Finance Minister Arun Jaitley today gave a point-by-point rebuttal to Congress Vice President Rahul Gandhi’s barbs on price rise and inflation in the economy. “Everybody in this house claims to be going to the market everyday,” Jaitley said in reply to Rahul Gandhi’s claim that the government is oblivious to the high rates of food and vegetables in the country. Jaitley explained the reasons for the current prices of pulses, onions, tomatoes and sugar. He also questioned Rahul Gandhi’s “back of the envelope” calculation in suggesting that the entire benefit of low oil prices should have been passed on to the consumer. We take a look at what Jaitley said on each issue raised by Rahul Gandhi in the Parliament:
1) What comparison was being made by you (Rahul)? We inherited double-digit inflation from your government. Now it has come down to 5 to 6% levels. The current price rise is a seasonal effect that will get settled in the coming months. I expect that with good monsoon and harvest, prices of most food items will come down.
2) Countering Rahul Gandhi’s ‘Arhar Modi’ and ‘Chowkidaar’ jibe, Jaitley said, “I am not sure what new economic equation is being talked about. By your (Rahul’s) logic, the price of dal should rise, only if the MSP rises. I would like to tell you, in case you don’t know, that price is a function of demand and supply. Even after increasing the MSP of pulses, there is a supply deficit. The requirement is 23 million tonnes and the production has been 17 million tonne. Less production is a function of two consecutive years of poor monsoon. The deficit had to be imported. Hoarding happened and we cracked down on it. Now, we expect that with good monsoon, the production should be around 20 million tonne. This will help control prices of pulses.”
3) You (Congress) mentioned the prices of sugar. Let me tell you that till a few months back the price of sugar was Rs 22-23. This is a price at which farmers cannot make profit. They can make profit at levels of Rs 28-30. So Paswan ji was working on policies that made it viable for farmers to grow sugarcane. That was the worry of the government.
4) As far as onions and tomatoes are concerned, till a few months ago onion prices had crashed. People were throwing onions on the streets. Tomatoes were also at very low prices. The current rates are because of a seasonal rise in prices. This is a pre-monsoon effect. After the good monsoon, the production would ensure that prices stabilise at lower levels.
5) On the issue of passing on the benefit of low international crude oil prices, let me settle this once and for all. It would be great if back of the envelope calculations are not made by you (Rahul). The benefit of lower prices has been distributed in a three-fold manner; one, it has been passed on to consumers in the form of lower petrol and diesel prices; two, it went to loss-making oil marketing companies; three, it was used by the government for public investment. You have to understand that the cars the consumers drive also need better roads. Public investment is a crucial part of growth, and it is one of the biggest drivers of growth currently. Had all the benefit been passed on only to consumers, then we would have an economy that is stuck with low economic growth.