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The end of food subsidies unleashes passions…
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The end of food subsidies unleashes passions…
The announcement by the minister of Finance, Rama Sithanen, that there will no longer be any subsidies on flour and “ration” rice in his budget speech has raised much dissatisfaction. After the opposition castigated the government in Parliament on this particular issue, bakeries have expressed their anxiety as to how they will face such a rise. As from 1st July, “ration” rice will go up from Rs 3.50 to Rs 5.30/lb while flour will move from Rs 3.75 to Rs 5.25/lb.
The first consequence of the decision to remove subsidies has been a reduction in the sales of the State Trading Corporation (STC). The ministry of Trade indeed confirmed a quota on flour until further notice to prevent wholesalers from filling in their pockets. Abuses started to occur just after the budget when some wholesalers came to purchase high amounts of flour and most probably intended to keep them until the new price was official to increase their profits. Bakeries are afraid that this situation is unfair to them, as they may soon be out of stock because of these wholesalers who are acting illegally. Some supermarkets are already out of stock with individuals pouncing on flour before the price goes up.
Quota on flour until further notice</B>
But this is not the only problem the government is facing with the end of subsidies. The minister of Trade, Rajesh Jeetah, had to answer the Private Notice Question of the opposition leader, Nando Bodha, on this particular issue in Parliament last week. The minister explained that the government is working on the new price of “pain maison”, which is controlled.
Owners of bakeries want the government to have preliminary meetings with them before implementing any new prices. There is no doubt that bread will be subject to an increase after the removal of subsidies as production costs will be higher. This is why they want to play an active role in fixing the new prices.
As for the Institute for consumer protection, its spokesperson, Mosadeq Sahebdin, came to the forefront to castigate the government’s decision. He is worried that the rise in the price of flour will lead to several increases; “It will make a certain number of basic consumer goods unaffordable for many.” Likewise Georges Legallant, member of Rezistans ek Alternativ, believes “prices of derived products such as “dholl pourris” ou ‘gato poutou’ will increase. The people the government claims to be helping will be the first ones to suffer. The allocations supposed to compensate the prejudice (…) are far from enough”.
Compensation after subsidies removal</B>
However, the government insists that its decision will not have any negative consequences on the most vulnerable. As explained in the budget, it will redistribute the money gained from the abolition of subsidies in income support to the most vulnerable through the Empowerment Programme. Hence, it will give Rs 225 to each of the most vulnerable 31,000 households as compensation after subsidies are removed on rice and flour.
Moreover, the president of SOS Poverty, Yousoof Dauhoo, made it clear in an interview to l’express-Dimanche that he has always “been against the principle of universal subsidies on rice and flour. It is aimed at favouring well-off people to the detriment of the most vulnerable ones. It is also to be noted that the socio-economic context has changed since the time the subsidies were implemented.” He nevertheless pointed out that such a measure has to be implemented in a global framework aimed at protecting the most vulnerable. Of course, the end of subsidies will lead to a rise in a certain number of other products. “As to reduce the effect of the several rises, the associations fighting for the most vulnerable must remain vigilant. They should fight so that the government maintains its policy of protecting those who really need to be protected,” he explained.
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