Why And How The Pulses Crisis Could Have Been Averted

Half the increase in consumer price inflation in October was due to the enormous rise in the prices of pulses. A new Crisil report shows that the prices of pulses peak every three years primarily due to supply bottlenecks and a shift towards high-protein consumption in rural areas (although per capita pulse consumption in India has declined over the years.)

Be that as it may, but the fact remains that this year, the rising prices of pulses could have been contained, had the states and the policymakers at the Centre been more vigilant.

A senior official from the Ministry of Consumer Affairs, Food and Public Distribution told Businessworld: “We were placing orders for importing pulses in the range of 10,000 metric tonnes, to ease the crisis, but look at the quantum of pulses seized in anti-hoarding raids across the country so far – 133828 metric tonnes!”

With the release of the seized pulses in open markets, the crisis has eased, but the Ministry, as also the entire Union government, are introspecting if the damage could have been contained. The dal prices, after all, were a hot issue in the Bihar assembly elections as well, where two of the concerned Ministers, Consumer Affairs, Food and Public Distribution Minister Ram Vilas Paswan and Agriculture Minister Radha Mohan Singh were camping, and where the BJP-led NDA suffered a humiliating defeat.

That the dal prices would shoot up, was known to one and all. India doesn’t grow enough pulses to feed its countrymen, and the average annual shortfall in pulses production is 3-4 million tonnes every year. This year, however, it was 30 per cent more – the country faced a shortfall in pulses production to the tune of 4-5 million tonnes.

According to a study by Assocham, however, India has a total annual demand of 27.1 million metric tonnes of pulses, out of which nearly 17 million metric tonnes is grown in the country and the rest is imported.

The first major problem that the policymakers at the Centre as also in the states faced was the monsoon forecast. While the IMD predicted that there would be a 12 per cent deficit in monsoon, Skymet said the monsoon would be normal. As the initial spell of rains was good, “most in the government thought that the Skymet prediction of a normal monsoon would come true, leading to slackness in preparedness to deal with the pulses crisis,” said Niti Aayog member Prof Ramesh Chand.

Government functionaries now concede this confusion could have been avoided.

An aide to the Consumer Affairs Minister Ram Vilas Paswan, however, told BW|Businessworld that the first letter asking the states to remain prepared for the impending pulses crisis was sent by the Centre as early as on May 22, early this year.

As the prices of pulses, specially arhar, started zooming past Rs 210 per kg mark, the government began placing order for imports. But if India witnessed a shortfall in pulses production, the international market too was not very good, with Myanmar, India’s main source of pulses import, seeing its crops damaged due to excessive rains. Orders were then also placed with countries like south-eastern African country of Malawi and Tanzania.

After the inter-ministerial group headed by Union Finance Minister Arun Jaitley and the Cabinet Secretary swung into action, the states were asked to crack the whip on hoarders. Many states initially remained indifferent to the situation, content with the blame-game, but as the anti-hoarding operations gained momentum, the effect was seen on the retail prices.

Among the states that worked swiftly against the hoarders, Chhattisgarh, Gujarat, Jharkhand, Haryana – all BJP-ruled states -- cracked the whip and asked the hoarders to release the pulses at Rs 130 a kg.

In Karnataka, due to swift and massive anti-hoarding operations, pulses prices fell by 25-30 per cent in a week.

Andhra Pradesh, Telangana, Tamil Nadu sold pulses used PDS to sell pulses.

A government functionary collating data from various states told Businessworld that some of the pulses’ stock seized, for instance in Mumbai, was found to be 4-month-old!

Government functionaries say that there should have been better Centre-state co-ordination, and the states should have acted much faster on this.

Most of the government’s measures, meanwhile, were part of short-term crisis-management plan.

The MSP announcement for rabi pulses (an increase of Rs 250 per quintal over their levels last year), decision to create a buffer stock, a crackdown on cartelisation and the arrival of the rabi crop in January are part of the short-term measures to ease the pulses crisis. Now, the Food Corporation of India will also procure pulses (along with NAFED).

In long-term, the government is now said to be debating the politically explosive questions like whether MSPs for wheat / paddy not be raised while MSPs for pulses are raised, giving the farmers extra incentives to grow pulses (as the area under cultivation of pulses has actually decreased). More importantly, pulses’ yield per hectare has been stagnant and there’s been absolutely no R&D in pulses. As Prof Ramesh Chand says, it’s like common cold on which medicine has not made any breakthrough. Prof Chand says a market intelligence unit must come into existence to forewarn of such crises in future.

The pulses crisis is clearly that should have been – and could have been – managed much better, concede government functionaries.