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The article discuss about the rising inflation in the pulses and the measures taken by the government.
- High prices of pulses are upsetting the food budget of many poor families. Soaring retail prices of dals have made dal a luxury for the dal-bhaat and dal-roti eating population.
- But not very long ago, wholesale prices of gram, arhar and urad stood below their minimum support prices (MSP). Inflation in pulses was minus 14 per cent in August 2013.
- It started rising in the latter half of 2014, crossed the double-digit mark in January 2015. Though inflation has declined somewhat, it still stood strong at 26 per cent in June 2016.
- Government has swung into action by setting up an expert committee under the chief economic advisor. Any rational approach would suggest carrying out a thorough diagnosis of what led to this price surge, and based on that, potential solutions.
- Back-to-back droughts in 2014 and 2015 reduced production of pulses. With demand remaining somewhat sticky, imports of pulses increased and increased global prices led to increased prices in India.
Government’s response to increased prices:
- The government has tried to augment supplies by keeping imports duty-free.
- The government has also signed a long-term contract with Mozambique for import of 1,00,000 tonnes of tur and other pulses. It aims to double the volume of the imports by 2020-2021.
- Indian teams are also scouting for possible government-to-government (G2G) imports from Myanmar and many African countries.
- Export of all pulses (except kabuli chana and organic pulses up to 10,000 tonnes/year) have been prohibited.
- The government is also inching towards a much-desired buffer stock policy for pulses: It has decided to raise buffer stock of pulses from 1.5 lakh tonnes to 8 lakh tonnes; recently it has also proposed to raise the buffer to 20 lakh tonnes.
- The Centre has also directed the states to impose strict stocking limits on pulses, and to raid hoarders breaching that limit.
- Futures and forward trading in all pulses (except squaring up of position in running contracts in chana) has been suspended.
- The Centre has also urged the states to de-list pulses from the APMC act and abolish local taxes on them.
- These measures are regressive and futile, and remind one of the controlled and rent-seeking economy of the 1960s. They also expose the hollowness in the understanding in policymaking circles about the market economy.
- A bonus of Rs 425/quintal on MSP of kharif pulses — arhar, moong and urad — has been announced to incentivise production. But the MSPs are still far below their respective wholesale prices.
- There is need for a crop-neutral incentive structure, which is currently tilted heavily in favour of rice and wheat.
- Dal reconstituted from soya flour can be promoted to fill the protein deficit of the poor.
- The government should recognise the huge failure of the technology mission on oilseeds, pulses and maize, which has been in operation since the mid-1980s, and dismantle it.
Two consecutive droughts have led to rising prices of pulses in the domestic market. But the steps taken by the government expose the hollowness in the understanding in policymaking circles about the market economy. Comment.
- Steps taken by the government.
- Why these steps are regressive.
- What should have been done.