Common man's woes: Union Budget and pulses - Outside View by S.S. TARAPORE

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Common man's woes: Union Budget and pulses
Oct 19, 2015

The government should build up a permanent buffer of pulses, essentially out of imports.

Powerful lobbies are getting active to articulate their own interests in the context of the Union Budget of February 2016. There are segments which will want specific concessions for their own interests. There are also wider pressure groups which want lower interest rates and these powerful segments believe that lower interest rates would lead the economy to paradise. In this entire din, the common person's interest gets totally drowned.

Distribution of income

There is the old dictum that the pattern of investment determines the pattern of income distribution which then determines the pattern of consumption. Now if investment is directed at producing coarse cloth and basic foodstuffs, then the income distribution would be towards those who would consume these items. If, however, the investment pattern is towards high quality durable consumer goods, the distribution of income would be such that incomes would flow towards those segments which can consume these goods. One is conscious that the bulk of influential opinion today would counter this analysis as referring to the erstwhile dirigiste state and today's liberalisation is result oriented. A view strongly articulated is that if we want rapid development there must be increased inequality of income. It is in this context that socially oriented expenditure is considered 'populist' while concessions for the well off segments are treated as 'positive' incentives which would be of benefit to the economy.

Structural deficit in pulses

For decades there has been an imbalance between supply and demand for pulses. Despite this deficiency, insufficient measures have been undertaken to rectify the position. In recent years, rice and wheat has been in surplus, yet despite the foodgrain stock mountain, insufficient measures have been taken to rectify the surpluses and the budget continues to provide large resources to finance foodgrain stocks. This has political economy ramifications as the powerful rice and wheat lobbies see to it that procurement prices remain high. Pulses are grown by marginal farmers, and there are inadequate measures to rectify the imbalance.

The pulses economy results in severe hardships over large tracts of the population. Unlike in the case of wheat and rice, little has been done to step up supply of pulses. Farming of pulses is on marginal land and undertaken by small farmers. The State has little or no control over supplies coming on to the market.

Measures which need to be undertaken are well known, yet these steps are not followed. First, the government should undertake imports well in advance. In fact the government should build up a permanent buffer of pulses essentially out of imports. In the current year, the pulses deficit is reportedly two million tones, yet measures are still to be taken to augment supplies

Secondly, pulses are not a single commodity but many pulses are not available in international markets. Hence measures need to be taken to step up production of those pulses which are in demand.

Thirdly, there should be measures to allocate uncultivated land to corporates to develop the land specifically for cultivation of pulses. If other countries can make the desert bloom, there is no reason why India cannot do likewise.

Fourthly, there should be a rechanneling of food subsidies. If a small sliver of the wheat/rice subsidy is cut it would more than suffice to provide strong subsidies to the pulses sector.

These are not by any means novel suggestions. They have been raised on many occasions, yet the authorities do not evince interest in these ideas. Nor do the authorities come up with better proposals. It is India's shame that per capita daily consumption of pulses fell from 60 grams per day in 1951 to 31 grams per day in 2011. The upshot of all this is that per capita consumption of pulses has been going down secularly and vast tracts of the child population is growing up with protein deficiency.

The government should not hesitate to spend in the current financial year and in 2016-17 what it takes to alleviate the pulses price situation. The present prices of pulses are just not acceptable and measures should be taken to bring down prices to half the present level- the cost to government should not be a restraint.

While soybean output has been rising over time, the budget must make unlimited funds available to improve textured soybean meal to meet Indian tastes. In fact textured soybean should be distributed free of cost to increase consumption.

There is a general helplessness expressed that there are no major sources from which shortages cannot be made up through imports. A number of countries can be sourced for imports such as Canada, Australia, Russia, Myanmar and the US. Official imports by the Indian authorities are considered only after prices of pulses reach stratospheric levels. While there is a Price Stabilisation Fund (PSF) of Rs 500 crore, it is abysmally small given the various demands. Given that the shortages of pulses could be of the order of 2 million tonnes, the government should hold a stock of pulses of the order of 2 million tonnes which can be unloaded on the market as soon as shortages become visible. There is no point in importing pulses after prices cross Rs 200 a kg.

The Budget being presented in February 2016 should undertake a pathbreaking reform under which the government should make large allocations for import of pulses well before shortages hit the market.

The country has been afflicted with shortage of pulses for many decades and it is resolve this problem, once and for all.

Please Note: This article was first published in The Freepress Journal on October 19, 2015. Syndicated.

This column, Common Voice is authored by Savak Sohrab Tarapore. Mr. Tarapore, is an economist and he runs his own Multi-Language Syndicated Column. Mr. Tarapore's other column, which appears in The Hindu Business Line, is titled Maverick View.

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