 "<b>Lunch with BS:</b> Ashok Gulati")
People who work for a while in India’s government system often emerge from the experience bemused, bitter, or both. But Ashok Gulati insists he “enjoyed every minute”. He has just completed his three-year stint as chairman of the Commission for Agricultural Costs and Prices.
As an advisory body on agricultural pricing, CACP is among the most politically sensitive wings of the Government of India, but had become somewhat somnolent in recent years. Gulati jerked it out of that ennui, an exercise that included turning up at the office so early that the cleaning staff complained.
He has, I know, many stories to tell, so we quickly order from the menu at The Deck, India Habitat Centre’s members-only restaurant that allows us to enjoy the last of Delhi’s al-fresco dining weather. Our presence there is courtesy the corporate membership of the Indian Council for Research on International Economic Relations where Gulati was appointed chair professor, agriculture a couple of days before.
Narain, who chaired CACP twice in the 1970s, joined the global think tank International Food Policy Research Institute after he retired, heading the same division Gulati did several decades later (“my career in reverse!”). “Dharam Narain lectured me as a student in Delhi School of Economics and was a researcher par excellence. More importantly, he was not known to bow to political pressure. So I told the PM, I will do what you want but you must bear with me!”
Gulati made good on this cautionary statement with a report within a month of signing up on March 1, 2011. This was on lifting foodgrain export controls. “I looked at the numbers and saw stocks were bulging. I knew this was going to lead to disaster. You know, export controls is one way of taxing the peasantry by suppressing prices. I can understand imposing controls in 2007 when world prices were sky-rocketing but you need to review them after three or six months.”
So his first report recommended immediately allowing 15 million tonnes of wheat and rice to be exported. The reaction, I ask as the starter arrives. First, the chairman of the Food Corporation of India (FCI) came to his room and told him, “Ashok, you can make these radical suggestions because you are coming from outside. But if the government allows one million tonne to go out of the country I’ll give you a treat.”
Gulati began to recce the situation within government. He also talked to the media. A text message from a former CACP chairman advises him not to do so. You’ll be in trouble, he warned. “I told him thanks, but this is my innings and I’ll play it my way,” Gulati says. The issue was this: the finance, commerce and agriculture ministries were fine with exports but the food ministry was not, because it was anxious about ensuring stocks for the impending food security law.
The government finally opened exports of wheat and rice in September 2011. “In 2012-13, we exported 22 million tonnes of wheat, rice and corn, and in 2013-14 we will be exporting about 18 million tonnes,” he says as he hospitably spoons the two dips, hummus, made from chickpea, and babaghanoush, from eggplant, on to my plate. “So in two years we have exported 40 million tonnes of cereals, which we have not done in the history of this country. And think what would have happened to the markets if these stocks were not allowed to go out.”
Gulati speaks with an amiable forthrightness that does not take the sting out of his words but expunges his criticisms of the suspicion of ulterior motive. He is astringent about the CACP set-up, for instance. Of the academics, he reckons that “not more than 25 per cent are of any calibre. The problem is that many of them stopped studying and analysing 20 years ago.” Luckily, he found younger people with experience ranging from one to five years but with “better knowledge than those who had spent 25 years there, so I built the system with them”.
One of his early strictures was that field visits were mandatory before reports were submitted. One of his own to Bihar proved an eye-opener. At the airport, he was met by two people who immediately tried to grab his bag. “This is such a feudal mentality in government,” he says, “It would be interesting to see how many secretaries carry their own briefcases and lunch boxes.” Having assured his greeters that nothing was wrong with his arms, he then declined to go to the Circuit House choosing instead to drive 200 km to Sasaram (“Jagjivan Ram’s constituency”) to meet farmers.
There he discovered that since the agencies were not procuring from the region, farmers were forced to sell their grain at 20% below the minimum support price (MSP). “This is the area where the second Green Revolution is supposed to happen. It was a bumper year, but you had export controls so you didn’t allow foodgrain to go out, you restrict the private sector domestically, plus you are not procuring. So the market collapsed for farmers in Bihar. Yet you are procuring from Punjab, which earns Rs 4,000 crore extra by charging a tax of 14.5%, what the heck!”
