We've a just delightful example of the tangle that the Indian bureaucracy can get itself into here. The current crop of certain pulses, including chana (gram, chickpea, all the same thing), looks like being fairly bumper. The proposal is therefore that there should be a 25% import duty on chana coming into the country in order to protect Indian farmers. This is ridiculous for three different reasons.
The first is that less than a year back that same bureaucracy was frantically trying to subsidise chana for the people:
Concerned by continuous rise in prices of pulses - both at the retail and wholesale markets, the central government on Thursday adopted multi-pronged strategy to deal with the crisis which includes further imports and distributing 'chana dal' at subsidised prices, an official statement said.
"In order to ensure availability of pulses at reasonable prices, the National Consumer Cooperative Federation (NCCF) has been directed to start selling chana dal at Rs 60 per kg through its mobile outlets in Delhi," said the food ministry statement.
The answer here isn't to frantically be running around one month trying to procure cheap chana and then one season later frantically trying to keep the price of the stuff up. As I've noted this is something best left to markets pure and unadorned:
Pulse prices were higher than they used to be. Therefore farmers planted more pulses. And do note that it is only partly the better weather that has led to the larger crop. If planting is up 37% and the crop 57% then the majority of the increase is due to the change in planting brought about by the price signals, not just the better monsoon. Or, as we again might say, markets work.
Chana was expensive, so farmers planted more, meaning that chana should be becoming cheaper again. That's what we want to happen and it does and did without those tender ministrations of the bureaucracy.
The second reason is that we shouldn't be thinking about the farmers at all. They're just not the people we should be running the economy for. Instead it is the consumer interest which should and must be paramount. Cheaper food is good for consumers thus allow food to get cheaper, don't try to keep the price up.
And the third point is that it won't actually work anyway:
The Centre is considering slapping import duty of not less than 25 per cent on chana (gram) to curb shipments and protect local farmers from possible price crash in the wake of record output.
If there's record domestic output then prices are going to fall. And who is then going to start importing chana into a market that has just seen record output? Quite.
And there's one more logical problem here. Recall that last year people were running around the world looking for chana to import into India. Because India needed and wanted it. Now the proposal is to block off those foreigners from that market? But how happy are they going to be the next time the chana crop comes up short?
