Control Inflation before 6th Pay Commission

G S Oinam *

Heart breaking statistical data of Manipur State 2008-09 published by State Directorate of Economics and Statistic Department, Manipur reveals the shortfall of food grains in the 2007-08 was about 97.02 thousand tonnes food grains , in which 68.27 thousand tonnes of rice were distributed to the people through fair price shop public distribution system. Remaining shortfall of food grains was purchased from the market by the consumers at any available price. State agricultural production required to increase growth at the rate of 35 % per annum of the total production of 419.23 thousand tonnes in 2007-08 to meet the required food grains for about 27.9 lakh population in 2011.The price of the food grains was recorded at Rs 1350/- per quintal of rice, Onion- Rs. 1500/- per quintal. It is evident that the retail price of Arhar Dal (pulses) was Rs. 53/- per kg., Rice - Rs. 19/- per kg etc. in the year 2008-09. Food inflation is likely to rise to 18% and over all inflation at 10% by March 2010.

According to Central Statistic Organisation survey, GDP growth rate of agricultural production at factor cost in the year 2010 was - 0.02% (negative growth rate) against 1.6% GDP growth in 2008-09. Therefore price of food grains and agricultural products are rising; which is a serious concern to the common people because food grains price are inelastic to demand. (When the price rises, demand does not change even change of income). However, Montak Singh Ahluwalia, Deputy Chairman of Planning Commission of India said that country has enough food stock.

Beside, Agricultural ministry has projected an all time high Rabi food grain crops (winter crops) of 117 million tones for 2009-10 which will start arriving in the market from mid March onward. The turn around in Rabi crops would mean that country’s total food grains production in 2009-10 would be 216.85 mts. Although below the previous year record of 234.47 mt, it is better than the 198.36 of 2004-05 and 174.77mt of 2003-04, which were also bad monsoon year. India has confidence to grow 8% GDP at factor cost this year unless another bad monsoon was faced. World has the confidence of Indian’s economy growth. Most of the foreign direct investors and multi- national companies were achieved target in India this year even when they failed to achieve target across the world due to global economy melt down.

In other word, 2.1% decline in India’s GDP growth rate effectively translate into 2.8% increase in incidence of poverty. In 2009 alone, an estimate of 13.6 million more people become poor or remain in poverty than would have been the case at 2008 growth rate, United Nation Development of Economic and Social Affairs (UNDESA) said. Centre has to answer unnoticed three questions 1. Why people are hording money (neither invest nor save) in hand? 2. Why the farmers are often suicide in India? And 3. Why volumetric sub committees on skill development did not consider for specialized skill development base on resource availability of specific geographical area?

Realizing mounting inflationary pressure, Manipur state government has to wait the actual target achievement of Rabi crops before making any decision to implement 6th pay Commission in the state. Mistake may cause "Hyper Inflation" and "Mass Hunger". We can live naked but we can not live without food. At present, State government employees are drawing salary 3 to 4 times greater than private employees. State own non tax and tax revenue are Rs.211.37 crores and 160.01 crores respectively in the year 2008-09.Non Development expenditure on administrative services for the year 2008-09 was 377.98 crores, which is more than total state own tax and non tax receipts.

State is bearing the burden of interest payment and servicing debt of Rs. 3127.85 lakhs in 2008-09. Overall non development expenditure including payments of pensions for the year 2008-09 was Rs. 97161.78 lakhs. 50:50 centre state shares for the implementation of 6th pay commission in the sate will worth over all tax, non tax receipts and central tax receipts for the payment of government employees’ salary only and bear the burden of higher taxation, repayment of public borrowing and budget deficit to ordinary people. Sorry! We can not agree at this moment!

Overall surplus of Rs. 157.42 crores during the financial year 2008-09 is suggested to use in agricultural production and subsidies of food grains to control food grain price rising. Price of food grains can be control by the government using various mechanisms in the short run. However, price will be rise automatically unless production was increased in the long run. We have no problem even issuing 'Pink Slips' to unproductive government employees. State government must keep in mind that 6 lakhs live registered educated unemployed persons are willing to join in any suitable government job at half of the salary of present pay scale. State par capita income was Rs. 19,258/- in the year 2008-09; which is lowest in north east (Nagaland State data are not available). All India per capita income was Rs. 40, 041 in 2008-09.

Control inflation, reduce the burden of interest payment of debt and government must assure to grow at 10% GDP growth rate before implementing full scale sixth pay commission . Government employees likes early implementation of 6th pay commission like counter part of other state, which is their rightful demand also. However, we do not like to bear the burden of huge interest payment, public debt to our children. Waiting for some favorable months will not hurt both common people and government employees