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Mainstream, Vol. XLVI, No 23

Food Crisis and Cooperation on Global Plane

Wednesday 28 May 2008, by Manish Sharma

As the chanting of God’s name removes fear out of one’s mind, repeated calls for globalisation should remove the suspicion of mutual distrust for a positive environment. The basic question at the present moment is to seek an answer of soaring unemployment and fears of hunger and famine on account of shortage of food production in different granaries of the world. Does the positive environment thrown open by expectations of globalisation provide answer to the global pressing problems? The present crisis at the political and economic levels warrants a drive for cooperation, understanding and interdependence on the global plane. The capacity and efficacy of globalisation is to be judged on the basis of effective cooperation and deliberations on problems confronting the people at different locations. The reformist phase of liberalisation from 1991 onwards witnessed the growth of information technology and improved modern communication that provided strong support to the spirit of globalisation. Have the reform measures reached the farming sector?

Leadership and Political and Economic Fallacies

THE tools of information and knowledge can effectively be used to face burning current problems of scarcity of food and other commodities and to devise efficient services to consumers and other needy people. To solve the problem of food scarcity, the income of farmers must increase which is possible with the help of reasonable prices of products and at the same time building the agricultural infrastructure such as irrigation, power and roads. Most of the economic fallacies stem from the tendency to assume that there is a fixed economic pie and that one party can gain only at the expense of another. Economic prosperity is the result of action and human ingenuity, thus there is little doubt that the size of the economic pie is variable and not fixed. The bonds of scarcity can be loosened with the help of knowledge and the output can be expanded with the passage of time. The present world crisis on scarcity of food and commodities illustrates the point that knowledge, even more than resources, is the constraining factor limiting economic progress. The political leadership must understand the basic point that the fallacy of banning exports, putting restrictions and hoarding of commodities to contain the price rise and improve the supply is counterproductive in the long run, as it harms the interests of farmers and other producers to gain from the rise of price in the market. The psychology of hoarding multiplies fears of inflation and finally harms the economic growth. The political leadership should be conversant with the idea of openness in exchange and trade as against the imposition of limitations on use of resources, including human resources, such as the political regional leaders in some of the Indian States are insisting for reservation and priority in dealing with the local residents. Resources can be exploited by preserving the open- door policy and giving incentives to the workers for production.

Increase of prices of inputs has forced governments all over the world to make use of the subsidies so that inflation can be contained by providing relief to the farmers. Subsidies have become part of the food policy as these can be used for short-term measures. However, what is needed is to improve the agricultural infrastructure such as improving irrigation, power supply and construction of roads. Food production can be increased by bettering the infrastructure and providing incentives and security to the farmers. India and China have vast space of land for food production and if the productivity in these two emerging Asian powers can be increased to the level of developed countries the food situation at the global level can be considerably improved. It is possible to increase food production and at the same time help production of bio-fuels at the places best suited for the purpose. An inclusive approach is needed for the solution of the commodity crisis. Inflation is caused by the scarcity of commodities and increasing demand at the global level. Technology and information sciences can go a long way in devising a new approach to meet the crisis.

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THE political leadership should be well aware of the shortcomings of export curbs as these would tarnish the credibility of the country as a reliable supplier and it may also mar future access to the export markets. Erection of trade barriers would not serve the global economy; the countries should coordinate their efforts to augment supply. The National Policy for Farmers, 2007 tends to ensure growth in the real income of farmers. Farming has to be made creative and remunerative to provide fruitful results. Food production has to be increased to save the consumers from the dangers of higher priced imports. The small farmers should be included in the provision for direct subsidies as it would save them from the manipulations of the rich and influential farmers. The presently developed IT tools can be used to identify small farmers and this would strengthen the efforts to combat poverty. Such measures would help make Indian agriculture more competitive and empower farmers to withstand global competition. Given our large cultivable land and favourable climate and at the same time effectively confronting the global food prices, a proper policy framework could be designed to make India the world’s food bowl.

The Union Government and the State governments have to face the political mandate of the people within a time period of one year. This provides an opportune time for a new policy framework and the inflation also offers an opportunity to evolve strategies for enhancing the static food production. The government policy can decrease inflationary expectations and dissuade hoarders and speculators who are hoping to reap a windfall from the present crisis. During the current period the government is prepared to sacrifice revenue to control prices. The RBI has also raised the Cash Reserve Ratio (CRR) by 50 basis points to tighten the monetary supply. Short-term measures may be taken by the government to deliver essential items to the needy people on a war footing. It is also expected that a normal monsoon would come to the rescue of the planners to contain the inflation. It is high time that long term measures are taken to give renewed attention to agriculture and improvement of the infrastructure so that the future may be secure for sustainable growth.

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