Mar 25, 2016

Is India being pushed back to the days of 'ship-to-mouth' existence?



Fifty years after Green Revolution was launched, India is getting ready to let the walls of protection against cheaper and highly subsidized agricultural commodities be washed away. Flood of cheaper imports is sure to dismantle the gains of food self-sufficiency achieved so assiduously over the past five decades. 

The import lobby is strong. Aided and abetted by mainline economists and policy makers who are always keen to seek reduction in import duty to enable cheaper and highly subsidized food and agricultural commodities to come in, the demand for lifting import tariffs is always rife. So when the industry lobby group – Assocham (The Associated Chambers of Commerce and Industry of India) -- released a report estimating lower wheat production thereby calling for reduction in import duties I wasn’t surprised. This has been the usual pressure tactic that the agri-business industry has always applied.

I am glad Agriculture Minister Radha Mohan Singh was quick to see through the ploy and rubbished the Assocham claims. He is so right when he says: “Lower import duty would lead to a fall in wheat price in the domestic market and farmers will incur heavy losses while traders will purchase from farmers at lowered price.” While the minister had rightly seen through the design of the trade, the fact remains that the demand for lowering the import tariffs is always in the pretext of an expected rise in food inflation.

Let it be known that the cheaper imported wheat from US/EU is highly subsidised. This subsidy is actually a dumping price. 

In fact, such is the power of lobby groups that a news agency went a step ahead. In a report on the wheat import controversy, it called the import tariff of 10 per cent (which is nominal by international standards) as wheat import tax. To term import tariffs as an import tax is a deliberate effort to misguide the policy makers to seek its removal. If the import tariff is a tax then I see no reason why EU should come up with a trade proposal under WTO rules for only the least developing countries (LDCs) for allowing ‘anything but arms’ and not allow developing countries to do so. EU knows that LDCs have hardly anything to export that it should be wary of but from developing countries like India, no way.

Wheat production last year had slumped to 86.53 million tonnes, from an actual harvest of 95.85 million tonnes the previous year. This year, production is unlikely to meet the target of 93.8 million given the weather anomalies but according to the minister ‘production of wheat in the country would still be around 92-93 million tonnes’.

I am not sure what the final estimate would be but one thing is for sure – the government has to blame itself for initiating policy measures that discourage farmers from cultivating wheat. Forcing the State governments not to provide any bonus over and above the minimum support price (MSP) and to pressurize the wheat growing States to dismantle the procurement system does not assuage well with its own claims.

Not only in case of wheat, it is the reduction in import tariffs over the years that has turned India into the world’s second biggest importer of edible oils and the biggest importer of pulses. I remember in 1993-94 India had become almost self-sufficient in edible oils, importing only 3 per cent of its domestic needs. And then began the imports, necessitated to bring down the domestic prices. India gradually began to lower the import tariffs (from the bound levels of 300 per cent) and eventually brought it down to zero per cent for raw edible oil imports and 7.5 per cent for processed edible oils. Reducing the import tariffs brought in a flood of cheaper imports from US, Brazil, Malaysia and Indonesia. India imports edible oils worth Rs 60,000-crores not because it can’t produce oilseeds within the country but simply because it bowed before the commercial interests of the import lobby.

I have always said that if India is keen to grow more pulses domestically then all it has to do is to raise the import tariffs to at least 25 per cent (from the prevailing 5 per cent) and provide farmers with a better price and an assured procurement. But instead the import lobby is so powerful that it has managed to convince the government that growing pulses outside the country – in Africa and Burma – and importing from there is a better option. Not realizing that while Indian farmers commit suicide, India is willing to pay a higher price to farmers in Africa and Burma.

Meanwhile, the import lobby has managed to get the imports of apples through from all ports and also get an approval for airlifting import consignments. Apple import, coming with 50 per cent import tariffs, has been opposed for long by apple growers in Himachal Pradesh and Jammu & Kashmir. The tragedy is that while cheaper imports are pouring in from China, US and even as far away as from Chile and Fiji, domestically produced apples are going abegging.

The demand for lowering import tariffs for fruits and vegetables, milk and milk products, from the European Union, and to allow the import chicken legs (a byproduct in the US) is next on the cards. And be sure, the demand is going to be louder with a battery of mainline economists already upping the argument seeking imports.

If the import surge continues, India will soon return to the days of ‘ship-to-mouth’ existence when food came directly from the ships into the hungry mouths. 

Wheat imports: Getting back to 'ship-to-mouth' existence ABPLive. March 23, 2016

Is India being pushed back to the days of 'ship-to-mouth' existence? Linkedin. Mar 24, 2016

1 comment:

Vaanbhatt said...

Do we ever bother about our own people, industry and agriculture???Big and influential lobbies get the policies mended to suit their benefits...the country which do not bother to spent more on luxuries must realize that survival is because of essentials...