Everybody was resigned to the fact that nothing would happen, Gulati remembers as the mezze platter, now almost empty, is removed and our main courses served. Dr Mangla Rai, advisor to Nitish Kumar, said as much; the agriculture secretary said the issue wasn’t his problem, and what the food secretary told him Gulati says he will never forget. “He said, ‘Tumne saare desh ka theka le rakha hai? [are you responsible for the whole country?] The government has made you a chairman. Enjoy life’.”
So he wrote a letter to the PM offering three options. The PM passed it on to the Food Minister K V Thomas, who called to say his secretary said he was complaining…. So Gulati decided to make it a test case and finally, after sitting with the state bureaucrats, the number of procurement centres were expanded. Procurement, though. didn’t jump much, principally because, he says, Kumar complained of corruption within FCI.
We’re talking about streamlining MSP, a proposal he put to the PM (to no effect). He is also irritated by critics who said his recommendations were reckless and reels off statistics to prove otherwise. Take wheat, he says. MSP for wheat from April will be $225 a tonne. “In the last six to eight months, export tenders have been coming in at $275 to $310 a tonne f.o.b. [free on board, meaning the buyer pays the price of shipment]. And what are other countries in the region paying as MSP? Pakistan $280, and China $388. That’s how we’ve been exporting.”
In rice, the numbers are more striking. Against an MSP of roughly $320 a tonne, China pays between $444 and $495 (depending on the variety) and Indonesia, Thailand and Philippines as much as $695. “Except for Vietnam, which pays about $297 a tonne, the others are in trouble. At an f.o.b price of $390 to $420 a tonne, we are now the world’s biggest exporters of rice today.”
Gulati offers me some pizza but I decline since I cannot offer him, a vegetarian, my wholesome, aromatic mutton stew and rice. “Yes, yes, I understand it’s a one-way trade,” he says good-naturedly putting a slice on my plate. It lives up to his fulsome praise, the crust delicately thin without being crumbly.
We’re on to his second-favourite topic, the skewed nature of subsidies. “The problem is the government is trying to achieve equity through price policy and not using income policy, so you have massive misallocations. This is how Soviet Russia collapsed. We need to get out of this socialist mindset and allow markets to function,” he says. I remind him that these weaknesses have been discussed for more than 20 years. He agrees and says direct cash transfers through things like Nandan Nilekani’s Unique Identification project could well have been a game changer now.
But what if we emulated Chhattisgarh, which has stanched the leaks in the distribution system? That’s a strange story. Since the state government was offering a huge bonus on top of the MSP, farmers, who account for more than half the rural population, sell their entire produce to the government and buy it back at Re 1-2 a kg. “Why are you giving food to farmers who produce it?” he points out, and predicts that Chhattisgarh will soon suffer the same problems as Punjab – failing water table, the problem of monoculture and so on.
I’ve run through my checklist of “mandatory” questions that one must ask a respected agricultural economist, but on which his positions were well known (food security, food inflation). But I really wanted to ask him how he rated the ministers with whom he worked. To my surprise, he does not demur, though he does say no political pressure was imposed on him. He found Agriculture Minister Sharad Pawar “progressive, more market oriented than other ministers and with a broad vision.”
But what of Pawar’s famous face-offs with Thomas? “Well, the food minister wanted to protect consumers, the agriculture minister the farmer. Each ministry works in a silo, so, really, it is for the prime minister to take a call. That’s when you need a leader.”
And Manmohan Singh wasn’t? “I don’t want to say that but where is the larger vision? A leader should be able to bring ministers together to follow that vision. But if each minister is beating his own drum, then where is the leadership? Somehow, I think the whole nation had that feeling.”
That mild censure strengthens a little as I pay a startlingly reasonable bill and ask him about Atal Bihari Vajpayee, on whose prime ministerial advisory council Gulati served along with a galaxy of experts, I G Patel, Montek Singh Ahluwalia, P N Dhar and N K Singh among them. “Vajpayee didn’t say much but he listened. Once, there was a discussion on deficit financing and Montek talked about how we need to disinvest in Maruti, Ashoka Hotel and so on. Vajpayee’s response was, ‘Bawaal khada ho jayega’ [it will become a problematic issue]. Yet, 15 days later, that’s exactly what the government announced. That’s leadership.”
A shorter version of this article appeared in the print edition
As an advisory body on agricultural pricing, CACP is among the most politically sensitive wings of the Government of India, but had become somewhat somnolent in recent years. Gulati jerked it out of that ennui, an exercise that included turning up at the office so early that the cleaning staff complained.
