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Mainstream, VOL XLIX, No 30, July 16, 2011

Surging Rise in Prices and Manmohanomics

Wednesday 20 July 2011, by Sailendra Nath Ghosh

In my student days, I had read William Hazlitt’s essay, “On the Ignorance of the Learned”. Now, we find conspicuous example of purblindness in our learned Prime Minister, Dr Manmohan Singh. He is acclaimed by the G-8 summiteers as a great economist. Since he accepted the Western paradigm of development, his advice, possibly, suits them well. In India, his expertise has resulted in (i) the creation of a small island—better say, an island of a few wealthy families—amid an expanding sea of poverty-stricken humanity, and (ii) in ever rising prices of everything that is needed for life’s sustenance.

Prices of foodgrains—that is, of wheat, rice, maize—are rising to an all-time peak due to (i) the USA’s exaggerated estimate of its corn production deficit; (ii) diversion of grains to biofuel production; (iii) speculative activities in the world commodity futures market; and (iv) Russia’s ban on wheat exports, somewhat under pressure from some speculative firms. This was a global phenomenon which was not Manmohan Singh’s creation. But Manmohan Singh and people of his orientation cannot insulate India from this scourge; they can only push the country deeper into its vortex. For they see no alternative to this trading system; they have shown no sign of seeing through the evils of “industrial farming” despite its ruinous effects on soil health, excessive mining of ground water, pollution of surface and ground water and air, and poison loading of crops. They have no qualms about agribusiness firms taking over farmlands, displacing farmers. In their view, reducing the percentage of population dependent on agriculture, even in populous, monsoon-ecology based, Nature-ordained agrarian countries is a progress.

Only larger death rates and widespread social unrest, as happened recently in the Arab world, will remove such blinkers.

As for the soaring of vegetable prices to unprecedented heights in Indian markets, these are the outcome of the Manmohan Singh-brand of policy-makers – namely (i) their refusal to take determined steps to curb petroleum consumption; and (ii) failure to see the evils of raising energy prices by small doses, too frequently.

Let us see the contrast—how an enduring perspective can evolve from nearness to life at the grassroots level. I, a small fry, depending on common sense, had written in the February 1, 1970 issue of the Oil Commentary* about the paramount need to curb petroleum consumption,

(i) by deterring every avoidable use of oil, and

(ii) by finding alternative production processes and feedstock-mixes.

This was three years before the OPEC administered the shock therapy by enforcing a huge hike in crude oil price. In the May 15, 1973 issue, again, in a lengthy article titled “Guidelines to Oil Policy”, I expatiated on the importance of curbing oil consumption, and of launching ventures for oil exploration abroad to improve our command over oil reserves. On July 15, 1977, I, aided by my late esteemed friend Dr Sachin Chaudhuri, an eminent biochemist, propounded a thesis that petroleum, the mineral hydrocarbon in which hydrogen is combined in the largest measure with carbon, ought not to be regarded as fuel at all. Since hydrogen has an affinity with oxygen, this mineral hydrocarbon, we felt, must be regarded as a close kin of metabolic carbohy-drate which is a major constituent of every living body. So long as carbon-based oxygen-dependent forms of life exist, the need for it will continue, if only to feed the corrective processes in the evolution of life, I reasoned.

Hence, for the conservation of crude oil without causing dislocation of the economy, the following regulatory measures were suggested:

(i) Not more than a marginal growth in petroleum products for the next six-seven years (1978-84);

(ii) Zero growth in its consumption for the following seven years (1985-93); and

(iii) Decrease in petroleum products consumption thereafter, despite the growth of population—by steadily increasing the use of energy from renewable resources.

This was a realisable programme if the national leadership had the will.

Nobody disputed the logic of these recommen-dations. In practice, however, the manufacture of oil-driven “small cars” was encouraged. As a result, petroleum consumption registered a quantum jump. This was a foolish decision. Like the Americans trying to reach the Wild West by limousines, we wanted more cars, even if small. Mass transportation system did not get its due and bicycles were infra dig.

In late seventies and during the eighties, in energy matters India’s political leadership was overly dependent on their economic advisers, among whom Dr Singh was very prominent. Many of them, like Dr Singh, had accepted the US Administration as the mentor. The US Administration, in turn, was under the influence of giant oil corporations who owned world-wide oil business and tried their best to delay the emergence of solar and solar-related forms of energy.

About energy pricing, this writer ardently advocated a hefty price-rise at once and not to allow any price increase during the seven or eight years that followed. This advice was based on the experience that the transporters and traders invariably passed on to the consumer a multiple of the official price rise every time. If the cauliflower costs Rs 60, brinjal Rs 40 and bhendi and tomato Rs 30 per kilo in the Delhi market today, it is due to the increase in petrol/diesel prices in small doses of Rs 2 or 3 per litre umpteen times. This is Manmohanomics which has led to vegetables being beyond even the middle classes’ reach.

The increase in prices of vegetables has not brought any gain to the farmers. They continue to sell vegetables at the same old price in the range of Rs 3-6 per kilo at their farms. It is the middlemen, the traders who have been making huge profits. Why cannot the government buy the marketable surpluses of vegetables by giving the farmers remunerative prices and intervene in the urban markets at affordable prices?

*A journal brought out from 1963 to 1977, its contents were closely read and studied by official policy-makers in all economic Ministries, apart from top executives of Indian and international oil companies.

The author is one of the country’s earliest environ-mentalists and a social philosopher. He can be contacted at sailendranathghosh@yahoo.com and sailendernathg@gmail.com

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