The Survey paints a rosy picture of recovery, projecting a growth rate of over seven per cent. It also gives an advance estimate of agricultural growth rate of (minus) 0.2 per cent. Our apprehension is, this will dip much more, primarily because grain production in the kharif season registered a 16 per cent fall over last year. So, we have to wait to see the veracity of the rate.
The Survey says the economic stimulus helped recovery. This seriously flawed approach doesn’t take into account two other important factors—the 6th Pay Commission and the general elections—that took place last year. A general election is never counted as an economic event, although it facilitates the largest cash transfer directly to the people. If you cut back on stimulus without taking into account these two bigger factors, crucial areas of social sectors will suffer.
The Survey’s presumption that Minimum Support Prices are causing inflation is misplaced. The prices are rising because of the government’s injudicious steps and speculative trading. The government knew a shortfall in sugar was coming, yet it allowed exports. It mysteriously lifted the ban on futures trading of wheat. A hike in fertiliser and fuel prices has also been decided; these are leading to hoarding. Commodity corporates have reported 150 to 300 per cent returns, earned from speculative trading. So, the step for controlling inflation lies elsewhere
But, the Survey places it within the ambit of monetary policies. This approach will not lead to proper economic recovery and inflation will remain uncontrolled. The government talks about replacing PDS cards with food coupons. The whole problem of inflation and food insecurity is caused by the market. Removal of the PDS distribution will mean relying more on the market. The Survey itself points out that as against the buffer norm of 20 million tonnes, there is stock of 47.45 million tonnes. Even after this surplus, why is the government just sitting on this stock and not releasing 15 million tonnes to the APL (above poverty line) category?
