More than the return of the United Progressive Alliance (UPA) government to power, the aam admi will remember the year 2009 for the back-breaking mehngai and the inability of the government to make dal-roti, sabzi and chini affordable for the masses.
The unprecedented rise in the price of essential commodities, particularly pulses, sugar, milk and vegetables turned the year bitter for the aam admi. What was irksome for the people was that instead of tackling the situation, the government justified price rise and tried to prepare, as it were, the aam admi for what is to come. By the end of the year when inflation soared to 18.65 per cent (for week ending December 12) there were doom’s day prediction of it becoming worse in the coming year.
The year began with enhanced prices of essentials that was explained away as part of the global scenario. However, as the year progressed, there was no easing the situation in food items and the blame was laid at the door of deficient monsoon that hit 299 districts in 13 states. The fact, however, remains that the effects of deficient kharif monsoon — an estimated 18.8 million tonnes decline in the combined production of rice, coarse cereals and oilseeds — would be felt later or even next year, if rabi does not make good the losses. Although monsoon deficiency averaged at 22 per cent, it is hoped that delayed monsoon activity will help the rabi (wheat) crop.
Through the deficient south-west monsoon, the government assured the nation that foodgrain stocks totalling 233.88 million tonnes were enough to tide over the situation. In fact, towards the last quarter, the government decided to offload wheat and rice in the open market to enhance availability and hold prices. So it is not as if the country was short in cereals.
The sugar story took a trajectory of its own. Much into the year the government woke up to the fact that sugar production would be 146.8 lakh tonnes in 2008-09. In the previous year it was 263 lakh tonnes. At the height of robust sugar stocks, the government refrained from allowing sugar exports. But even as reports were coming in about the decline in domestic sugarcane acreage in 2008-09, the government allowed industry to export. And then in 2009-10 kharif sowing, when there was no great improvement in sugarcane sowing figures, and with predictions of sugar output remaining around 160 lakh tonnes this year, the government had to go in for imports of raw and refined sugar. By then, of course, international sugar prices soared. The price of the sweetener in the domestic retain market soared from Rs. 16 two years ago to Rs. 40 a kg currently. Around the same time, koya prices also escalated, impacting Diwali and Id celebrations.
As things stand, the Central government has not been able to get on top of the price rise situation but has almost succeeded in tossing the blame on state governments saying that they must take action against hoarding, speculation and diversion from the PDS. Chief Ministers Nitish Kumar and Mayawati opposed this, but by and large there is an inexplicable quiet in the polity on this. The Samajwadi Party had announced an agitation against price rise but dropped it. Now the Left parties plan to take to the streets on the issue in the budget session which is two months away and by when the situation might alter.
As per official data, atta prices that were Rs. 14 a kg one year ago in Delhi’s retail market stood at Rs. 20/kg on December 24, 2009; sugar soared from Rs. 21/kg to Rs. 40/kg; tur dal from Rs. 50/kg to Rs. 90/kg; moong dal from Rs. 45/kg to Rs. 81/kg; urad dal from Rs. 45/kg to Rs. 76/kg; milk from Rs. 21 to Rs. 22-26/kg; wheat from Rs. 13/kg to Rs. 15/kg; rice from Rs. 22/kg to Rs. 23/kg; loose tea from Rs. 144/kg to Rs. 156/kg; salt from Rs. 11/kg to Rs. 12/kg. Ghee prices have also soared.
What is inexplicable is the unprecedented rise in the price of vegetables and fruits, even seasonal ones. Gaps between demand and supply are the routine excuses put out by the administrative ministries. In some cases, as in onion prices “local factors” are responsible. But in the case of potatoes, farmers got paid peanuts while in the cities the tuber is selling at Rs 15/kg. Tomatoes continue to be sold between Rs. 22 to Rs. 30/kg.
Clearly high inflation is the combined and the cascading effect of the last hike in the price of diesel and petrol, the high across-the-board service charges that is levied, and the high percentage (to be raised) of value added tax. Speculation in the futures market is also said to be responsible for the tendency to hoard. The result is that there is no respite for the aam admi and housewives are at their wits end on how to manage the family budget. For the poor and lower middle-class, any medical emergency or celebration or children’s education and tuition costs is enough to push them into debt.
In the year to come the aam admi will have to bear the consequences of the free market forces and speculative trading that the Manmohan Singh government favours. Of course the parallel economy in the country will give the government a false sense of comfort about recession not hitting India, but the aam admi will ring in the new year worried about how to make both ends meet.