He has, I know, many stories to tell, so we quickly order from the menu at The Deck, India Habitat Centre’s members-only restaurant that allows us to enjoy the last of Delhi’s al-fresco dining weather. Our presence there is courtesy the corporate membership of the Indian Council for Research on International Economic Relations where Gulati was appointed chair professor, agriculture a couple of days before.
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He is enthusiastic about Pizza Fiorentina, a thin-crust pizza smothered in crispy spinach — “you won’t get this kind of crust anywhere, not in Pizza Hut or Dominoes”. Since we’ve selected a starter of vegetarian mezze platter, a reliable favourite, I decide to get my quota of meat with Lamb Navarin. So: government, I say. He attributes his enjoyment to the fact that he considered the job a duty and wasn’t looking for favours. His brief came from his first meeting with Prime Minister Manmohan Singh. What did Singh expect from him, he asked. To “bring CACP back to Dharam Narain days”, the PM said.
Narain, who chaired CACP twice in the 1970s, joined the global think tank International Food Policy Research Institute after he retired, heading the same division Gulati did several decades later (“my career in reverse!”). “Dharam Narain lectured me as a student in Delhi School of Economics and was a researcher par excellence. More importantly, he was not known to bow to political pressure. So I told the PM, I will do what you want but you must bear with me!”
Gulati made good on this cautionary statement with a report within a month of signing up on March 1, 2011. This was on lifting foodgrain export controls. “I looked at the numbers and saw stocks were bulging. I knew this was going to lead to disaster. You know, export controls is one way of taxing the peasantry by suppressing prices. I can understand imposing controls in 2007 when world prices were sky-rocketing but you need to review them after three or six months.”
So his first report recommended immediately allowing 15 million tonnes of wheat and rice to be exported. The reaction, I ask as the starter arrives. First, the chairman of the Food Corporation of India (FCI) came to his room and told him, “Ashok, you can make these radical suggestions because you are coming from outside. But if the government allows one million tonne to go out of the country I’ll give you a treat.”
Gulati began to recce the situation within government. He also talked to the media. A text message from a former CACP chairman advises him not to do so. You’ll be in trouble, he warned. “I told him thanks, but this is my innings and I’ll play it my way,” Gulati says. The issue was this: the finance, commerce and agriculture ministries were fine with exports but the food ministry was not, because it was anxious about ensuring stocks for the impending food security law.
The government finally opened exports of wheat and rice in September 2011. “In 2012-13, we exported 22 million tonnes of wheat, rice and corn, and in 2013-14 we will be exporting about 18 million tonnes,” he says as he hospitably spoons the two dips, hummus, made from chickpea, and babaghanoush, from eggplant, on to my plate. “So in two years we have exported 40 million tonnes of cereals, which we have not done in the history of this country. And think what would have happened to the markets if these stocks were not allowed to go out.”
Gulati speaks with an amiable forthrightness that does not take the sting out of his words but expunges his criticisms of the suspicion of ulterior motive. He is astringent about the CACP set-up, for instance. Of the academics, he reckons that “not more than 25 per cent are of any calibre. The problem is that many of them stopped studying and analysing 20 years ago.” Luckily, he found younger people with experience ranging from one to five years but with “better knowledge than those who had spent 25 years there, so I built the system with them”.
One of his early strictures was that field visits were mandatory before reports were submitted. One of his own to Bihar proved an eye-opener. At the airport, he was met by two people who immediately tried to grab his bag. “This is such a feudal mentality in government,” he says, “It would be interesting to see how many secretaries carry their own briefcases and lunch boxes.” Having assured his greeters that nothing was wrong with his arms, he then declined to go to the Circuit House choosing instead to drive 200 km to Sasaram (“Jagjivan Ram’s constituency”) to meet farmers.
There he discovered that since the agencies were not procuring from the region, farmers were forced to sell their grain at 20% below the minimum support price (MSP). “This is the area where the second Green Revolution is supposed to happen. It was a bumper year, but you had export controls so you didn’t allow foodgrain to go out, you restrict the private sector domestically, plus you are not procuring. So the market collapsed for farmers in Bihar. Yet you are procuring from Punjab, which earns Rs 4,000 crore extra by charging a tax of 14.5%, what the heck!”
