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Political charade

Print edition : Feb 11, 2011 T+T-

The UPA government is apparently unmoved by the widespread criticism that its policies have fuelled the price rise.

in New Delhi

INFLATION and price rise get inextricably linked to the political process at several levels of society. Developments in the past two months, which saw unprecedented rates of inflation and price rise, have underlined this perennial reality in politics. Activities of the United Progressive Alliance (UPA) government at the ministerial level, in administrative matters as also in the political jousting in the ruling coalition between its leader, the Congress, and the smaller partners have all had inflation and price rise at the core. The manoeuvres of the principal Opposition party, the Bharatiya Janata Party (BJP), and the non-BJP Opposition led by the Left parties have also stressed the same theme.

Social activists not directly affiliated to political parties have also addressed the issue in several foras. One such forum came up with a statement signed by 150 social activists from across the country and led by the Magsaysay Award winner Aruna Roy on January 19, even as the Rashtrapati Bhavan was getting ready for a course-correction reshuffle in the UPA Ministry. The statement asserted that the Manmohan Singh government's priorities were such that they increased the economic hardships of the poor and the underprivileged who had to bear the brunt of the double-digit inflation.

The statement made a particular reference to a decision announced by the Prime Minister himself (through a letter on December 31, 2010) to delink wages given under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) from the Minimum Wages Act (see story on page 115). It also pointed out that the government of India had already undermined wages under the NREGA through a January 2009 notification, which imposed an unjust freeze at an arbitrary rate of Rs.100 per day on its wages and that the present action literally sought to remove the basis of constitutional and legal protection of the lowest end of workers in the wage hierarchy. The statement added: With a consistent near double-digit inflation rate, touching 9.7 per cent and even higher food price inflation, the frozen NREGA wage, over the last 24 months, has been significantly eroded in real terms.

The publication of this statement was preceded by a two-day consultation on minimum wages organised by the Bandhua Mukti Morcha, a non-governmental organisation, in collaboration with the Planning Commission and the Nehru Memorial Museum and Library (NMML). This consultation, which had the participation of an array of people from different segments of society, including senior politicians, prominent social activists and key administrators such as Deputy Chairman of the Planning Commission Montek Singh Ahluwalia, Union Minister of State for Labour Harish Rawat, Communist Party of India (Marxist) leader Sitaram Yechury, CPI leader D. Raja, Justices Ajit Prakash Shah and J.S. Verma, activists Harsh Mander, Medha Patkar, Swami Agnivesh and Prashant Bhushan, and development economist Jean Dreze was dominated by pointed criticism of the UPA government's functioning on very many fronts, including its failure to control inflation and the price spiral.

While the central focus of the consultation revolved around the assertion that a rational policy of minimum wages should be in place to allow workers a life of dignity, it also addressed other questions relating to it directly or indirectly. These included the overall policy thrusts of the Manmohan Singh government as well as the political pulls and pressures it was facing vis-a-vis the price rise.

The statement of the 150 social activists pointed out that the government's refusal to pay even minimum wages on public works at a time when food prices keep shooting up lays bare the Prime Minister's promise that no citizen of our country must sleep hungry'. It added that it is shocking that a government battling trust deficit as scam after scam privileging powerful corporations become public, will let, comparatively minor, fiscal considerations override a constitutional and humanitarian mandate. A government violating the Minimum Wage Act was violating the Constitution and calling to question its own legitimacy.

The consultation as well as the statement presented the views of a large cross-section of people and reflected the growing anger against the policy thrust of the Manmohan Singh government, particularly in relation to the lives of the common people.

References to a statement issued by the Prime Minister's Office (PMO) on January 13 regarding inflation and price rise came up time and again during the consultation. The Prime Minister had a two-day-long consultation with senior Ministers on ways and means to check inflation before issuing the statement. The PMO had stated: The current bout of inflation is driven by a rise in prices of vegetables and fruits which is more difficult to manage because these commodities are not held in public stocks. The rise in prices is partly due to late rains, which affected the onion crop. There is also an underlying increase in the prices of milk, eggs, meat and fish, which is the result of fast growth of the economy, leading to rising income levels, combined with the effect of several inclusiveness programme which put greater income in the hands of the relatively poor whose food consumption increases.

