, they thought it was an inevitable, concomitant phenomenon that would dovetail with the celebrated growth rate of 9% of our GDP. The reserve bank hiked the cash-reserve ratio in a monetary attempt to reduce the liquidity in the system. The Finance Minister reiterated the hackneyed ‘aam aadmi’ rhetoric and labelled it as a supply-side problem that would be sorted by the next crop season.
A year later and things have gone from bad to worse. The inflation rates have hit an all-time high of 7%, the storm after the ‘calm’ of a P.A Chidambaram budget. I suppose it is unfair to place the blame entirely on the government because this rise in rises has global influences. For starters, Mother Nature hasn’t been too generous with her dispensation of weather conditions conducive to growing food crops. Two successive droughts in Australia, the world’s second largest producer of wheat has triggered off a global sense of panic. The consequence, according to economists, is the ‘national hoarding of food grains’. Ukraine, Russia, Uzbekistan and Argentina, all big producers of wheat and other food grains, have begun to curb exports. Back home meanwhile, we read stories of wheat crops being damaged in Punjab on a rather large scale due to unfavourable weather. The Minister for Agriculture, Mr. Sharad Pawar has recently stated that the government is even willing to import wheat to increase the supply and bring prices down. They have already enforced a ban on the export of food grains and there is a feeling among that these moves might ruin farming community.
This is where our government falls short in its duty to the country—stop-gap measures employed to temporarily assuage public panic. The government and its followers believed that the 60,000 crore loan waiver would be the panacea to farmer woes. Hardly a month on and the farmers are discovering the measure to be nothing more than a knee-jerk reaction. Most farmers can hardly avail of the waiver because its land ceiling of 2 hectares is too low for our widely practiced system of joint holdings. Furthermore, the government finds itself in a Catch 22 situation—should it work on reducing the consumer price rise by banning exports? This would be at the expense of the protection of agrarian interests. A lowering of paddy prices by Rs.100 per quintal could have extremely harsh ramifications for the farmers as the losses incurred will be passed onto them.
The government should not forget that this steady rise in inflation rates is also concurrent with an increase in middle class salaries. In the long term, it may not hit them as hard as it will the farmers. Rather than resorting to another myopic reaction, the government should look at dealing with this issue with the long term interest of the farmers in mind. Otherwise, there might even be a greater shift to the cultivation of commercial crops by farmers due to the limited rewards from raising food crops. Unless this government and its successor in 2009 channel their energies at honestly dealing with the agricultural issues of our country instead of handing out the seasonal election sop, the country will dangerously compromise her self-interests.
A year later and things have gone from bad to worse. The inflation rates have hit an all-time high of 7%, the storm after the ‘calm’ of a P.A Chidambaram budget. I suppose it is unfair to place the blame entirely on the government because this rise in rises has global influences. For starters, Mother Nature hasn’t been too generous with her dispensation of weather conditions conducive to growing food crops. Two successive droughts in Australia, the world’s second largest producer of wheat has triggered off a global sense of panic. The consequence, according to economists, is the ‘national hoarding of food grains’. Ukraine, Russia, Uzbekistan and Argentina, all big producers of wheat and other food grains, have begun to curb exports. Back home meanwhile, we read stories of wheat crops being damaged in Punjab on a rather large scale due to unfavourable weather. The Minister for Agriculture, Mr. Sharad Pawar has recently stated that the government is even willing to import wheat to increase the supply and bring prices down. They have already enforced a ban on the export of food grains and there is a feeling among that these moves might ruin farming community.
This is where our government falls short in its duty to the country—stop-gap measures employed to temporarily assuage public panic. The government and its followers believed that the 60,000 crore loan waiver would be the panacea to farmer woes. Hardly a month on and the farmers are discovering the measure to be nothing more than a knee-jerk reaction. Most farmers can hardly avail of the waiver because its land ceiling of 2 hectares is too low for our widely practiced system of joint holdings. Furthermore, the government finds itself in a Catch 22 situation—should it work on reducing the consumer price rise by banning exports? This would be at the expense of the protection of agrarian interests. A lowering of paddy prices by Rs.100 per quintal could have extremely harsh ramifications for the farmers as the losses incurred will be passed onto them.
The government should not forget that this steady rise in inflation rates is also concurrent with an increase in middle class salaries. In the long term, it may not hit them as hard as it will the farmers. Rather than resorting to another myopic reaction, the government should look at dealing with this issue with the long term interest of the farmers in mind. Otherwise, there might even be a greater shift to the cultivation of commercial crops by farmers due to the limited rewards from raising food crops. Unless this government and its successor in 2009 channel their energies at honestly dealing with the agricultural issues of our country instead of handing out the seasonal election sop, the country will dangerously compromise her self-interests.
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