Governments struggle to achieve balance between famers and consumers

Export curbs on farm produce are not fair to farmers who are denied an opportunity to earn, said Finance Minister Nirmala Sitharaman, but added that most governments struggle with achieving a balance between the interests of farmers and consumers.  
 
“It’s not and I wouldn’t have hesitation in admitting it. But others may ask is that fair to the consumer? I am caught between the two. I want to support the farmer; I don’t want unpredictable restrictions on exports. But if in our country, market prices go skyrocketing, consumer equally approaches the government to ask what are you doing for me,” the finance minister said on Saturday at the India Today- Business Today Budget Round Table 2024.

She was responding to a question on whether export curbs are fair to farmers who get an opportunity to earn more when export markets are paying well but are then faced with such restrictions.
 
The minister pointed out that consumers complain that (food) crops that are growing in the country and required by them are allowed to be exported and not sold to consumers. “So there is this balance, which governments struggle to achieve. And I am not saying just our government, most governments struggle with this,” she underlined.
 
Meanwhile, on a question of the suggestion by the Economic Survey to exclude food items from inflation for the purpose of inflation targeting, the finance minister said that the Survey is prepared by the Chief Economic Adviser and his team and the finance ministry maintains an arm’s length distance from it but said that it is a discussion worthy subject.
 
“Although it is from the Department of Economic Affairs, the Chief Economic Adviser prepares it, we maintain an arm’s distance from them. So not necessarily it is the ministry’s work,” she said.
 
She, however, said that it is a discussion-worthy subject but neither she nor anyone can take a straightaway view on it as it requires a lot more thought and discussion.
 
The Survey said that higher food prices are, more often, not demand-induced but supply-induced, adding that short-run monetary policy tools are meant to counteract price pressures arising out of excess aggregate demand growth.

“Deploying them to deal with inflation caused by supply constraints may be counterproductive,” it said while suggesting that it is worth exploring whether India’s inflation targeting framework should target the inflation rate excluding food.