The Hindu : Front Page : CPI(M) calls for intensifying struggles against rise in prices of essentials

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CPI(M) calls for intensifying struggles against rise in prices of essentials

Vinay Kumar

Exhorts UPA to discharge its duty to the common man, threatens mass protests

Liberalisation has made India open to global speculation and pushed it towards food insecurity
Large-scale speculation in forward/futures trading in food grains globally cited as a key factor

NEW DELHI: The Communist Party of India (Marxist) has called for intensifying struggles against price rise and said that the only way to insulate “ourselves from the international speculation is to reverse the process of liberalisation in commodity trade and to prohibit futures/forward trading in essential commodities.”

The United Progressive Alliance (UPA), in the last year of its government, must at least now discharge its responsibilities towards securing a decent livelihood for the “aam admi,” an editorial in the latest issue of the party organ People’s Democracy said.

It warned that the joint nationwide protest movement against the relentless price rise, called by the Left parties and the United National Progressive Alliance would witness countrywide mass protest programmes till April 23.

The editorial reiterated the Left parties’ demands: strengthening of the Public Distribution System by universalising it; restoring the cut in food grain allocations to the States under the PDS and including 15 essential commodities such as pulses, edible oil, and sugar in the PDS.

Other demands include banning futures trading in 25 agricultural commodities; cutting customs and excise duties on oil; reducing retail prices of petrol and diesel; taking stringent action against hoarding of essential commodities and strengthening the provisions of the Essential Commodities Act to empower the State governments to deal with hoarding and black-marketing.

On the government’s argument that the price rise was mainly due to the global rise in prices of essential commodities, particularly food grains, the editorial said: “Yes. It is a fact that certain developments, internationally, are mounting inflationary pressures. The steep rise in oil prices does impact agriculture as oil is an essential input in agricultural activities raising, consequently, the costs of production.

Bio-fuels

“Yes, again, that the emphasis on bio-fuels is leading to a shift in the usage of food grains away from feeding people. For instance, this year, 20 per cent of maize production in the U.S. is to be used for bio-fuels. Yes, again, there is a deep agricultural crisis in many countries of the world, leading to a fall in the production of food grains. All these put together are impacting on raising the prices of food grains globally.”

The editorial said the main factor that contributed to the phenomenal rise in prices of food grains was the large-scale speculation in forward/futures trading in food grains globally. “In the year ending February 2008, the price of wheat has risen by a whopping 92 per cent globally. That of soybean rose by 65 per cent. Similar is the case with all other essential commodities.”

Recession in U.S.

It said that recessionary conditions in the U.S. triggered by the sub-prime home loan crisis had contributed to the global increase in prices.

“In order to cut their losses, global financial giants seeking greener pastures are heavily indulging in speculative trading in commodity exchanges, particularly in food grains and other essential commodities. This is what explains, mainly, the sudden spurt in the rise in prices of these commodities during the course of last year.”

In the past, through a procurement and distribution mechanism, India had, by and large, insulated itself from global speculation. However, since embracing the trajectory of neo-liberal economic policies, these mechanisms had been vastly diluted and were on the verge of being abandoned.

MNC procurement

Permitting huge multinational corporations to purchase and store food grains had resulted in a sharp fall in the governmental procurement of food grains.

Though the production of wheat rose from 69 to 75 million tonnes between 2005-06 and 2006-07, the procurement had been declining from 16.8 million tonnes in 2003-04 to 14.8 million in 2004-05 to 11.1 million in 2005-06.

“In other words, the liberalisation trajectory has not only made India defenceless and more vulnerable to global speculation, but has also perilously pushed India to the brink of food insecurity,” the editorial observed.

Maximising profits

Big multinational corporations involved in speculative trading in food grains maximised profits by ensuring, among other things, that the government did not have large stocks to dampen spot prices; private operators had sufficient stocks to deliver and have the capacity to hold the stocks till prices rose; and there should be no support system such as the PDS.

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