The travails of Sharad Pawar

January 15th, 2010

Agriculture Minister Sharad Pawar is furious, arguably with just cause. There he was, quietly minding his own business, when whoosh ! Sugar turns Rs 50 a kg, the Uttar Pradesh government starts filing FIRs against sugar mill owners who are also Pawar’s friends and friends in other parties shrug their shoulders and say: ‘Sorry pal, hate to do this, but you should have taken care of things’, following it with the most trenchant attack on an agriculture minister in recent times.

Food inflation is the single most important factor responsible for a rise in inflation. Food prices, especially sugar prices, have gone through the roof. As rise in sugar prices is related to the supply side and production is cyclical, Finance Ministry manadarins say Pawar should have known this and made adequate preparations. Instead, India is going round the world, cap in hand, to buy sugar and is pleading with suppliers not to be unreasonable.
Just as the production of sugar is cyclical, so are Pawar’s political fortunes.

The downfall began somewhere in the beginning of 2005 when Sharad Pawar decided to contest the elections for the Board of Cricket Control in India (BCCI) again. Much of that year was spent first lobbying, then consolidating his position and then trying to free BCCI of the tentacles of Jagmohan Dalmiya, the elements that had caused his defeat earlier. As anyone involved in cricket politics knows, it is hard to reach the pinnacle of the cricket administration empire and harder still to stay there. Understandably it occupied a lot of Pawar’s time and attention. Now, he is president in waiting of the ICC. That too takes time.

Between then and now, it’s been one wild ride, with the general elections and the Maharashtra assembly elections intervening. In December 2009, Sharad Pawar was also elected president of his party for the fourth consecutive term. His party, ever vigilant and sensitive to rising prices, passed this resolution:  “The abnormal rise in prices is causing great difficulty to the common man.  Recent draught situation in certain parts of the country has caused a little spur in the prices of essential articles including vegetables.  But the government is seriously monitoring the situation to make essential commodities available at reasonable prices.  This warrants more intervention by the state government in the market, over and above strengthening of the Public Distribution System which will curtail the rise in prices of essential commodities to some extent.  At the same time the government of India should take effective steps to arrest the tendency of ever
increasing prices of essential commodities.”

Meanwhile, cricket management was also a problem. At the height of the food prices conundrum, the agriculture minister batted at queries by pesky reporters. “I am not an astrologer. I don’t know when sugar prices will come down” he snapped when asked a question. He was a lot more forthcoming about cricket, though. “The ICC will take a decision next week on whether to allow the Feroz Shah Kotla to host World Cup matches in 2011” he said, two days after David Morgan, the ICC president,  had said he was not in favour of a World Cup ban on the venue, which had been classified by the ICC match referee Alan Hurst as “unfit”, the harshest possible assessment after the abandoned fixture between India and Sri Lanka last month.

“I am not going to give any opinion on this issue. The ICC is yet to finally take a decision and the process is on. The BCCI is expecting a response from the ICC probably next month or in two months,” Pawar said after chairing the meeting of the World Cup organising committee in Dhaka earlier in January. “It is the biggest cricketing event in the subcontinent and I am sure the way the preparations have been going on it will be a hugely successful event and security will be no issue. India and Sri Lanka have the prior experience of hosting the World Cup and it will be a great event.”

Really? And sugar prices will come down soon too?

It is useful to remind ourselves what happened with wheat during the last term of the United Progressive Alliance. Then  too, it was Pawar who was agriculture and food minister.
In October-November 2005, it was clear that India was on a brink of a wheat shortage. The Prime Minister began signaling that the Agriculture Ministry should prepare itself for imports. Because procurement by the Food Corporation of India had fallen sharply the previous year and there was a global shortage of wheat, the danger was that wheat supplied to ration shops might fall short.

What did the government do?

The Agriculture Ministry thought about it. And thought about it. And thought about it.
The Prime Minister flagged the danger of a wheat shortage in December 2004. Imports began in February 2005. Wheat traders denied strenuously, the charge that in the intervening period they had stashed away the commodity until prices rose. “Where would we store such large quantities” they asked. They also denied charges of round-tripping - wheat procured from India, sent out of India and later resold to the Indian Government after a hefty markup.

Worse followed. There were suggestions from some foreign entities that phytosanitary standards of wheat imported by India had been altered to help other foreign entities. The Ministry realized that the amount of wheat already imported would not be enough so tenders were called for a second tranche. Even before the tenders were opened, in a momentary fit of absentmindedness the Agriculture minister made a policy announcement – that import duty for private sector importers would be slashed from 50 per cent to zero. Sensing a rush of buyers from India, global bidders pushed up prices.

No prizes for guessing what is going to happen with sugar this time.

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