Modi Government Headed for a Dal-Roti Mess as Traders Make a Killing

Modi Government Headed for a Dal-Roti Mess as Traders Make a Killing

The government, in an effort to prevent a repeat of the 2015 dal crisis, has been carefully managing the food economy through export and import bans and custom duties. But a recent government order concerning masoor, tur and chana dals has raised eyebrows.

Lentils and the Modi government have a peculiar relationship. In its first year, the government faced hyperinflation in dal prices, and now, over nine years later, India is once again grappling with imminent dal and food price inflation crises.

Dal prices have already begun to rise in the mandis , prompting hoarders and big traders to stockpile dals in their warehouses. The government, in an effort to prevent a repeat of the 2015 dal crisis, has been carefully managing the food economy through export and import bans and custom duties. But the recent government order concerning masoor, tur and chana dals has raised eyebrows.

 

Last week, the Ministry of Consumer Affairs wrote to all state chief secretaries, urging them to ensure that any available stocks of masoor, tur and urad dal with stockists in their respective states are declared on the government portal. In recent months, the all-India average price of tur/arhar dal has surged 25% to Rs 128.66 per kg, prompting the government to open up imports.

Interestingly, there may be issues with importers as well. The government issued another clarification, requiring importers of pulses to compulsorily declare their available stocks. This step became necessary as several importers had been holding dal stocks after benefiting from relaxed import regulations.

A few months ago, the government reduced import duties on dal, flooding the markets. But neither consumers nor farmers have benefited from this policy because importers, foreign traders and large stockholders have once again reaped the lion’s share of the imports, which is in their godowns. While the government’s efforts are commendable, they may not be sufficient to curb dal price inflation. In fact, some measures may inadvertently favour these entities.

Why is this the case? Firstly, the government allowed the cartel responsible for dal price manipulation, as per the Income Tax department’s report, to go unpunished. Additionally, it attempted to dismantle the Essential Commodities Act as part of the farm laws. A suo motu investigation initiated by the Competition Commission of India (CCI) was closed for “lack of evidence”. This raises questions about how two government departments could study the same problem and arrive at different conclusions. While the IT department found evidence of “cartelization” and conducted an investigation, the CCI did not find sufficient evidence.

Lentils are a major protein source for most Indians, yet no action has been taken against hoarders or foreign corporations that openly profited from price manipulation in 2015. The same people are probably exploiting loopholes to profit from India’s hunger once again.

Now, let’s discuss dal import custom duties in the context of the G20. Lowering customs duties on US-origin lentils like chickpeas is a way to appease US President Joe Biden. The US is one of the biggest exporters of lentils to India, and the Indian government has progressively reduced duties on US-origin lentils from 30% to 20%, and now to none. This move serves a dual purpose: it creates demand for cheap exports due to artificial scarcity, allows India to strengthen its ties with Biden and enables Modi to acquire US dal along with second-grade weapons systems. This pleases Biden’s agricultural electorate, benefits Modi and exempts corporations selling dal from custom duties, all at the expense of domestic producers and the market.

The term ‘killing’ may sound harsh, but it accurately describes the plight of Indian farmers who have repeatedly appealed to the government for a lucrative Minimum Support Price (MSP) on lentils. Within three years, this could help safeguard foreign reserves and make India sovereign in this category. Even the RSS’ Bharatiya Kisan Sangh has repeatedly written to the government regarding oilseeds and lentils. However, it appears that the government is prioritising American farmers. Since the Modi government’s first term, lentil imports have continued to grow, and this trend is likely to persist, regardless of whether the BJP or Congress is in power, as both parties have similar agricultural import policies.

With inflation already at a peak, food security will become an even more pressing concern than anticipated. After enduring vegetable price inflation, consumers and farmers are growing frustrated. If the government mishandles the lentil supply and fails to control inflation, India will not remain silent, as this issue directly impacts dal-roti, the basic staple of our diet.

Content Source – Modi Government Headed for a Dal-Roti Mess as Traders Make a Killing (thewire.in)

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