Tensions are mounting in several Union ministries as their budgets show signs of slipping due to disruptions in global supply chains and the resulting rise in commodity prices.
The supply chain disruptions had been there since March of last year, due to restrictions linked to Covid. But the restrictions also caused a drop in consumption due to weak demand for food, fertilizers and petroleum products. But, as the pandemic has slowed considerably, consumption levels have increased. Even as the government welcomes the increase in industrial activity and the return to normal working hours in most regions, ministries were not well prepared for the import shortage. Even for the products that were available, the prices went up. As the government continues to spend on Covid preparedness, maintaining hospital beds and oxygen factories, the brief fear caused by coal shortages has been a warning of other crises looming.
Union Health Minister Mansukh Mandaviya, who also manages the portfolio of fertilizers, chemicals and pharmaceuticals, has warned that international fertilizer prices are skyrocketing. But he praised the prime minister for asking the government to absorb the price difference so that farmers across the country can get fertilizer at current prices.
The Oil Ministry issued a warning that international oil prices were rising and more funds were needed. But the ministry does not win any sympathy; it is flayed for continuously raising the prices of gasoline, diesel and cooking gas even when international prices were low. Union Petroleum Minister Hardeep Puri is expected to hold talks with Union Finance Minister Nirmala Sitharaman on the need to reduce central customs and excise duties, so that oil prices can be reduced. fuel does not increase further. But the Ministry of Finance, which has a lot of demands on its plate, has been greedy in taxes. It would be difficult to give up the habit, as deficits can increase.
The Ministry of Food and Civilian Supplies has also been criticized for being slow to respond to the sharp rise in prices for pulses and edible oils. Now, using the provisions of the amended Commodity Act, the government has imposed restrictions on stocks that can be held by wholesalers and retailers so that prices do not skyrocket. But, since demand has increased due to the festival season and the return to normal, countries that export palm oil, tur dal (split pigeon pea), urad dal ( black gram) and chickpea to India see big profits. The government’s missions on edible oils and legumes, which aim to make India self-sufficient in the production of these products, are far from being realized due to the annual increase in demand.
During decades of scarcity, the government had a ministerial price committee headed by the finance minister, which monitored prices and shortages, and took action when needed. Over the past two decades, shortages of essentials have been rare. The functions of the price committee have been merged into the Economic Affairs Committee, headed by the Prime Minister and whose members include political heavyweights such as Defense Minister Rajnath Singh, Home Secretary of Union Amit Shah and Union Minister of Road Transport Nitin Gadkari, as well as ministers dealing with economic issues – Sitharaman, Piyush Goyal (trade, industry and civil supplies) and Narendra Singh Tomar (agriculture ) – and Union Education Minister Dharmendra Pradhan and Foreign Minister S. Jaishankar.
As crucial elections approach, the government must continue to be proactive on the price front.