APPENDIX TWO: ACTION BY THE GOVERNMENT
The following detailed description of the Bengal Government's actions confirms that it adopted an approach very similar to Sen's. They believed that there was only a first-degree shortage. They believed that lack of purchasing power rather than lack of food caused starvation. They believed that price control was necessary under wartime inflation to prevent certain groups from getting more than their fair share. They believed in public relief schemes. They believed that a large supply of food had to be distributed through the public distribution system. They believed that some degree of rationing was desirable. They believed that speculation and hoarding were major causes of the famine. They attempted therefore to provide the population, and particularly the population of Calcutta, with the purchasing power necessary to obtain the food. They instituted public relief measures. They intervened on the market. Had they been right in their assessment of food supplies, and on the cause of the famine, they might have been successful. Instead, three million people died.
The Bengal Government was convinced that famines were caused mainly by changes in distribution, and that they could control such famines by market intervention. They had experience to support this belief.
"In the course of the 15 years preceding 1943, there were three years (1928, 1936 and 1941) in which the supply obtained from the aman' crop reaped in the previous year, was seriously short because of the partial failure of that crop from natural causes. During these years, distress prevailed in many parts of the province and relief measures on a considerable scale had to be organised. When, however, purchasing power was provided by these measures, the necessary supplies became available for purchase, and no deaths from starvation occurred." (FIC pl3)
When the Government saw that the price of rice was rising in 1942, it felt it should act. In June it fixed a maximum price for rice on the Calcutta market, but prices had already exceeded this level by the time it was implemented on lst July. As a result, merchants diverted supplies to the high priced markets elsewhere in India (FIC p29). The Government reacted by stopping exports, except under permit, from l6th July, and by seizing and distributing stocks. A week later they raised maximum prices by one rupee. It still had little effect. Then the "denial" rice was put on the market, and the district officers were ordered not to enforce price control. Commercial firms and state bodies setup organisations for distributing subsidised rice to employees. At the same time, good rain in September and October improved expectations for the December crop. The combined effect was to stabilise prices, though at a rather high level. (FIC p30). The Government were reinforced in their belief that market intervention could prevent a shortage from getting out of hand.
All this time, as throughout the war, the Bengal Government and the Indian Government were concentrating on anti-inflationary price control, both for the normal reasons, and because they feared that price rises and shortages would lead to an outbreak of political violence. The price control was instituted in the firm belief that there were adequate stocks.
On October l6th there was a cyclone. The trade saw the implications and started buying.Prices doubled in the country areas between l8th November and 7th December. In December 1942 the Civil Supplies Department of Bengal saw the shortage as mainly psychological (FIC p33). In December too, at the India Food Conference it was considered uncertain whether Bengal needed supplies - it had experienced poor crops before and yet had imported relatively small quantities.
After the cyclone there was an immediate shortage in the cyclone-hit areas, and Government introduced relief measures on the lines set out in Appendix I. As destitution started in other areas, relief started there too. It started in January 1943 in Chittagong, and soon after in Tipperah, Faridipur and Dacca. It is not suggested that the relief efforts were adequate, but they would have been, had there been only a first-degree shortage.
The government saw its basic role in relief as providing purchasing power to those who had lost it
"It is in such circumstances that relief measures are undertaken by Government. The essential feature of these measures is, not the direct provision of supplies, but the provision of purchasing power to the affected population, mainly in the form of wages paid to labourers employed on relief works, and to a lesser extent in the form of loans and gratuitous payments. It is assumed that once the purchasing power has been provided the necessary supplies will become available for purchase." (FIC p12)
It will be noted that if there is any substantial shortage of supply, this policy leads merely to an uncontrollable price spiral, with government and individuals bidding against each other for non-existent grain.
When there was a shortage in Calcutta, on 27th December, Government requisitioned stocks and sold them through controlled shops. They considered the shortage to be purely a symptom of panic by distributors.
The Government firmly believed that there was no shortage, but prices continued to rise at the beginning of 1943. It diagnosed a shortage due to speculation and acted accordingly.
