The great Indian Dal scam revealed

Business Economy
(Last Updated On: January 6, 2016)

The great Indian Dal scam revealed

India Today on Thursday exposed the great Indian Dal scam. It put together a special investigation team, including Arun Singh and Harish Sharma, to find out why prices of certain crops, especially pulses, have soared massively.

Modus Operandi

According to the investigation, the satta traders first identify how each crop is faring, especially the one that is likely to fare poorly that year. Once the crop, called the loose point, is identified, the operators form a cartel and devise a joint strategy to artificially inflate its prices. The cartel then sends procurement agents to Myanmar and Africa (explained in the photo gallery). Large importers in these countries then purchase the food crop from all major suppliers in India. To further suck the supplies out of Indian market, the large operators also buy out crops procured by smaller importers at a premium.

In the most crucial link of the modus operandi, the importers take delivery of the imported crop and hoard it at foreign ports. Then the freight ships are ordered to deliberately slow down and delay their journey toward India.

Meanwhile, the shortage of food production creates a scarcity in the domestic market of India. The demand is massive, but the supply meagre. The prices then start to skyrocket. This is when mill owners are forced to purchase dal from importers at hugely inflated prices. The importers recover their money, but the mill owners then spike the rates further before making the pulses available in wholesale markets.

The small retailers then add their own premium to the inflated prices making dal unaffordable to consumers.

The major dens

  1. Naya Bazaar, Old Delhi
  2. Top commodity importers who operate from Mumbai port
  3. Myanmar is one of the biggest destinations for dal importers
  4. African countries such as Kenya, Tanzania, Malawi, Mozambique also export pulses to India
  5. Ports such as Mombasa in Kenya, Dar-es-Salaam in Tanzania, Beira in Mozambique hoard the material
  6. Ships from Myanmar are stationed in Singapore to delay imports
  7. Importers then hoard the stock at Mumbai and Chennai ports after shipments reach India

Pulse prices soared by a whopping 42 per cent in October this year. In September, the food inflation jumped to 5.25 per cent from 3.88 per cent, whereas the overall retail inflation as measured by consumer price index (CPI) clawed up to 5 percent. This year, the food inflation was the lowest in July 2.15 per cent and August 2.12, and was the highest at 6.79 in February.

In India, four states – namely Madhya Pradesh, Maharashtra, Rajasthan and Uttar Pradesh – produce nearly 70 per cent of India’s total pulses output, according to a Crisil report. Pulses contribute only 6 percent of food inflation, while cereals constitute 25 per cent.

The recent rise in the prices of dal is the sharpest in a decade. Tur and moong, that are widely used in Indian kitchens, are particularly more expensive. Of the two, the rise in tur dal prices is the highest at least since January 2010. Tur prices shot up 104 per cent this month. Urad dal prices soared by 88 per cent this month. All the above data has been provided by the consumer affairs ministry.

Read full article: India Today

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