The several inclusiveness programme mentioned here is perceived to be the NREGS, which offers a minimum 100 days' employment to the rural population. Citing the NREGS as a cause for rising prices evoked widespread criticism. At the consultation, Jean Dreze, who is a member of the National Advisory Council (NAC) headed by UPA chairperson Sonia Gandhi, lampooned this line of argument and insisted that increasing NREGS wages is essential to protect the worker against the debilitating inflation.

Montek Singh Ahluwalia, who had pursued a line similar to the one propounded by the PMO at several fora and even described inflation as a sign of prosperity and food price rise as a one-time increase that had helped agriculture, did not specifically respond to this criticism. All that he would say was that the government needed to function within legal parameters on all issues, including curbing inflation and protecting minimum wages.

The January 13 statement gave a number of solutions for tackling inflation and price rise. These included stringent action against hoarders and black marketeers and steps to boost agricultural productivity. The latter proposal was explained as one that would involve taking up new schemes that would provide large budgetary support for the production of cereals, pulses, oilseeds, vegetables and fruits, milk and milk products, and poultry.

Commenting on this, Professor Sudhir Kumar Panwar of the Kisan Jagriti Manch, a collective of activists and academics that addresses the concerns of farmers and seeks to make them part of think tanks and policymaking bodies, told Frontline that increasing agricultural productivity and making special efforts in that direction is only a small part of the solution. He pointed out that India was the second largest producer of onions in the world, contributing 19 per cent of the global production, and yet the price of onions in the country had reached an all-time high in the past three months. What we need is not measures such as these, which are primarily short-term and fail to address the core policy issues involved in the current situation. What we require is a comprehensive policy shift from the current market-driven policies that the UPA-II government is pursuing, Panwar said.

However, he said, he and his organisation did not see any chance of such a policy shift happening. At a time when the government needs to think on these lines, it is actually contemplating an absolutely counterproductive measure of allowing 51 per cent foreign direct investment (FDI) in retail trade. What is interesting in this regard is that the BJP government in Gujarat as well as the BJP-Akali Dal alliance government in Punjab are in favour of such a move though the BJP-led National Democratic Alliance (NDA) at the national level is opposed to FDI in the retail sector. Panwar noted that the motivations for such policy flip-flop among mainstream parties came from sources beyond national politics. Interestingly, many prominent State-level leaders of the NDA, including Bihar Chief Minister Nitish Kumar and Uttarakhand Chief Minister Ramesh Pokhriyal Nishank, had squarely blamed the Union government for the price rise, he observed.

The CPI(M) pointed out that the government's steps on inflation had essentially rested on false assurances and that the Ministers in the UPA government are giving differing and contradictory statements regarding price rise and how to tackle it.

In a statement, the party highlighted the difference between the promises of Ministers and the actual measures as follows: Since deregulation, petrol prices have been hiked seven times leading to a 20 per cent rise and this has prompted the oil companies to increase the price of petrol twice in a month. The hike amounts to a steep Rs.5.50 per litre. The government has not stopped speculation through forward trading in food items and essential commodities. The export-import measures for commodities such as onions have fuelled price rise and only helped the private trading companies to make huge profits. The price rise of food items has not benefited farmers. In many areas, farmers in distress continue to commit suicide. Neither do they get remunerative prices nor are they compensated adequately for crop losses. The Central government has not extended adequate assistance to meet the losses of farmers due to unseasonal rains. The statement also pointed out that the government move to allow foreign companies in the multi-brand retail trade would mean loss of livelihood for lakhs of shopkeepers and traders.

CPI leader Atul Kumar Anjan, was of the view that the government statement about stringent action against hoarders and black marketeers is essentially meant for public consumption. If the government was serious about this, much would have happened long ago. For over a year, the government has assured the people that it would reduce the prices of essential commodities. Not only has that promise remained unfulfilled, but the reality has been a galloping rise in prices. What this promise of stringent action actually aims at is realpolitik objectives. Elections are due in many States, including big ones such as West Bengal and Tamil Nadu, in the not-so-distant future and the aim is to address the electorate in these States, he told Frontline.

The realpolitik aims vis-a-vis the price rise situation cited by Anjan had found a reflection in the coalition politics of the UPA in recent times. It set off a kind of tussle between the Congress and its junior associate, the Nationalist Congress Party (NCP) led by Union Agriculture Minister Sharad Pawar. It was Congress general secretary Rahul Gandhi who triggered the tussle when he blamed the compulsions of coalition politics for putting limitations on the Congress' ability to control prices. This was perceived as a jibe directed at the NCP and Pawar, who wasted no time in retorting that decisions regarding price rise are taken collectively. He added that the Prime Minister, his Economic Adviser, the Finance Minister, the Home Minister, myself and the Planning Commission's Deputy Chairman take periodic reviews.

