The Indian Middle Class may still view Dr. Manmohan Singh as the architect of economic reforms from a previous avatar but his Prime Ministerial tenure seems to be turning the clock back on an economic reforms. Little do they realize that Dr. Manmohan Singh’s inclusive agenda now includes appeasing Crony Capitalists. In what is a hark back to the Indira Gandhi era License Raj, the Manmohan Singh Sonia Gandhi lead UPA has gone from a ban on export of Cotton to a License based red tape system for export of Cotton.
The Outlook has a good summary on the overall confusion in the Industry on the norms for export of Cotton
The Centre had banned cotton exports on April 19, however after strong opposition from the cotton growing states like Gujarat the ban was partially lifted and a new licensing regime for its exports was introduced on May 21.
“It is still not clear to the stakeholders how cotton exports will happen under the new licensing regime introduced by the Centre,” Gujarat State Co-operative Cotton Federation, Managing Director N M Sharma told PTI.
“Will the cotton exports be now through quota allocation or will it be through a bidding process. It is still not clear under the new licensing regime,” Sharma said.
“The moot point is that who shall be the ultimate beneficiary of any of the system opted by the government to allow exports,” he said.
“Earlier, only registration of cotton for exports was mandatory with the textile ministry and there was no license required for it, but since the commodity has been brought under the Ministry of Commerce one needs to obtain license from the concerned agency,” Secretary Saurasthra Ginners Association Anand Popat said.
“There is still no clarity either on how the cotton exports will resume nor any word from the DGFT about when it will be allowed,” Popat said.
The cotton export issue assumes significant importance for Gujarat because
Cotton is a major cash crop of the state, and Gujarat contributes nearly 50 per cent of the total exports from the country.
The estimated production of cotton in Gujarat during this cotton year is being pegged at 100 lakh bales against a production of around 92 lakh bales last year.
Understandably the lone voice of political protest against the export restrictions on Cotton was that of Gujarat Chief Minister and BJP leader Narendra Modi
“Gujarat farmers have lost Rs 2000 crore due to the ban on cotton exports. In one month the cotton growing farmers of Gujarat have been left in the lurch,” Modi said at a function in Gandhinagar.
“License raj means, opening doors for corruption,” he said.
Modi said there should not be any kind of license for export of cotton. “Like before, the farmers of Gujarat should be able to export cotton without any restrictions. This method of restricting exports is wrong,” he added.
“Gujarat’s farmers will not accept this policy of the Centre and will fight against it,” Modi said.
Angst over export restrictions on Cotton is not limited to Gujarat alone.
“The ban is still on”, said A Sakthivel, president of the Tirupur Exporters’ Association, an industry body that has opposed exports to depress local cotton prices.
A Mumbai-based official of the Cotton Corporation of India, a government body that procures raw cotton and an exporter, added: “The procedure of getting the licence has not yet been clarified, and whether the [prior] registration [of the exporters] will be needed or not is also not clear.”
The crony Capitalism underlying the UPA’s arbitrary decision on restricting Cotton export can be best appreciated by this piece in The Hindu Business Line’
’Cotton banking strategy sought to insulate textile industry’ ( Business Line May 24), the head of a South-based garment company wants the Union Government to formulate a cotton banking strategy to store 1-2 crore bales so that Indian cotton is available to domestic textile units and does not find its way into overseas market. He has cautioned that India may lose out to Vietnam too in garment export, after having been overtaken by Bangladesh. He has also bemoaned the high cost of internal transportation.
Translated into simple language, the industry representative wants strict controls on cotton exports.
He also seems to believe that it is the manufacturing industry’s birthright to obtain raw material at stable prices and it is the sovereign duty of the Government to ensure it.
The Manmohan Singh Sonia Gandhi lead UPA’s blatant appeasement of crony capitalists at the expense of Cotton farmers has not even raised a murmur of scrutiny let alone protests in the national media. A media which otherwise falls head over heels to assert its “liberal” credentials on cultural issues stands guilty of a conspiracy of silence when it comes to protesting excesses of the State on economic freedom. That Narendra Modi is the only political leader speaking up on this issue reflects a vaccum in political leadership when it comes to defending economic freedom. Nitin Pai over at the Acorn writing in May of 2005 had called for the emergence of a latter day Mahatma to champion the cause of economic freedom.
Gujarat had once given birth to a mass movement for political freedom over the tax on salt.
Will Narendra Modi lead a 21st century Dandi march over the cotton issue to spur a mass movement for economic freedom ?
Filed under: betrayal of aam admi, DesiPundit, economic freedom, Gujarat Polls 2007, Local Governance, UPA-II Critical Appraisal
thanks for bringing this up. This license quota raj is the bane of our economic freedom. A cotton farmer’s dandi march will indeed be a good idea.
and i hope there is also a Malt March to protest against prohibition in Gujarat.
Textile industry heads contribute directly to the “Kill No confidence motion” budgets, why would they be sidelined then? Let the cotton growers rally behind an equally powerful force.
It’s shameful to See MMS wasting 10 years of his life doing nothing.
Clearly this permit on cotton export have been introduced to hurt the Gujarati farmers (Gujarat generating 50% of the produce) .
A vindictive congress govt at the center seems to be ‘teaching’ Gujarati farmers a lesson for supporting Modi ….
The way Gujarat is zooming foreward leaving behind the rest of India … soon the central govt will start putting restrictions on everything Gujarat will export.. right from milk to potatoes (the rest of the states will not be impacted as they will be barely able to produce enough for their own consumption …forget export) .
May be the shameless Congressis will put a development tax on everything Gujarat produces (as a punishment for developing too fast).
Kitni giragee yeh Delhi ki sarkar ?
Off topic but important.
http://www.dailypioneer.com/258677/Jharkhand-Bishop-openly-backs-Maoist-cause.html
Excerpt:
Claiming that the Church and the Maoists are waging war against the same social evils, Bishop Charles Soreng, Hazaribagh, Jharkhand, says in an interview, “In this (the tribals’) fight for equal opportunities and rights, the Maoists are coming to the aid of the tribals, especially in glaring cases of denial of justice and rights. That is the reason for the wider appeal that the Maoists enjoy.”
In the interview in the May 6 edition of Sathyadeepam, a Catholic weekly published from Kochi, the Bishop admits that the Maoists are sympathetic to the Church and are supporting the priests in carrying out their missionary activities. “…There are some honest people who are really working for justice. They are working against greed for money and power…,” he says.
He also says that Maoists do not attack the priests because “Christians are serving the poor and are working for getting justice to the poor.”
To look at the other side, if the exports are allowed the prices of raw cotton will shoot up in the domestic market. This will in turn lead to higher prices for textile products in the country and hence will add to the already high inflation.
I think the license raj system is bad. But the export ban in this case is helping the domestic textile industry and also helping to keep adding to the inflation.