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The wholesale fibs party and its propaganda

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(This article was first published by Vijayvaani and is available here.)

The Congress disinformation machine is up and running so hard that now it’s reinventing economics. An article in The Hindustan Times, dated Jan. 15, 2019 on the wholesale price index (WPI), with a wild headline, “Worst price slump in 18 years shows scale of farm crisis”, shows the Congress-plus-opposition agitprop firing on all cylinders. The trouble with this shoddy report and its very obvious promoters is that the wholesale price index (a) hasn’t behaved the way they claim it has (b) is not an indicator of the income health of the kisan household.

These minor inconveniences did not stop The Hindustan Times report from pronouncing that “This financial year, 2018-19 could end up being the worst year for farm incomes in almost two decades, government data indicates in a revelation that emphasises the gravity of the ongoing agrarian crisis”. The government data cited is the WPI which, as the name makes clear, is an index of the change in prices at the level of bulk sale, which for primary agricultural produce is at the mandi, or “farm gate”, as this reporter calls it fashionably. “The WPI sub-component for primary food articles has been negative for six consecutive months beginning July 2018. This means their prices are falling,” says the report.

This is false. Here are the WPI numbers for the category ‘primary articles – food articles’, for the months July to December (the latest month) 2018: July 144.8, August 144.8, September 144.5, October 145.9, November 146.1 and December 144.0 – where is the “negative for six consecutive months”?

Even the simple math the report claims to have done – based on a misreading of the WPI – is wrong. “The WPI sub-component for food components was -0.1% in December. It was -2.1%, -4%, -0.2%, -1.4% and -3.3% in the preceding five months,” says the report. Also false. The sequence of change, from December running backwards to July, is -2.1, 0.2, 1.4, -0.3, 0 and 3. And the change is a number, not a per cent, because the WPI and its components are indices.

But the HT report ploughs on unmindful: “The last time WPI for primary food articles showed negative annual growth for two consecutive quarters was in 1990. The disinflation in farm prices has also led to a collapse in nominal farm incomes, which was last seen in 2000-01.”

So many non-sequiturs in two sentences. A sequence of WPI numbers over several months is not an indicator of annual growth or contraction for what is being measured. As any Food Corporation of India warehouse manager could have told the reporter, what is indexed is the change.

Did the newspaper scrutinise WPI data back until 1990? If it did – and if the sponsors of this “data revelation” did – they would not have failed to notice that the current WPI series has the base year (from which index numbers of 697 different components are calculated) of 2011-12. The previous base year was 2004-05, before that it was 1993-94 and before even that it was 1981-82.

What happened instead is that The Hindustan Times was told to reference the Centre for Monitoring Indian Economy which maintains the WPI data back to the 1981-82 series, but has shown a chart with the news report that draws the 2004-05 series. The rider while comparing indices from different series – that they be recalculated with a specific linking factor that makes two series intelligible to each other – is not mentioned at all by the reporter nor by those interviewed by the paper, and they are, in order of appearance: Himanshu, an associate professor of economics at the Jawaharlal Nehru University; Niranjan Rajadyaksha, research director and senior fellow at IDFC Institute, Mumbai; Praveen Chakravarty, chairman of the Congress data analytics department. And last, BJP spokesperson Gopal Agarwal.

Their quotes, and the confused graphs thrown in, are meant to prop up the sagging storyline – that the Doubling Farmers’ Income programme of the BJP is not working, that there is ‘agrarian distress’ all over India (the reason given for the INC-Left-NGO morcha to Delhi in November 2018), that the boost to minimum support prices are not working.

“To be sure,” the report says, so that we get the point that the data certainly does not make, “the current crisis in farming is related more to a crash in farm prices rather than output growth.” And immediately adds that in July 2018, “the central government increased the minimum support prices (MSPs) of 14 crops to give farmers a 50% return over their cost of production”. In fact, the MSP was raised so that it is now no less than 50% above the cost of production. Several crops have their MSPs pegged at 60% and even 70%.

Not content with the bashing of the BJP government by those the reporter has interviewed, the newspaper then brings in still another angle, GDP (gross domestic product) data. “That disinflation in farm-gate prices has put a squeeze on farm incomes can be seen from a comparison of growth in agricultural GDP at current and constant prices,” blithely says the report.

“The first advance estimates of GDP figures for 2018-19, which were released by the Central Statistical Office (CSO) last week, show that the difference between current and constant price growth in Gross Value Added (GVA) in agriculture and allied activities was -0.1 percentage point. This differential is 4.8 percentage points for overall GVA.”

It is surprising that The Hindustan Times appears to have no access to any of the Indian Council of Agricultural Research’s agronomists, who could have been asked to clarify what the connection is, if any, between GDP growth rates, gross value added and the income of a kisan household in any of our 350 (and rising) districts that produce food for markets near and far. What matters to that household is the income realised for crop grown and sold, and this is where eNam, the electronic national agriculture market, is making a difference with, till date, 585 markets in 16 states and 2 union territories being integrated.

But the newspaper wants to press every available economics button in its frantic attempt to convince its readers that there is an agrarian crisis being engineered by the BJP government. And so it enlists the Reserve Bank of India, too, claiming that “The failure of MSP hikes to arrest the decline in farm-gate prices was taken note of by RBI as well”. What has been quoted from the RBI monetary policy committee meeting held during 3-5 December 2018 does not say so at all.

“The prices of several food items are at unusually low levels and there is a risk of sudden reversal, especially of volatile perishable items,” is how the RBI has been quoted. And what this means is that the consumer of food could find the weekly food bill rising; as with the other crutches this report leans on heavily, the RBI has not said what The Hindustan Times tells readers it has. The risk of the price of some food items rising is not a “decline in farm-gate prices”.

Likewise, the second quote from the RBI meeting – “available data suggest that the effect of revision in minimum support prices (MSPs) announced in July on prices has been subdued so far” – is an encouragement, far from the burden it is made out to be by the report.

Typically, a rise in the MSP would have been transferred, at least some if not most of it, by the layers of crop collection, retail and distribution, to the consumer. This transfer, said the RBI, has been subdued, which shows that the measures taken by the government to cut out profiteering middlemen are working.

Six months in 1990 are not six months in 2018. Gross value added whether at constant or current prices is in no way a measure of income for harvested crop a kisan earns at a mandi or through eNam. These and every other trick used in this report show why it is a shabby, confused, hodge-podge of opposition party innuendo that is meant to ride on data which the reading public scarcely notice. Except, when it is noticed, the whiz-bang falls flat.

Written by makanaka

January 26, 2019 at 08:38