Home ยป Politics ยป Wheat import duty waiver: will it be the next scam to blow up in NDA's face?

Wheat import duty waiver: will it be the next scam to blow up in NDA's face?

Charu Kartikeya | Updated on: 10 February 2017, 1:36 IST

For two days now, opposition parties in Rajya Sabha have been riled up over the union government's latest decision to do away with the import duty on wheat.

The move will ruin Indian farmers because it would disincentivise domestic production of wheat and will allow foreign companies to make huge profits, the opposition said.

Given the government's own admission that it has good buffer stock of wheat, the decision is strange for several reasons.

Also read - Import of Pulses to rise to 5 million tonnes in April-December, says IPGA

In September, the duty was at a high of 25% when the government slashed it to 10%. Why it has now suddenly decided to reduce the duty to 0% is perplexing.

Consumer interest?

Food minister Ram Vilas Paswan said in Rajya Sabha on 8 December that the decision had been taken keeping in mind interests of consumers, since indications of a rise in price of wheat were emerging even though there was no shortage of its stock. He also sought to assure the House that this decision is not permanent.

However, he was countered by Congress MP Jairam Ramesh, who asked why imports were being encouraged if there was enough stock.

CPI(M) general secretary Sitaram Yechury, who was the first one to raise the issue, said that the government was afraid that "because of the demonetisation, there may be food riots and the duty has been removed to prevent such a situation.

A possible scam?

So what could really have been the objective behind the move? Won't it harm farmers' interests? What is it an indicator of?

To get the answers to these questions, Catch spoke to a few independent experts. The responses range from preparing for a possible impact of demonetisation to a design to benefit multinational corporations to, shockingly, a possible scam.

A highly placed source close to the union government told Catch that the real reason was that some powers in the government want to make money for themselves by benefiting importers, traders and millers and taking a cut from them. The source said this is exactly what had happened once under a food minister in the Congress-led UPA government.

Most have slammed the move as detrimental to farmers and have urged the government to roll it back

Among those who are not privy to internal machinations within the government, most have slammed the move as detrimental to farmers and have urged the government to roll it back. Well-known agricultural analyst Devinder Sharma told Catch that this move will open floodgates to cheaper imports, and will also import unemployment as small farmers will be devastated.

Sharma explained that this is exactly what American federations have been demanding in WTO, along with dismantling of MSP. They have already refused to raise MSP in front of the Supreme Court and now the other demand has also been met, he alleged. He also recalled that it was Paswan who had earlier stopped states from giving bonus over MSP to farmers.

Sharma questioned the government's defence, asking what had changed in just two months that forced the government to do away with the import duty entirely. Is the government admitting that demonetisation will lead to higher prices, he asked. In the long run, the government was essentially pushing small farmers out of agriculture, he concluded.

Sharing the benefits

Chairman of Bharat Krishak Samaj Ajay Vir Jakhar is also cynical about the move. He linked it to the government trying to benefit American and other foreign commodity firms, expressing his resentment in a tweet.

A former chairman of the Committee on Agricultural Costs and Prices, who did not want to be identified, also agreed that this was a very wrong move as it will devastate domestic cultivators of wheat. He said wheat is a major Rabi crop, sowing for which had already begun. Demometisation has already hit farmers hard and this move will further discourage them from sowing wheat, he noted, asserting that the timing of this move is also faulty.

Economist and Director of Aequitas Research, Dr Amir Ullah Khan, said that this move was a clear indication that the government has already assessed that demonetisation is going to hit the Rabi crop hard. He explained that that will create shortage and prices will rise and that too at a critical juncture i.e. just at the time of key assembly elections in Uttar Pradesh and four other states.

Price rise

If we look at the data, buffer stock appears to be in a good position vis-a-vis the stock available in March-April, but it is showing a consistent decline year on year.

Prices, at least in the commodity markets, too have been on a slow but steady upward path. There are reports of private importers already having purchased large amounts of wheat from other countries, indicating that they may have been preparing for a shortage and resultant price hike. The shelving of the duty at this juncture does fall in sync with the narrative so far.

But if all of this is being done only for filling the coffers of corrupt politicians and bureaucrats, then the Narendra Modi government has a major scam coming its way.

Edited by Aleesha Matharu

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First published: 9 December 2016, 10:09 IST
Charu Kartikeya @CharuKeya

Assistant Editor at Catch, Charu enjoys covering politics and uncovering politicians. Of nine years in journalism, he spent six happily covering Parliament and parliamentarians at Lok Sabha TV and the other three as news anchor at Doordarshan News. A Royal Enfield enthusiast, he dreams of having enough time to roar away towards Ladakh, but for the moment the only miles he's covering are the 20-km stretch between home and work.