The Hindu Business Line : Wheat fiasco

The country is paying a heavy price for the indecision, indifference and incompetence of the Government. New Delhi’s inept handling of the wheat situation — right from imprecise production estimate and failed procurement to this week’s import fiasco — has cost the nation dear, in terms of money and image. The latest 5.11-lakh-tonne import contract is priced at about $326 a tonne. It is about $63 a tonne more than what was negotiated a couple of mont hs ago but cancelled because someone in the government thought the price too high. It is unclear whether there were any external considerations in the decision to cancel the tender after negotiating the price. Meanwhile international prices spurted.

On the latest deal the country will spend an additional Rs 120 crore, representing the difference between the current contract price and the one that was cancelled. If about 50 lakh tonnes are imported this season, the ‘total additional expenditure’ will balloon to Rs 1,200 crore, assuming international prices do not rise further. Who in the government is responsible for this waste? It is time someone raised tough questions, and the Government asked to respond. One of the biggest problems with the Government is lack of accountability. It is a legal fiction that whatever the government does is in ‘public interest’. If it is so, the government should be forced to demonstrate or prove ‘public interest’ in its every action.

Be that as it may, the latest purchase at a high price is sure to send bullish signals to the domestic market. Consumers have no choice but to pay a higher price (than now) for the fine cereal. As wheat growers have marketed the crop, they will not benefit from the price rise. Intermediaries and speculators who have built inventory in anticipation of rising prices will make a killing. Worse, how will New Delhi respond to accusations that it is willing to support wheat growers abroad by paying a higher price rather than at home? About the only sensible point in the ham-handed manner of wheat imports is the decision not to dilute the quality standards, despite pressure from powerful overseas lobbies.

A bigger question that raises the spectre of continued large imports not only of wheat but also of several essential food commodities into the foreseeable future is the status of agriculture and less-than-modest output growth in recent years. There seems to be no specific strategy or action plan to help the farm sector achieve the 4 per cent annual growth target. For grains, the growth target is even lower at 2.3 per cent. Demand, on the other hand, is accelerating. The international agri-commodity trading houses vie with one another to supply to India. Going by current pointers, India is likely to keep them in business for years.