This was followed by an announcement by the Trinamool Congress, the West Bengal-based constituent of the UPA, that it would launch mass protest rallies against the government's measures that contributed to inflation and price rise. Interestingly, the so-called course-correction reshuffle in the Union Cabinet, which ultimately manifested itself as a dud exercise on January 19, was billed as something that would strengthen the measures against inflation and price rise. As it turned out, there was no concrete political or organisational element in the reshuffle that suggested a significant move in this direction.

According to Anjan, such opportunistic and confrontational politics within the ruling coalition blunts a real struggle against inflation and rising prices. The CPI leader agreed with Sudhir Panwar's view that the real struggle against inflation and price rise has to be policy-oriented.

Anjan added that a broad framework of the required policy shift is available in the recent call given by nine non-Congress, non-BJP parties for a nationwide movement against inflation and price rise. The parties had exhorted the government to take steps for ending forward-trading in food and essential commodities, universalising the public distribution system, taking firm measures against hoarding, paying remunerative prices to farmers and giving inputs at reasonable cost, ending deregulation of petroleum products and rolling back the budgetary hikes on petroleum products and not allowing foreign capital in retail trade. The nine parties, which include the four Left parties and the Janata Dal (Secular), the Telugu Desam Party (TDP), the Rashtriya Lok Dal (RLD) and the All India Anna Dravida Munnetra Kazhagam (AIADMK), are planning an agitation that will stretch up to the Budget session of Parliament, which is scheduled to begin on February 21. It remains to be seen how far this campaign or the deliberations so far will impact government policy. If the track record of the past one and a half years is anything to go by, a drastic reversal of policy seems unlikely.

What people say: KERALALeela, thatch maker

I make thatches out of coconut leaves for a living. I manage to make about 20 pieces a day for a daily wage of Rs.40. I live alone, in a small, leaking hut on half a cent of land my family gave me. The government claims I belong to the above poverty line (APL) category. I am not eligible for ration rice at subsidised price. For most part of the year I have no work. A kilo of rice in the open market costs nearly Rs.30. I skip breakfast and survive on black tea for most part of the day and the half a kilo of rice I buy from the retail shop every three days and, maybe, some fish. I cannot afford to buy vegetables. I ask God, every day, why do you make me live like this?

Vijayan, farm labourer

True, prices are going up. But if people like me cut down on food, how will we do the hard labour in the fields? I have been a farm labourer all my life and there is much demand for my kind of work now. I am sure to get four to five days of work every week, on an average, at Rs.400 to Rs.450 a day. I live with my wife and aged mother. We have been able to manage so far despite the rising prices. But by the end of the week, we have very little savings left.

Rejitha, nanny and domestic help

I am really worried now. I live alone with two school-going children, a daughter aged 15 and a son aged 12. I earn about Rs.4,000 a month, looking after a child for a young working couple six days a week and doing domestic chores for different households on Sundays. I need Rs.1,200 every month for tuition and transport expenses for my children. I need to clear a housing loan of Rs.17,000. But my household expenses have gone up by Rs.1,400 in the past six months. I try to pay the grocer and the vegetable seller some amount every month. But debts are mounting. There is this constant fear about the future.

Satheesh, part-time company employee

I have changed my shopping habits. I have stopped buying milk, except a quarter litre every day for my child. We have stopped eating meat. I go to the vegetable market at night on Saturdays, when they sell it cheap, before the holiday. I buy half of our requirement of rice, atta, and so on from the ration shop, and the other half, of better quality, from the open market. We buy fish only on special occasions. We buy onions very rarely. We always go for the cheapest cooking oil. It has been months since we ate out. I have to manage a household with Rs.4,000 a month.

Chandran, wayside restaurant waiter

The hotel where I work caters mostly to poor people, workers, labourers and the like. There is a definite change in the past few months: many regular customers who used to order rice and fish curry or meat for lunch are now asking if they can have rice alone, with some gravy perhaps. And we oblige.

Rajan, city vegetable seller

Where they used to buy one kilo they buy less nowadays. Or they go for cheaper alternatives. We have stopped stocking costly vegetables, onions, potatoes, and the like.

