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The Centre has again stepped in to stem inflationary trends, this time for arhar dal or pigeon pea. The Union Ministry of Finance issued an order waiving off import duty on whole pigeon pea March 3, 2023. The order came into effect March 4, days before the festival of Holi was to be celebrated.
This is only the latest in a string of steps taken by the government to curb inflation. It also recently increased the sale of wheat under the Open Market Sale Scheme (OMSS) to 5 million tonnes from 3 million tonnes.
This step was taken as wheat stocks in the central pool are only slightly above the buffer. At least 25 million tonnes must be procured in the Rabi Marketing Season 2023-24 to meet the requirement of the public distribution system and welfare schemes, news portal The Print reported recently.
The government has also been heavily importing refined palmolein of late. From November to December 2022, around 450,000 tonnes were shipped into India. In October 2022, 127,000 tonnes of refined palm oil was imported, according to a recent Down To Earth report.
This decision of the government has led to a collapse in edible oil prices, notably mustard.
Last year, the government had restricted the import of sugar in late May to maintain domestic stocks and keep prices stable.
In the earlier part of May 2022, the government had imposed a near-total ban on wheat exports in the wake of an unusually warm winter that shrivelled the crop even as the Russian invasion of Ukraine began.
The government has allowed zero duty import on whole tur, pointed out Siraj Hussain, former Secretary of Agriculture and Farmers’ Welfare. “But the tur crop has already been harvested so the decision will not harm the farmers.”
“This is a correct decision as the tur prices are much higher than the minimum support price (MSP) and there is high inflation,” Hussain added.
Wheat inflation is about 20 per cent and the government would like to procure 25 million tonnes, so the government decided to release five million tonnes under OMSS. “This has brought down the wheat prices no doubt but I think the government did not have an option,” Hussain said.
Fair enough. But where does all this leave the Indian farmer?
Devinder Sharma, food and trade policy analyst, told DTE that government steps to control inflation were usually taken without realising that the entire burden of the same was borne by farmers.
“Nobody wants the farmer to get a higher or sizeable income. India’s macroeconomic policy is the biggest stumbling block preventing farmers’ income from going up,” he said.
Specific steps are needed to augment farmers’ income, he added. “It is possible. But the economic thinking prevalent globally is that agriculture has to be sacrificed for industry,” Sharma noted.
Ajay Vir Jakhar, chairman, Bharatiya Krishak Samaj, said the solution should be two-pronged. “I do not have a problem with the government importing from abroad to control inflation. But it should not allow import of food items if the landing costs are less than the MSP,” he said.
The second major component, according to Jakhar, is compensation.
“In the United States, if the government acts in a way that prices get subdued because of its policies, then it compensates farmers who are being affected. This is the way it should be done here too,” Jakhar told DTE.