Everybody was resigned to the fact that nothing would happen, Gulati remembers as the mezze platter, now almost empty, is removed and our main courses served. Dr Mangla Rai, advisor to Nitish Kumar, said as much; the agriculture secretary said the issue wasn’t his problem, and what the food secretary told him Gulati says he will never forget. “He said, ‘Tumne saare desh ka theka le rakha hai? [are you responsible for the whole country?] The government has made you a chairman. Enjoy life’.”
So he wrote a letter to the PM offering three options. The PM passed it on to the Food Minister K V Thomas, who called to say his secretary said he was complaining…. So Gulati decided to make it a test case and finally, after sitting with the state bureaucrats, the number of procurement centres were expanded. Procurement, though. didn’t jump much, principally because, he says, Kumar complained of corruption within FCI.
We’re talking about streamlining MSP, a proposal he put to the PM (to no effect). He is also irritated by critics who said his recommendations were reckless and reels off statistics to prove otherwise. Take wheat, he says. MSP for wheat from April will be $225 a tonne. “In the last six to eight months, export tenders have been coming in at $275 to $310 a tonne f.o.b. [free on board, meaning the buyer pays the price of shipment]. And what are other countries in the region paying as MSP? Pakistan $280, and China $388. That’s how we’ve been exporting.”
In rice, the numbers are more striking. Against an MSP of roughly $320 a tonne, China pays between $444 and $495 (depending on the variety) and Indonesia, Thailand and Philippines as much as $695. “Except for Vietnam, which pays about $297 a tonne, the others are in trouble. At an f.o.b price of $390 to $420 a tonne, we are now the world’s biggest exporters of rice today.”
Gulati offers me some pizza but I decline since I cannot offer him, a vegetarian, my wholesome, aromatic mutton stew and rice. “Yes, yes, I understand it’s a one-way trade,” he says good-naturedly putting a slice on my plate. It lives up to his fulsome praise, the crust delicately thin without being crumbly.
We’re on to his second-favourite topic, the skewed nature of subsidies. “The problem is the government is trying to achieve equity through price policy and not using income policy, so you have massive misallocations. This is how Soviet Russia collapsed. We need to get out of this socialist mindset and allow markets to function,” he says. I remind him that these weaknesses have been discussed for more than 20 years. He agrees and says direct cash transfers through things like Nandan Nilekani’s Unique Identification project could well have been a game changer now.
But what if we emulated Chhattisgarh, which has stanched the leaks in the distribution system? That’s a strange story. Since the state government was offering a huge bonus on top of the MSP, farmers, who account for more than half the rural population, sell their entire produce to the government and buy it back at Re 1-2 a kg. “Why are you giving food to farmers who produce it?” he points out, and predicts that Chhattisgarh will soon suffer the same problems as Punjab – failing water table, the problem of monoculture and so on.
I’ve run through my checklist of “mandatory” questions that one must ask a respected agricultural economist, but on which his positions were well known (food security, food inflation). But I really wanted to ask him how he rated the ministers with whom he worked. To my surprise, he does not demur, though he does say no political pressure was imposed on him. He found Agriculture Minister Sharad Pawar “progressive, more market oriented than other ministers and with a broad vision.”
But what of Pawar’s famous face-offs with Thomas? “Well, the food minister wanted to protect consumers, the agriculture minister the farmer. Each ministry works in a silo, so, really, it is for the prime minister to take a call. That’s when you need a leader.”
And Manmohan Singh wasn’t? “I don’t want to say that but where is the larger vision? A leader should be able to bring ministers together to follow that vision. But if each minister is beating his own drum, then where is the leadership? Somehow, I think the whole nation had that feeling.”
That mild censure strengthens a little as I pay a startlingly reasonable bill and ask him about Atal Bihari Vajpayee, on whose prime ministerial advisory council Gulati served along with a galaxy of experts, I G Patel, Montek Singh Ahluwalia, P N Dhar and N K Singh among them. “Vajpayee didn’t say much but he listened. Once, there was a discussion on deficit financing and Montek talked about how we need to disinvest in Maruti, Ashoka Hotel and so on. Vajpayee’s response was, ‘Bawaal khada ho jayega’ [it will become a problematic issue]. Yet, 15 days later, that’s exactly what the government announced. That’s leadership.”
A shorter version of this article appeared in the print edition