Appukkuttan, farmer

The weather has been playing truant, there is the invariable threat of floods and pestilence and the worry about a poor harvest. But when we do have a good yield, we are happy that the prices of vegetables are going up, until we go to the market to buy other essential commodities. We never get the price that middlemen reap from the market with our produce. Rice cultivation is not profitable now. So we are forced to buy rice too. A cup of tea costs Rs.5 at the village tea shop. Coconut oil, onions, you name it, we are forced to buy them all, at the price that the market decides. Labour is costly. My family lives on the vegetables and bananas that we grow in our field. Now I try to sell my harvest to middlemen who export vegetables to the Gulf and other countries. They are willing to pay any price and are eager to take any quantity. But then, when the yield is plenty too, prices fall. Life is hard.

Sekharan Nadar, village tea shop owner

I get nearly a hundred customers a day, all of them regulars, farmers and farm labourers from the locality. Many have started complaining that I am hiking prices much too frequently. But do you think I can help it? Prices of all commodities have gone up. The daily expense for running this shop is Rs.1,000 to Rs.1,200. At the end of the day, I get Rs.1,500 to Rs.2,000. I need to maintain that to look after my family's needs. I try to avoid serving dishes with onions and potatoes and rely mostly on cheaper or locally available stuff. But customers are not happy. I can sense it. Some order much less than they used to. Some do not visit the shop at all. Others mutter curses under their breath.

Savithri, rural housewife

They say salaries and wages are going up. But prices are rising at a much faster rate. What is the point in government hiking salaries if it cannot control prices? Big onions sell at Rs.80 a kilo; small onions at Rs.75; green gram and black gram sell at Rs.80 or Rs.90; a kilo of coconut oil costs Rs.100. The government offers rice at Rs.2 a kilo for BPL cardholders. But we are excluded from that category. Rice is nearly Rs.30 a kilo in the open market. So instead, we buy back ration rice from the BPL cardholders at Rs.10 a kg. Incomes are rising, but only for the rich. For the poor like us, such rise in prices is proving to be a disastrous burden. Either steal from the rich or encourage everybody in the family to commit suicide that's the only option before us.

The headmaster, government school catering to poor children from coastal Thiruvananthapuram. The noon meal programme is certainly a big relief for the poor fisherfolk's children in our school, especially because life is becoming a burden in the coastal areas. The system provides upma or steamed rice and chickpeas or green gram for breakfast; rice, sambar, and two side dishes for lunch; and milk and eggs at least two days a week for all 166 students in this school. At times there is a delay in the funds being released. Until recently the teachers used to manage the system by pooling their own resources. But with rising prices, and the funds being delayed for over two months, we are unable to find the necessary resources for everything. So we have stopped providing breakfast to the children for the past two months.

Mary Stella, fish vendor

I travel from the coast to bring fish to nearly 70 households in the city every day. Many of them curse me, saying that I am trying to fleece them. But does anyone realise how difficult life has become for people like us? I have asked my son to stop going to school so that his two elder sisters can complete their education.

R. Krishnakumar in ThiruvananthapuramWhat people say: MAHARASHTRA

EVERY year thousands participate in the Mumbai Marathon's six-kilometre Dream Run. This part of the annual event is usually a colourful spectacle with people supporting various causes running in fancy dress. Of the 22,000 Dream Run participants this year, one man stood out: he was wearing a garland of onions. The elderly gentleman said he planned to present the garland to the winner. A fitting prize for the present times.

Workers in the unorganised sector are the worst affected by the price rise. They say jobs are not difficult to get but the wages they are paid are not enough to survive on. Even in the organised sector, salaries are not enough to cover basic expenses. Sheila Kamble works in a nationalised bank. Her husband is a manager in a shipping company. Together they earn close to Rs.60,000 a month. They have to repay a housing loan and a car loan, pay school fees, pay medical bills of their parents and utility bills, and, of course, buy food. Earlier I would not care about the amount of food I bought. After all, we have two growing children. But now with ordinary dal costing Rs.100 a kilo or cooking oil costing Rs.110 a litre, we plan our purchases each week, she says.

Sheila says it is absurd to say prices are rising because people are consuming more. Prices are rising because they are not controlling them and have no proper policy, she says.

Alka Jadav has been a cook for 30 years. She and her husband commute two hours every day from Vasai, a northwestern suburb, to Churchgate in South Mumbai because salaries this side of the city are better. Until a few months ago, Rs.100 would get me two kilos of onions and a kilo of peas. Now I buy half a kilo of onions and some cheaper vegetables, she says.

