Dry sky, moist eyes
The sad old story of drought and government helplessness has hit the country again. The authorities have to do much more than last minute repairs

The drought in India is now official, ie the officials have finally accepted what was common knowledge for over a month. From an early monsoon prediction in June, the Indian Meteorological Department throughout the month of July kept assuring us that the monsoon was behaving normally and it was just a matter of time when all shortfalls in rain would be compensated. Now it seems, the ever optimist IMD too has lost faith.

The result of this dragging of feet can be catastrophic. In lieu with the IMD, the ministry of agriculture kept assuring us that food production would not be much of an issue. Even as late as July 31, the agricultural minister Sharad Pawar stated that he expected ‘some shortfall’ in rice production. This was a gross understatement. Already it has been reported that there was a 25 per cent fall in acreage and that only two-third of current area was sown. Continuing shortages in rainfall means that even the production of the sown areas will suffer, reducing final output by quite a margin. And this will affect not only paddy but other crops as well.

The Prime Minister finally cleared all confusions on August with a straight forward statement. Yes, there is a drought condition in 246 districts in India. The country is facing a difficult situation. Agricultural production and the livelihood of the huge majority of population associated with it are in trouble. All state governments were urged to start relief operations wherever necessary. Programmes like NREGA, Rashtriya Krishi Vikas Yojana and national Food Security Mission must be utilised to the full extent for this purpose. In case their contingency relief funds were not sufficient, the states were requested to quickly prepare a detailed memorandum for assistance under the National Calamity Contingency Fund.

The consequences of this drought will be manifold. Firstly, food production will be hit which in clear terms means — less to eat. Direct fallout of that will be rise in food prices. With food prices eating off much of our income, expenditures in other commodities will decrease, affecting the revenues of FMCG companies. The manufacturing sector, looking to recover from last years recessionary conditions could well do without that. A drought not only means less water for agriculture, but also less water for overall usage, which includes industrial production as well. For example, around four tonnes of water is required to produce one tonne of steel. Many parts of the country could face conflicts between industrial and domestic water usages. Low rainfall will affect cotton production which in turn will affect textile industry, one of our top export earners. Similar fate awaits other agro based industries like tea, soya etc. To cap it all, we might have to import food, which will further eat into our precious foreign reserves. The stock market surely is not going to like any part of all this, and investors, especially those controlling the FDI purses, will express their grouses in their own typical way.

Rising food prices are already affecting our daily lives. The Consumer Price Index (CPI) based inflation rate, which gives higher weightage to food products, was 9.29 per cent for Industrial workers, 11.52 per cent for agricultural labourers and 11.26 per cent for rural labourers in June 2009. Things have surely worsened by August. This can rise further if drought triggers further rises in food prices.

It was perhaps because of all these problems that the officials acted like an ostrich in trouble and denied the dreaded D word for so long. But now that the PM himself was stepped forward, let us not bicker about all that and look forward to the possible remedies. As the saying goes, better late than never.

The solution put forward by the PM, and indeed by all discussing the issue, is state intervention. The central government along with the respective state governments has to make a co-ordinated effort to counter this problem.

This I find to be ironic. Till last year, there were consistent arguments of opening up the market for private procurement of agricultural products, corporate farming and corporate retailing in agricultural products, open market selling in international markets for highest price etc. Apparently when things go fine and sundry, the private sector would love to wet its beaks. When the going gets tough, everyone suddenly remembers the state, the role it is supposed to play in a country and suddenly we all get moralistic about the issue.

One of the many points made by the PM in his speech is asking all concerned authorities to be wary of hoarding. Hoarding or the more colloquial ‘black marketing’ is a phenomenon where stocks of essential commodities are piled up in store houses to take advantage of the demand and earn a higher profit through higher pricing. In that sense, hoarding is a perfect example of free market. Hoarding is an activity which is only engaged in by the private procurers. Now it seems that the very agents who were till yesterday being touted as the solution for the agricultural sector are today deemed to be a problem. Food Corporation of India, the oft criticised government body, is our only bet today. Just imagine, if all the suggested ‘reforms’ were implemented, what scope would the state have today to counter such a crisis?

India officially had record amount of production and procurement in 2007-08 and 2008-09 for which the country has sufficient food reserves. The Prime Minister himself has assured that there will be no food crisis despite the drought. But the question remains, if there are sufficient food stocks, why are the prices rising? Is it that hoarding has already started? Between the farmer who produces the grains and some like you and me who eats it, there are numerous intermediary agents involved, many of whom are private players. Barring the authorities, every one else were convinced about the impending drought months ago. Is it that the private players have taken preemptive measures in advance considering a rise in demands?

Answers to these questions are subject to detailed investigations. However, what we can conclude safely is that food availability is bound to be affected given a drought. And no matter what the official opinion might be, almost everyone in the street already expects rise in food prices in the days to come. If it took over a month for the government to admit the problem, just how long will it take for it to implement the solutions? Official processes are notorious for being long drawn and the whole exercise by itself is a mammoth task. Moreover, the government is only talking about food supply as of now. A drought, as explained above, has other consequences. The authorities are yet to address those issues, let alone formulate solutions.

Lastly, as stated in my previous article, it is a shame that a country which seeks to achieve newer heights in industrialisation is dependent on the vagaries of nature for the most basic of its need. Agriculture in India is still predominantly rain fed, which is the most primitive form of irrigation. Even the Inca’s in historic Latin America had better man made irrigation facilities! We need to have proper irrigation projects in the country to avoid such calamities in the future. After all, isn’t prevention better than cure?