Fertilizer Subsidy...

Subsidized fertilizer means subsidized food grains. The question arises “why the government supported the food grain prices till now and why, now, it wants to discontinue this practice?” There can be two possible answers, one, the government wanted to reign in inflation and inflationary expectations, and, the second one is, that, it wanted to support the farmers, anyway. If the government wanted to lower inflation then why, now, it wants to leave the economy in doldrums when inflation is already high and is not coming down. This is not the right time to discontinue subsidies. And, if it wanted to support the farmers, then, why, now, it feels it appropriate to leave them to the market, the argument given in favor of FDI in multi brand retail, when it has not arrived yet. Subsidies distort the price structure the market offers. Till now the government provided subsidies and bought the most of food grains itself. It never intended the market to support the farmers which could offer them higher prices and also the capacity to pay for fertilizer, themselves. It has literally exploited the farmers so far and now it will push the whole economy back to high inflation. The proposition that government now wants to discontinue subsidies due to high fiscal deficit is acceptable. But is the food grain market in INDIA, now, sufficient to factor in the cost of fertilizer and pay for it without increasing the prices of food grain and overall inflation? It is not possible. Let us wait for the FDI in retail, if it happens, amid all the discussion. I hope it will come…