Trade unionist and social activist Vivek Monteiro says inflation is really hurting the unorganised sector. People are eating just once a day and we find nutrition levels are dropping rapidly. He says the naka workers (those who pick up work at commercial areas for a daily wage), who would normally earn about Rs.100 a day, still earn that amount but it is not enough to feed their families.

Naresh Ram lives in a slum near Worli and has four children below the age of six. He works as a loader and is the only working member in the family. My wife cannot leave the children and go to work. I make around Rs.2,500-3,000 a month. Some days my wife would feed the children dry rotis and then wait for me to return with my earnings to make a proper meal for the children. It was not so difficult until a few months ago.

It is not just urban India that is reeling under inflation. Ravindra Deolekar owns seven acres of agricultural land in Saswani village in Raigarh district. If the monsoon is bad then our crops suffer and that hits our income, he says. This is a terrible situation because farmers also need to earn money. But if the prices are too high then the consumer gets hit.

Montek Singh Ahluwalia has a point in an economy that is doing well, but that is hardly a realistic scenario, says Vijay Jawandhia, a cotton farmer and an activist with the Shetkari Sangatana in Wardha. There is an increase in the money supply and therefore in prosperity. But it is not benefiting the larger population, 70 per cent of which is in the agriculture sector, he says. The Sixth Pay Commission looked after the urban poor and the working class but paid no attention to farm labour, Jawandhia says. How can farm workers survive in a so-called thriving economy when prices are increasing but their income is not? he asks.

Anupama Katakam in MumbaiWhat people say: DELHI

IN times of inflation, restaurants and eateries feel the bite of competition. Sample this: We still serve pyaj [onions] with our meals while most other restaurants have switched to mooli [radish], Govardhan, the manager of Gopi Restaurant in South Delhi, says. Salad is vital to Delhi cuisine, and onions form an important part of it along with carrots and cucumber in small measure.

But the spiralling prices of onions between Rs.80 and Rs.110 a kilo in the last one month have completely changed the food pattern in the small dhabas.

Govardhan's trade secret? You just have to use onions more judiciously in the curries. That's it.

Gopi Restaurant is in Yusuf Sarai, which is probably the only lower middle class place to shop in South Delhi. Because of its proximity to the All India Institute of Medical Sciences, its numerous dhabas get a lot of business from people visiting the hospital. They stay in cheap hotels for the period of their treatment, which is usually more than a month.

With the prices of food served in the dhabas going up in the past year, another business is thriving here: provision stores have started renting out utensils to these people to cook their own food in the hotels they stay in.

Jagmoti Baruah from Assam, 60, a kidney patient, has been in Delhi for a month with his wife. The last time I came here was in 2007. We got a meal for less than Rs.20 then. Now it costs Rs.60. Hiring cooking utensils and making our own food works out much cheaper than eating out, he says.

A few hundred metres from the Yusuf Sarai market is the Green Park market. Here vendors sell exotic vegetables such as broccoli, lettuce, bell peppers, black mushrooms and olives. The fruit sellers here sell imported fruits.

Ram from Bihar, in his mid-40s, is the biggest vegetable vendor here. He sells the best onions even during these times of inflation. He sells them for Rs.120 a kilo. There has not been much difference in onion sales despite the high prices, he says.

He sources the vegetables from Azadpur, the biggest wholesale vegetable mandi in North India, at a price higher than what he paid earlier. We have to cut down on profits because even though my shop is in Green Park, we cannot sell the vegetables for the prices we demand. You have to stabilise the prices according to Delhi, he says.

In Green Park's restaurants, salads do come with onions. The only thing is that they are not as prominent as they were before.

Around 20 kilometres from South Delhi, the crowded streets of Paharganj are home to the largest number of pavement-dwellers. Mohammed Rasheed, who has been living here for the last 30 years, says Even if we get bread and pulses every day, that is more than enough, sir. Even a plate of dal does not come for less than Rs.30 in the cheapest dhaba here. We are labourers and don't earn more than Rs.50 a day. We don't need salads.

We have no idea what the government is doing. For us, the only concern is to get any food and to see that the police do not drive us away from this pavement, another homeless person adds.

The middle classes, too, are dropping their pretence of concern for growth in the times of inflation. But one memory is still alive: the defeat of the BJP in the 1998 Delhi Assembly elections, caused solely by spiralling onion prices. A fall from which the party has not recovered.

Ajoy Ashirwad Mahaprashasta