Sreelatha Menon: Formula to cut inflation

Farm activists say low MSP is fine, if salaries revised under the Sixth Pay Commission are lowered

When activists of the Right to Food campaign attacked Planning Commission Deputy Chairman Montek Singh Ahluwalia over the Rs 32 per capita per day cut-off for poverty line, Vijay Jawandhia — a farm activist from Vidarbha — asked a counter question: “Why are you happy with a minimum wage of Rs 100 per labourer per day under the National Rural Employment Guarantee Act (NREGA), when salaries have been revised several times under the Sixth Pay Commission?

Jawandhia of Setkari Sanghatna, in a letter to Aruna Roy who along with the Right to Food activists had challenged Ahluwalia, said Roy’s silence on the wages of the NREGA workers was unfair, given her objection to the Rs 32 poverty line. His reason: A farm labourer’s wage in his village in 1972 was Rs 100 a month whereas the salary of a school teacher was Rs 150-200 per month. Now, after the Sixth Pay Commission, the teacher’s salary has gone up to Rs 16,000 while the farm labourer gets Rs 3,000 a month. He says a minimum wage of Rs 9,000 per month or Rs 300 per day alone could bring parity.

He feels the Commission for Agricultural Cost and Price (CACP) should consider Rs 200-300 as the minimum wage while it calculates the minimum support price (MSP), as well.

Roy, in her reply to Jawandhia, said she believed minimum wages should be linked to inflation. She, too, had sought Rs 200 as wages.

The arguments of Jawandhia and other farm activists for better wages are linked mainly to their demand for a better agricultural remuneration and MSPs or even direct subsidies.

Devinder Sharma, another agriculture activist, had challenged the Right to Food and NREGA activists to live for 365 days on an income they received for 100 days. His arguments also lead in the same direction — farmers deserve better. Ashok Gulati-led CACP is expected to revise MSP for wheat soon, but with the measly revision of paddy in June, there isn’t much hope.

Jawandhia says nothing less than Rs 2,000 would be a fair revision or there would be a danger to crops such as gram replacing wheat in the coming season. The last revision that took place was three years ago at 28-40 per cent, while prices and wages have gone up.

He says even if the Rs 32 poverty line was considered, the minimum wage of Rs 160 should be considered for a household while calculating MSP. The CACP, on the other hand, took into account wages of about Rs 60-70 while calculating MSP, he says.

Activists such as Jawandhia are as concerned about inflation as the finance ministry. They also appreciate the links of inflation with higher MSPs and wages.

However, they say linking MSP to inflation was as lame as not linking inflation to increase in salaries under the Fifth and the Sixth Pay Commission.

Both Sharma and Setkari Sanghatna’s activists have favoured direct farm subsidies. They say the US and China have given subsidies worth $5-6 billion. Citing the criticism by the World Bank and the International Monetary Fund of subsidies in farm, education and health, they wonder why there was no objection raised to pay revisions under the Sixth Pay Commission. The idea is to keep 25 crore people well paid, so that there is a market with money to buy consumer goods. But the rest are kept happy with a Rs 2 a kg rice, says Jawandhia.

“We would be happy with the present prices of wheat and paddy, provided there is a 50 per cent cut in the salaries that were revised under the Sixth Pay Commission,” he says. He stops short of asking for a similar cut in private salaries, too.

Any takers for this anti-inflationary formula?