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National Executive 2000 to 2015


7-9 SEPTEMBER, 2006

Resolution on Price Rise

The UPA government inherited a strong and resilient economy from the NDA regime. The growth rate was high, inflation was under control, foreign exchange reserves were record high and the economy had transformed from shortages to surpluses. There was special emphasis on infrastructure creation.

The food grain buffer stocks ensured food security and the government could translate its social welfare schemes on the strength of Food-for Work Programme. Not only was the inflation was under control but the prices of essential commodities were affordable.

The UPA rode to power on the strength of the slogan to help the common man - aam aadmi. The UPA government has been a conspiracy against the aam aadmi. The country is witnessing an unprecedented food shortage. Food grain imports are desperate measure being resorted to feed our people. What is worse is that the government didn't have the economic vision to foresee the shortage in advance. Distress purchases from the international market are being made at higher prices than the prevailing prices.

The prices of wheat, pulses, rice, milk, sugar, edible oils, vegetables, fruits, petrol, diesel, electricity, steel, cement, water, clothes and cooking gas have hit a record high. Basic amenities like house, health and education have become a distant dream. The poor and the lower middle classes suddenly feel a dip in the quality in their lives. Even the middle classes are finding their budgets being stretched to meet basic necessities. What is worse is that though the consumer is paying more, the farmer is not benefited. The frustrated farmer is being pushed to destitution and suicide.

The last three budgets presented by the Finance Minister are high taxation budgets. The UPA is a high tax regime. Taxation is resulting in raising costs and inflation. They are dipping in to the pocket of aam aadmi.

The lack of economic vision of the UPA prevented from visualizing the anticipated food shortage. The food shortage has led to further rising of prices. It has incurred in speculations, hording and black market. Except in the case of wheat, productions of other commodities have not gone down. Though wheat production has fallen by 4 lac tons, this doesn’t warrant more than 100% rise in prices as compared to the last year. Production of commodities such as pulses, sugar etc., have gone up compared to last year. But still, the prices of all essential commodities have witnessed unprecedented increase.

The food stocks are almost empty. Against the minimum norm of 8 million tons, wheat stock has fallen to 2 million tons in August. With such low stocks, the traders have presumed that the government is not in a position to contain prices and hence started resorting to hoarding.

Forward Trading, in essential commodities like food grain, pulses, sugar etc., is the other major reason for rise in prices. Forward trading is beneficial to farmers when they actively participate in the market. But here middlemen influence prices at the cost of both consumer and the producer.

One of the main reasons and failures of this government, for price rise is total collapse of PDS system. The poor have not got the assured quantum from these shops as the allotted food has found its way to black market.

The other reason is the Commodity Exchange, which was allowed even during the scarcity. The economy was booming and the food stocks were overflowing during NDA regime. There was no place to stock the food grains. The central government offered free food grains to the states to pay the wages under Food-For-Work Programme. Even the standing committee attached to the Food Ministry had recommended disposing of the excess quantity. At that stage, all the restrictions on food grain movement and trading were lifted and forward trading was allowed in commodity exchanges. The policies of surpluses cannot be continued in the days of scarcity. The BJP demanded that speculative trading in food grains be disallowed in these exchanges but due to high-level corruption, the government decided not to act.

With regard to petroleum products, the UPA has increased the prices of petroleum products seven times within a span of just two years. The total hike during this period is almost 58%. When the NDA demitted office the price of petrol was Rs 30.25 in New Delhi. Now it is Rs 47.49. The Diesel price at that time was Rs 20.49, now it is Rs 32.45. The price of cooking gas is now Rs 50 higher. Indian prices of petrol and diesel are higher compared to the prices in other countries. The central government collects more than Rs. 1,00,000 crores from custom and excise duties on petroleum products.

The Congress gave a slogan on the eve of elections that "Congress ka hath Aam Admi ke sath" but it betrayed the masses. When the Congress comes to power, corruption, controls, queues, lines, waiting lists, shortages and black marketing – all resurface. When the congress goes, all these disappear.

Whatever steps the UPA government has taken so far to control the prices is too little and too late. The government has messed up the whole issue. The Congress party should realize that price hike is only a congress government phenomenon. The Congress Party has a history of financial mismanagement and wrong economic policies.

It is also worth noting that successive Congress governments have mastered the art of fudging statistics to reflect lower inflation rates even though the ground realities speak otherwise. If real inflation rates are indeed as low as 5% as projected by the UPA government, why is the aam admi across the country crying for relief on price rise?

The inflation rate in NDA regime was around 3%. It has, at times, gone up to even 8% during UPA regime and has not come down below 5%. The wholesale price index does not reflect the bitter reality fully. When WPI stood at 5.24 pc in January, the rate of inflation in case of individual essential commodities almost was double and it was 35% in case of pulses. The essential commodities have witnessed a sharp rise in prices anything between 25 to 30%.

In the interest of the common man, the BJP demands:

1. Strengthen the Public Distribution System and the allocations made to each state, district and village should be made public to have transparency and arrest corruption.

2. Government to set up a monitoring system to study the production, procurement of needed food items and make available to the states as and when there is scarcity.

3. Review the tax structure on petroleum products and rationalize it so as to reduce the prices of petroleum products and provide relief to the common man.

4. The government should plan in advance and estimate the production level and accordingly prapare a contingency plan including timely procurement of foodgrains by FCI and also maintain enough buffer stocks.

5. Remove the forward trading in commodities and ban ‘satta’ in agricultural produces.