By Dr Mayengbam Lalit Singh
Asst. Professor, Dept. of Economics, Kha Manipur College, Kakching
It is duty of economists to bring equilibrium between economic forces such as demand and supply. Maxim of Classical Economics “Supply creates its own demand” which was applicable during those decades when there was no hectic official procedure against free flows goods and services. However, modern day governance brings obstacles against free flows of goods and services if the later does not comply with official procedures framed by governance. Economic history taught us lessons how disequilibrium between demand and supply evolved in many countries. The distinguished example is The Great Economic Depression in 1930s in the USA where there were records of overproduction of goods without matching demands from consumers. Despite the overproduction in the USA, several countries in the world experienced in the lack of those goods. Similar situation was witnessed in 2014 when Crimea (part of Ukraine) was integrated with Russia due to political unrest in the country. Several countries of European Union along the USA imposed sanction against import to and export from Russia. Many farmers of European countries exported fruits, dairy products and agro based product to Russia. However, due to sanction, they could neither export nor find market elsewhere. It was pathetic situation to watch those distressed farmers destroying their produces and hence their annual incomes were crippled. However, in Russia consumers face scarcity of those imported products since local producer could not produce the amount demanded by local consumers which resulted in inflation in Russia.
Recent trade war between the USA and China affects availability of consumers’ goods in both countries. The USA levies high tariffs on those manufactured goods imported from China which result in scarcity of the manufactured goods. In similar fashion, China also levies high tariffs on those agricultural items imported from the USA. Among agricultural commodities, soybean is reported the most consumed item in China. Owing to the high tariff rate, USA farmers find it very hard to find the market for their products. Chinese consumers face shortages of soybean along with inflated prices. Hence, such impediments in the free flow of goods lead to artificial inflation of goods across many countries.
The most debatable scarcity of goods at present is due to ongoing pandemic COVID-19 in many countries. When referred to Indian cases, it is reported that all the states have been facing shortages of basic goods along with inflated prices of these consumers’ goods.
In the case for India, there are reports that ongoing lock down disturbs distribution of foods across the country. It has been witnessed that farmers are unable to sell their products to the consumers. The great vegetable malls in the cities can’t be supplied due to lock down. As a result scarcity of vegetables takes place in the vegetable sector which results in inflation of these goods. On the other hand, the plight of vegetables from the growers has been dwindling and prices for vegetables are grounded. Farmers who borrowed loans for their crops are facing a harsh situation of being in between a rock and hard place. If these perishable vegetables are not plighted in time, they will be spoiled within a short period of time.
During the first phase of lock down in Manipur, there was fear among the farmers of Wabagai that standing vegetables (cabbage, cauliflower, tomato, peas, Wabagai potato, etc.) would perish and incurred a huge loss. However, many CSOs and social workers in Imphal gathered vegetables at the price prevailing in the market and distributed it to each household. Later on, private businessmen join the supply of vegetables through a pass system introduced by related government officials. Since then, such businessmen have become player of discriminating prices towards farmers and consumers. Such businessmen usually collect relatively valuable vegetables to their weights at the lowest rate and sell it at the highest rate to the consumers so that they can earn huge profit in every trip. At present, according to farmers, these businessmen buy cabbage (two kilogram or more than that) at rupees 10 and reportedly sell rupees 10 per kg to the consumers which earn at least rupees 30 or 40. Farmers feel that the price they get is just the cost price. So, they are reluctant to sell cabbage at that rate instead they feel that it is better to make cabbage perished to become organic manure. So the government should initiate such policies where members of rural governmental bodies should be employed in collecting vegetables at a price rate prevailing in the rural market. Members of urban governmental bodies should be instructed to cooperate with those rural bodies and sell it to respective localities at fair price. This would solve the scarcity of vegetables in urban areas and reduce variability between prices prevailed in rural and urban areas. At present, private small businessmen are the ones who plight such vegetables from Wabagai to urban areas and other parts of Manipur. According to them, hectic procedures in pursuing vehicle pass, scarcity of vehicle fuel and infrastructural bottlenecks (pathetic roads) in Wabagai are major constraints in the regular plight of vegetables from Wabagai. In regard to infrastructural constraints, roads originating from where vegetables are grown to main Mayai Lambi Road (Irabot Road) are so pathetic with huge potholes which reduce capacity of plight. Government needs to convert these roads to blacktop ones as a part of “Go to Village” programme so that the village can feed the people of Manipur and contribute more to state GDP.
By Dr Mayengbam Lalit Singh