X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Common man's woes: Union Budget and pulses - Outside View by S.S. TARAPORE

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

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.

Disclaimer:

The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

Equitymaster requests your view! Post a comment on "Common man's woes: Union Budget and pulses". Click here!

  

More Views on News

BSE Sensex at All Time High; ONGC Among Top Gainers (Market Updates)

Jul 18, 2018 | Updated on Jul 18, 2018

Markets all time high analysis : The bse sensex at all time high; ONGC among top gainers. Find the latest update, special reports and news on all time high gainers of BSE Sensex at equitymaster.com.

BSE Sensex at All Time High; ONGC Among Top Gainers (Market Updates)

Jul 18, 2018 | Updated on Jul 18, 2018

The BSE Sensex has hit an all-time high at 36,748 (up 0.5%) with ONGC among the top gainers.

Two Meetings That Nailed the Idea of Owning Brilliant Smallcaps Without Buying Them (The 5 Minute Wrapup)

Mar 22, 2018

Certain blue chips hold the potential of delivering returns comparable to small-cap stocks. With these stocks, you can get the best of both worlds.

A Sense of Melancholy (Vivek Kaul's Diary)

Jul 18, 2018

...

Mere Paas HRITHIK Hai... The Mother of All Trading Stocks (Profit Hunter)

Jul 18, 2018

You are missing out big gains if you don't own these 8 stocks.

More Views on News

Most Popular

How to Avoid a 90% Loss Suffered by This Super Investor(The 5 Minute Wrapup)

Jul 12, 2018

Blindly following super investors is a dangerous game to play. Here's how you can avoid such mistakes.

The Answer to Your Wealth Worries: Small Caps (Especially Now)(Profit Hunter)

Jul 10, 2018

If you're worried about the markets - you are on the wrong track. This is opportunity - put your wealth-building hat on, instead - Richa shows you how...

The Multiple Problems with the Minimum Support Price (MSP) System(Vivek Kaul's Diary)

Jul 11, 2018

The price signals that MSP sends out, creates its own set of problems.

New Fund Offer - ICICI Prudential Pharma Healthcare and Diagnostics Fund - Should You Invest?(Outside View)

Jul 6, 2018

ICICI AMC launches an open -ended equity fund following Pharma, Healthcare, Diagnostic and allied theme.

When Disappointment Panda is Around. Buy Quality Stock like This!(Chart Of The Day)

Jul 6, 2018

Buy Companies that can fight all kinds of Pandas and Bears in the long run.

More

Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE SENSEX


Jul 18, 2018 03:37 PM

MARKET STATS