India will import one lakh tonne of pulses from Mozambique by giving them financial and technical help, apart from equipment and seeds. This one lakh tonne will be gradually increased to two lakh tonne by 2021. One lac tonne may seem huge but it’s not even half a percent of what India consumes annually.
The annual demand is 2.3 crore tonnes of which we produce 1.7 crore tonnes currently. This Mozambique deal still would have been welcomed had there been a probability of solving the current problem of high prices of pulses.
Image Source: Business Standard (@bsindia) via Twitter
The Mozambique Deal: Pros and Con
Practically, this deal can’t bridge the gap between demand and supply, at least in the short term, and bring the prices down. Moreover, it essentially gives a license to black marketers to sell their stock at a higher price than what the government will import and sell through its channels.
Suppose there is a hoarding of 20 lakh tonnes, which they procured @ ₹50/kg and sold @ ₹120/kg, they make a profit of ₹14000 crores. Yes, a whopping ₹14000 crores. [ 200 crore x 50 = 10000 crore and 200 crore x 120 = 24000 crore] (20 lakh tonnes = 200 crore)
20 lakh tonnes is the consumption of just one month as we have a daily consumption of around 64000 tonnes. Mind you, I am being conservative with the figures of both hoarding size and selling price as there are plenty of people in India who can invest this much amount and even more.
Another aspect of the deal is the current grim situation of farmers in our country. Can’t the government give this kind of support to our own farmers which will serve a dual purpose, of improving farmers’ condition and reducing import bill?
Farmers here are forced to sell their output at a fraction of the market price, don’t they deserve a fair market to sell their output? If we are giving guarantee to Mozambique to purchase their output in full, then why can’t our farmers be treated and assured similarly?
This is a simple case of bad planning and playing into crony capitalism, or should I say, a case of good planning to aid crony capitalism?
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