REVERSE POLICIES TO CONTROL PRICE-RISE : CPIM

The Polit Bureau of the Communist Party of India (Marxist) has issued the following statement:

The Polit Bureau of the CPI (M) notes with grave concern that the WPI inflation rate climbed to 7.31% in December 2009 and inflation in food articles remained very high at 17.28% in the week ending 2^nd January 2010. The retail price of sugar has reached an unprecedented high of 50 rupees a kilo. Prices of cereals, pulses, vegetables and milk continue to rise. This reflects the utter failure of the Congress led Government in checking food prices and inflation.

The recent note issued by the Cabinet Committee on Prices shows that the Central Government wants to shirk its own responsibility by blaming the States. Without a proper assessment of the causes behind the relentless increase in food prices, effective measures cannot be undertaken. For example, one of the reasons for high sugar prices is the failure of the Central Government to build a sugar buffer stock. Instead the Government incentivised exports helping big traders and sugar mill owners. Sugar imports with a slew of concessions to importers since early last year have not resulted in lowering the retail price of sugar. Only the traders and big companies have profited, Some of the trading corporates have reported profits from 150 to 300 per cent. The Cabinet note does not address these issues but instead blames the States. In fact all the three Left led State Governments have removed VAT on sugar as have many others.

The Central Government’s faulty approach is evident in the decision to release buffer stocks of foodgrains in the open market rather than to provide it to State Governments at subsidized rates as a measure to restore the earlier cuts in allocations to APL sections. The issue price of so-called additional allocations of foodgrains being offered to State Governments is double the price of the earlier APL allocations. For example in Kerala the issue price of rice for APL allocations was Rs.8.90 per kilo. The monthly allocation of 1.13 lakh tonnes was slashed to just 17,000 tonnes. Now the additional foodgrains offered by the central Government is at Rs. 17 a kilo. Such is the hypocrisy of the Central Government on price rise!

Further, the threats being issued to State Governments that they will be bypassed and Central agencies like NAFED and NCCF will directly provide subsidized foodgrains, edible oil and pulses to consumers in the States is highly objectionable. This goes against the federal character of the Constitution. Besides it is common knowledge that these agencies have failed to deliver even on their present responsibilities given their limited outlets.

Even the homily to the State Governments to undertake dehoarding operations sound hollow when it is the Central Government which has liberalized inter-State movement of foodgrains and relaxed stockholding norms for private traders and corporates. At the same time speculative capital in the futures market continues to play havoc with commodity prices. Shockingly, in spite of continuing high prices in wheat, the earlier ban on future trading in wheat was lifted by the Central Government. Only Central Government can reissue the ban. Individual State Governments cannot make a dent on inflation through isolated actions in the neoliberal policy environment created by the Central Government. The Central Government follows policies which help hoarders and speculators and then blames State Governments for not taking action. Indeed it is the contradictory statements of different Central Ministers which are fuelling inflationary expectations.

The CPI (M) demands that the UPA Government take the following immediate steps in order to reign in food price inflation:

1. The Government must release cereal stocks through the PDS by increasing the rice and wheat quotas for the States. The Food Security legislation should be tabled without any further delay.

2. The Government must supply sugar, pulses and edible oils through PDS outlets at cheap rates.

3. Futures trading in all food articles must be immediately banned.

4. The Government, in coordination with the State Governments, must launch a countrywide crackdown against hoarding and black-marketing. All private traders of food articles must disclose their stocks and release surplus stocks.

5. Diesel and petrol prices must be brought down by cutting indirect taxes.

The Polit Bureau of the CPI (M) calls upon all its units to intensify the ongoing struggle against price rise till the Congress led Government initiates these steps in the coming days.