It not surprising that a section of the Indian left, particularly the CPI, is so obsessed with the possibility of concessional food imports from the United States that it is anxiously looking for the slightest sign to prove that the government has already decided to seek resumption of PL 480 supplies in a modified form. It remains so completely trapped in the psychology of the cold war that, despite overwhelming evidence to the contrary in the past, it instinctively assumes that such imports will weaken India’s ties with the Soviet Union and give Washington an enormous leverage in this country.
The CPI has, of course, its own theory regarding the current food shortage and the consequent pressure on prices and unrest all over the country. It has been seeking to create the impression that the crux of the problem is not a real and substantial drop in production in the last rabi crop but hoarding, and that the supply position can ease a great deal if big farmers and traders are compelled to sell their stocks at controlled prices. Perhaps its rank and file believe this to be the case. But the reality is very different. The stocks that are being held by big farmers and traders in anticipation of even higher prices are relatively small; the state cannot get at them without the use of its coercive apparatus; this is not a practical proposition in a democracy; and even if it was, the availability of these supplies now will empty the pipeline and therefore create fresh difficulties later.
Needs
In plain terms, the country needs imports of four to five million tonnes in order to tide over a difficult situation. This is specially so because the coming kharif promises at best to be an average one. The monsoon has been less than satisfactory in most parts of the country. It will be welcome news if the Soviet Union once again loans two million tonnes of wheat as it did last year or if Canada proves more generous than it has been in recent years. But the need for imports is indisputable, and there is no reason at all why New Delhi should hesitate to tap the United States provided the latter is willing to oblige.
The government and the leadership of the ruling party are partly to blame for the current confusion. They have refused to acknowledge that there was a substantial shortfall in wheat output last May and have encouraged the belief that vast stocks are being withheld by big farmers and traders. This is extraordinary because at the same time they have followed a pricing policy which can be explained only in terms of their awareness that there is a real shortage and that the farmer has to be induced to part with the maximum he can. Surely the government would not have raised the procurement price from Rs. 76 a quintal last year to, for all practical purposes above Rs. 125 this year, if it believed that production was only marginally lower than last year.
This is not all. Some of the state governments run by the Congress, which have been most enthusiastic about the so-called dehoarding drive, have ended up by allowing retailers to buy wheat directly from the farmer. This means that the trade has virtually been absolved of the obligation to deliver one-half of its purchases to the state at Rs. 105 a quintal. This clearly has been done because the situation in the towns is bad and the dehoarding drive has failed.
Mrs Gandhi’s dilemma is at least understandable. She does not wish to weaken her negotiating position with the United States at this stage when there is a better prospect than ever before of its conceding to India the status that has always been its due in South Asia. Perhaps she also believes that since the Americans are fully aware of India’s difficulties and the efforts it has made to increase food production in recent years, they themselves should come forward with an offer of concessional food.
But these considerations do not apply to the CPI leadership. It plainly lacks confidence in those who are in charge of the country’s affairs. Else it would not have been so frightened at the possibility of improvement in Indo-US relations and of America extending food assistance to this country. It is possible that its fears have been aggravated by recent developments in Egypt and the come-back that Washington has made in the Arab world as a whole, doubtless at the cost of the Soviet Union to some extent. But whatever the explanation, the fact remains that the CPI leadership is so impressed by US power and diplomatic skill, and so suspicious about the bona fides of most ministers, that it takes it for granted that Mr Kissinger has only to appear in New Delhi to conquer it.
Stark Fact
The opponents of concessional food imports have also chosen to ignore the stark fact that this country is among the worst hit by the steep rise in the prices of oil, fertilisers, food, non-ferrous metals, industrial machinery and raw materials and that the aid it has received from Iran, Iraq and members of the World Bank consortium has barely offset the increased cost of its essential imports. In the circumstances India should ideally have received substantial assistance from countries like Saudi Arabia and Kuwait which are flush with oil revenues. But so long as they are not ready to fulfil the role history has placed on them, this country has little choice but to seek assistance from developed countries, be they the members of the Soviet bloc or the West. And it is pointless to ignore the fact that in the past 80 per cent of aid to this country has come from the West.
The Indian leadership almost to a man has been extremely reticent on the issue of prices of oil and other raw materials and has not sought, except obliquely, to draw the world’s attention to the country’s plight. It is odd but true that one has to read reports by the World Bank and the IMF to be adequately informed about the disastrous consequences for this country of the rise in oil prices. This country’s silence on this issue is a form of masochism which should not be confused with national self-respect.
It can doubtless be argued with some justice that the country would not have found itself in this hopeless situation if it had managed its resources efficiently and had not allowed unnecessary controversies to hold up offshore oil exploration and the establishment of more fertiliser plants. But while nations, like individuals, can and should learn from past mistakes, they cannot evade the challenge of the present which for this country is both urgent and serious. At least those who have been responsible for lack of progress in offshore drilling and expansion of the fertiliser industry should have the honesty to recognise that they have been wrong.
Two Points
Two other points should be borne in mind in any discussion of external assistance. First, apart from those rich in oil and other scarce minerals not many countries in the world can claim to be totally self-reliant these days. The United States itself is receiving billions of dollars from the Arabs without which it cannot balance its trade and prevent a drastic drop in the exchange value of the dollar; the Soviet Union is seeking, so far unsuccessfully, massive investment from the West, China is cheerfully accepting export credits even though at commercial rates of interest, and is also importing 11 million tonnes of wheat this year; Britain has just secured a loan of one billion dollars from Iran in addition to those various public undertakings have negotiated in the Eurodollar market; Italy and France have borrowed billions of dollars and so on.
Secondly, the political consequences of the aggravation of food shortage and the continuing pressure on prices can be very serious. Developments in Gujarat and Bihar should leave little room for doubt that inflation, coupled with the shortages of essential goods specially food, can imperil representative government. Corruption was doubtless a major issue in Gujarat and so it is in Bihar. But hundreds of thousands of students would not have taken the law in their hands and the millions of ordinary citizens would not have sympathised with them if they were not desperate.
There is no doubt good reason to fear that the authorities here may ignore urgent reforms if they are assured of substantial foreign aid. But right now the pressure on the country is intolerable and threatens to overwhelm much that it values.
The Times of India, 14 August 1974