"The Bengal Government decided that steps must be taken to reduce the price level. The key to the situation was the Calcutta market, because prices in that market govern prices throughout the province. They, therefore, visualised the remedy in the first instance, as one of checking speculation and restoring healthy conditions on the Calcutta market. The process was later described as breaking the Calcutta market' . . . experience had shown that the use of the denial' stocks had helped check the rise in prices." (FIC p36)
It is unnecessary to point out the weaknesses in their logic: had they analysed the situation correctly there would have been no famine.
In order to "break the market", Government aimed to buy 7400 tons of rice. In fact, it only managed to buy 2800 tons - even though "District Officers were informed that, if necessary, requisitioning was to be resorted to until the quota fixed for the district was procured". The scheme was replaced by another one aiming at buying 22,000 tons a month at government prices. In spite of embargoes preventing anyone but the Government agents exporting from the district, only 2,200 tons were purchased between 10th and l7th January, and the scheme was abandoned (FIC p36). A Food Grains Purchasing Officer was then allowed to buy direct from the trade, but he managed to get only 3000 tons between l8th February and llth March (FIC pp 36-8). The fact that such tiny quantities, out of 9.6 million tons annual consumption, were considered adequate to"break the market" confirms that the Government did not believe that there was any real shortage. All that was necessary was to panic speculators into disposing of their stocks.The fact that it was not possible for the government to buy even the small quantities they wanted suggests that there was a major shortage of supply.
The supply situation for Calcutta was desperate: the city received only half its normal supply in the first quarter of the year. The Bengal Government considered it impractical to seize surplus stocks by force, as they would have wished, and decontrolled the market instead. They did it with reluctance because they believed that
". . . decontrol, particularly if it were not possible to acquire stocks sufficient to enable a moderating effect to be produced on prices, might result in prices rising to a level where widespread famine would be inevitable." (FIC pp 38-39)
They were fully in agreement with Sen on this.
In order to mitigate the effects on Calcutta, the area most at risk because it was at the end of the distribution chain, the Government increased distribution of subsidised grain through employers' organisations, approved markets etc.
District Officers were told to purchase without limit of price any rice and paddy offered to them in the first three days up to a limit of 20,000 maunds. They bought 17,000 tons between l2th and 3lst March, but only 18,000 tons up to the end of August (FIC p39).Again, one is struck by the small quantities considered and the difficulty in purchasing it.
On 10th March it was proposed that 60,000 tons should be obtained from neighbouring states "to break the Calcutta market". Only 28,000 tons were obtained and "the supplies were not sufficient to achieve the primary object of "breaking the Calcutta market" (FIC p43)
During June and July there was free trade between Bengal, Bihar and Orissa. 90,000 tons were purchased and moved into Bengal (38,000 tons by Government agents), but "the effect on prices in Bengal was negligible." (FIC p52). Again, this suggests that the quantity obtained was tiny in relation to the true shortage.
In April and May there was "a propaganda drive for the purpose of convincing the people that the supply position did not justify the high prices prevailing". It was hoped that this propaganda, coinciding with the arrival of imports, would induce a freer flow of stocks into the market and bring down prices. It was intended that this would induce speculators and hoarders to release their stocks. These objectives were not achieved, possibly because there were no excess stocks to release.
In June 1943 there was the Food Drive which aimed at locating surplus stocks and "to organise distribution of local surpluses as loans or by sales to those who were in need of food grains" (FIC p55). In fact it was found that there was very little in stock (see page 14).
In August the Government re-controlled the market.
As late as l9th October 1943, when the famine was at its peak, Wavell noted in his journal "On the food situation Linlithgow [The Viceroy] says chief factor morale."(Moon, 1973 p34).
It should never be forgotten that if the Bengal Government had been successful in its market intervention, the death toll would have been much higher. If they had forced traders to sell off their stocks until market prices fell to the 1942 controlled price, if they had seized and distributed hoarded grain, if they had persuaded farmers and hoarders to sell their stocks, then Bengal would have run out of food completely.