Govt may go back to Nehru era to tackle prices

from The Times of India

NEW DELHI: A global food crisis, rising prices in domestic markets and an election at hand has got the government shifting its focus from deregulation of trade in agriculture to contemplating old-Nehruvian style stricter controls and regulation of food markets.

Flashback to 2004-05 and the government was sending out clear signals that the food and agriculture business would be liberalised, made more amenable to private players and, in general, shift towards a market without the state intervening as big-brother at each step.

Back to 2008 and we have the food minister as well as the commerce minister threatening that, if their hands are forced, the government would be willing to return to a control-regime where movement of essential food items and its stocking would be strictly regulated.

Step back into 2005 and one is reminded of the times when the government took off several items off the Essential Commodities Act in what it said was to "facilitate free trade and commerce". It demanded that the states follow the trend, remove restrictions on movement of goods, storage and trade of commodities.

And, even though it kept on with the much-abused public distribution system, the overall food distribution to poor under various government-run programmes slowly dwindled. But today, faced with fading gains from the green revolution, climate variations leading to the century's worst crop failure in countries like Australia, diversion of agricultural land to biofuels and rising demand from developing economies - all leading to unprecedented food prices in the domestic market — the government has begun to rethink its strategy.

A while back, it had rationalised (read reduced) foodgrain supply under the Above Poverty Line (APL) quota, using a formula that hit the poorest states worst. But now, even though it is aware of the misuse of APL supply, it is keen to keep the prices of APL quota as low as possible. Facing a political and economic crisis, the government is agreeable to even deploying its weakest tools in the fight against inflation.

Hoping to plug the holes, the government has now asked the states to be vigilant. It has warned them to keep track of private players in mandis across the country. Partly, it might work for the Centre, facing several elections this year and the big show next year, to push onus on the states for mismanagement and inflation but the need to revive the lost regime is evident.

The Centre has begun to talk again, after a studied silence, on tax evasions by private players, hoarding by stockists and leakages in the supply chain. It has demanded that states maintain close scrutiny over procurement and arrivals in mandis . It has also asked states to use all possible powers under existing Acts, rules and legislations to check "artificial shortages" — a phrase last heard in the 70s and 80s.