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Its time to peel the onion, layer by layer : Dr. Devinder sharma

The stage managed crisis to justify the approval for FDI in
multi-brand retail. There is more to onion prices than what meets
the eye. And it is time to peel the onion, layer by layer, pleads -
Dr. Devinder sharma
No sooner did the onion crisis erupt on your small screen last
week, following the retail prices jumping from Rs 35/kg to Rs
60-80/kg, Minister for Commerce Anand Sharma was the first one to
make a statement. Even before the Food and Agriculture Minister
Sharad Pawar opened his mouth, Anand Sharma had told the nation
that the onion crisis was because of hoarding, and that the country
had enough stocks.
This year production of onions has been a record with at least one
million tonnes more onion produced than the previous year.
I wonder how and why Anand Sharma made this statement. After all,
agriculture is Sharad Pawar’s beat and normally Cabinet Ministers
tread carefully by not transgressing into the domain of a fellow
colleague. Even if Anand Sharma commented because he looks into
trade, the fact remains that he has never commented earlier when
prices of sugar and dal for instance had touched the roof.
As the evening progressed, and the UPA government went into a
tizzy, Nafed’s managing director Sanjeev Chopra expressed surprise
at the sudden price rise. He told the media that there was roughly
20 per cent more supply, and despite the rain damage to the
standing crop in September when the sowing takes place in
Maharashtra and Rajasthan, the price rise defies any logic. I agree
with Sanjeev Chopra. He was being forthright and honest.
While all kinds of explanations were being tossed around, what
became increasingly clear was that the trade — middlemen, in this
case — had made a killing. But what remains hidden from public
glare is that the entire onion price crisis is stage managed. It
has been created to justify the need to bring in big box
retail.
Within the next two days the government went into a massive salvage
operation. Knowing well that onion prices have in the past brought
down the government, not once but twice, UPAII didn’t want to take
any chances. Exports were immediately banned, import duties were
brought down to zero, crackdown against hoarders began
simultaneously, and lo & behold the prices began to come down.
Meanwhile tomato and garlic prices began to rise. While tomato
prices ruled high in Delhi (rising to Rs 40 a kg in retail
markets), again there was no reason for tomato prices to rise. In
fact, as metros witnessed tomato prices going out of reach, the
irony is that Jharkhand farmers were dumping tomatoes on road for
want of a fair price.
Coming back to onions, before the prices had even stabilised at Rs
50-60 per kg, Anand Sharma moved swiftly to talk to his fellow
colleagues on Dec 23 about the need and possibility of opening up
to multi-brand retail. In other words, in the midst of a crisis
situation, Commerce Minister found time to ‘discuss’ with his
Cabinet colleagues the possibility of inviting multi-brand retail
into the country.
For the benefit of some of our readers, when we say multibrand
retail we are talking of big box retail like Wall-Mart and
Tesco.
At a time when the Cabinet Secretary was monitoring the onion price
situation on an hourly basis, Commerce Minister was confabulating
with his ministerial colleagues about multi-brand retail. Finance
Minister Pranab Mukherjee , Home Minister P Chidambaram,
Defence Minister A K Anthony had taken part in these discussions.
Why the urgency? Anand Sharma replied: “Policy formation is a
dynamic process, and we are very progressive and forward-looking.”
Surely, Mr Sharma. We know what you mean by ‘progressive and
forward looking’.
In fact, he also met media persons the same day to tell them about
the dynamics of FDI in retail. A journalist asked him about the
link FDI in retail has with the soaring onion prices. According to
The Hindu (Dec 24) “While Mr Sharma rejected the argument that
there was a link between the soaring onion prices and the opening
up of multi-brand retail to foreign direct investment, the demand
for liberalising the sector has been intensifying, especially in
the wake of the wide gap between wholesale prices and retail
prices.”
Now if you are wondering how can someone be planning (and
succeeding) in raising onion prices across the country, I want you
to remember the sudden eruption of dropsy several years back, which
took quite a human toll. Dropsy was blamed on poisonous argemone
seeds which had slipped into mustard oil extraction process. This
was, as we now know, done to build a market for packed mustard oil.
And surely, the sales of loose mustard oil has gone down
drastically after that incidence.
Howcome, argemone seeds never found their way into mustard oil
after that? More recently, according to a leaked US diplomatic
cable released by WikiLeaks, in a January 2008 meeting, US and
Spain trade officials strategized on how to increase acceptance of
genetically modified foods in Europe, and among the measures
included inflating food prices on the commmodities market.
Allowing big box retail into the country is no less a priority for
Manmohan Singh government than the nuclear treaty. President Obama
had pressurised India to open up when he visited India in
November. Before that, British Prime Minister David Cameron
had sought the opening up of Indian market for big box retail when
he had made a visit. And more recently, French President Nicolas
Sarkozy had also promised more investments if India opens up to
retail FDI.
The G-20 has also directed member countries to remove all hurdles
in accepting multi-brand retail. It was primarily to meet this
directive that the Department of Industrial Policy and Promotion
(DIPP) had floated a completely flawed discussion paper on allowing
FDI in multi-brand retail. Consultations with the stakeholders (?)
have also been completed by the Ministry of Commerce.
Both Sharad Pawar and Anand Sharma are in favour of it. Since there
is opposition to multi-brand retail FDI within the Congress party,
the onion price drama had to be stage managed. While your tears
have by now dried, let us wait and watch how soon the UPA-II gives
us another breaking news.
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