I have got tired of reading the same faulty prescription. The economic way forward being suggested by all and sundry is a failed model. And yet, every other day you see the same analysis, the same arguments, and the same approach being suggested ad nauseatingly. What has happened to this country? Where has our collective wisdom disappeared? Must we be cowed down by the blackmail being continuously unleashed by the rating agencies as well as the international financial institutions?
This is in reality what is meant by populism.
The populist perception is not often pragmatic. I agree. And this is exactly what I am worried about. The populist perception today is that with the fiscal deficit likely to grow, at a time when current account deficit is already galloping, the Finance Minister must ensure that the investment climate remains favourable. Stepping up expenditures is something the government can ill afford at the moment. So the axe must fall on welfare schemes.
Diesel prices have already been freed, and GAAR deferred. Taxing the rich is not the right way, and therefore the only solution these economists and economic writers have is to shower more tax concessions and freebies to India Inc.
If this was workable, and would help kick start the economy, I wonder why the same formula is not working in Europe. All the years of austerity drive, following the economic recession of 2008-09, hasn't seen the European economy showing any signs of emerging out of woods. Greece, Spain, Ireland, Italy, France, Germany and you name it. All European countries are grappling in the dark having blindly followed the IMF prescription. While public outrage has spilled to the streets, unemployment and poverty is growing. With many living in their cars, the crisis has put cash starved Greeks on their bikes. Unemployment in Greece has grown to 25 per cent. Greece is not an exception.
The reality is that the countries that imposed harsh austerity measures are deeper into crisis. In Greece, Spain and Portugal -- where austerity provides a test case -- unemployment is soaring.
International Monetary Fund (IMF) has finally admitted that it had underestimated the damage from its austerity drive. IMF chief economist Olivier Blanchard has in a paper admitted that it didn't fully understand how austerity will not be able to rejuvenate economic growth. As a caveat, and as a face saving, IMF says that austerity works well if fiscal multiplier are small, but for large economies it actually ends up increasing debt-to-GDP ratio.
Should India therefore follow the European decline?
Regardless of what is happening globally, the rich want to extract the last pound of flesh. You shouldn't therefore be surprised at the populist discourse. As the Budget day nears, the decibel pitch increases. It will reach its crescendo on the day Mr P Chidambaram will stand up to present Budget 2013. As expected, the stock markets will first register a fall (this is a blackmail tactic they have perfected) before the Budget is presented, and as the Finance Minister showers freebies on business and industry, it will rise.
But should we succumb to populism? Just because the entire public policy space is occupied by austerity hawks -- in India, they use the phrase: Spending cuts -- does not mean that we have to keep quiet and accept the faulty economic regime. It does not mean that the populist view -- Rob Peter, to pay Paul -- should be accepted just because everyone is saying so.
Farmers Income Commission is now a reality in India. Karnataka becomes the first state to establish it.
Karnataka has done it. Last week it announced the setting up of a Farmers Income Commission. The terms and conditions have yet to be formulated. If implemented properly, and followed up in Punjab, it can be the game changer for Indian agriculture which is reeling under a terrible agrarian distress.
Noted agricultural scientist Dr M S Swaminathan sees merit in this. Thanking me for persuading the Karnataka government to establish an income commission, he wrote in a personal communication: “The National Policy for Farmers calls for a paradigm shift from measuring agricultural progress in terms of production to measuring progress by the real rate in the growth of the farmers income….This is the need of the hour.”
Six years after I first demanded the need to provide farmers with an assured monthly income, the nation is gradually waking up to the desperate need for such a body to address the fundamental issue of income security among country's exasperated farming community. Credit will go to former Karnataka Chief Minister Y S Yeddurappa who very patiently listened to me, discussed its pros and cons and agreed to set up such a body. Present Chief Minister Jagadish Shettar finally announced it as part of the agricultural budget presented in Feb 2013.
By providing income in the hands of farmers, the mainstay of the economy, we are actually providing the real stimulus to kick-start the economy.
In my opinion, modern farming leads to two kinds of agriculture. First, is the highly subsidised agriculture in the western countries. And second, it results in subsistence agriculture, as is being witnessed in the developing world. The only way to bail out subsistence farmers is to provide them with direct income support, as is being done in the rich and industrialised countries.
In my opinion, modern farming leads to two kinds of agriculture. First, is the highly subsidised agriculture in the western countries. And second, it results in subsistence agriculture, as is being witnessed in the developing world. The only way to bail out subsistence farmers is to provide them with direct income support, as is being done in the rich and industrialised countries.
Let us make a comparison. In the 10-year period, between 1997 and 2008, the National Crime Record Bureau tells us that approximately 2.40 lakh farmers had committed suicide primarily to escape the humiliation that comes along with growing indebtedness. Another 42 per cent want to quit agriculture if given an alternative. In the US on the other hand, between 1995 and 2009, farmers have been paid Rs 12.50 lakh crore as farm subsidies, including direct income support. In other words, while our farmers were reeling under mounting debt, US farmers got a fat cheque sitting at home.
In Europe, the economic handouts are more lucrative. Farmers receive a per hectare subsidy in the form of direct income support of Rs 4,000. In the case of cereals alone, if you multiply Rs 4,000 with 2.2 lakh hectares area sown in 27 countries of European Union, it comes to a staggering Rs 90.40 lakh crore.
At a time when all out efforts are to launch the 2nd Green Revolution, buoyed with genetically modified crops, and stricter IPR laws that will shift the control over seed into the hands of private agribusiness companies, the market structure being laid out -- contract farming, food retail, commodity exchanges, and future trading -- all aim at making farmers economically viable, will actually allow the companies to walk away with more profits and leave farmers with empty pockets.
If all this was workable, and was bringing income to farmers, there is no reason why the US and EU governments for instance would be providing huge subsidies, much of it in the form of direct income support or income transfer in one form or the other, to their miniscule population of farmers.
For 45 years, the dominant breed of bureaucrats and technocrats, have been telling farmers that the more they produce the more will be their income. By saying so they were actually not helping farmers, but in the name of farmers promoting the commercial interests of fertiliser, pesticides, seed and mechanical equipment companies. No wonder, the average monthly income of a farming family in 2003-04, which includes five members of a family plus two cattle, had been worked out by NSSO at a paltry Rs 2115. The NSSO has since stopped measuring farm income.
For 45 years, the dominant breed of bureaucrats and technocrats, have been telling farmers that the more they produce the more will be their income. By saying so they were actually not helping farmers, but in the name of farmers promoting the commercial interests of fertiliser, pesticides, seed and mechanical equipment companies. No wonder, the average monthly income of a farming family in 2003-04, which includes five members of a family plus two cattle, had been worked out by NSSO at a paltry Rs 2115. The NSSO has since stopped measuring farm income.
Under the 6th Pay Commission, a peon or a chaprasi in government service gets a minimum monthly salary of Rs 15,000. A farming family earns less than Rs 2115 (in terms of prevalent prices, it would be around Rs 2,400 a month). Can’t we as a nation even think of providing farmers with an income that equals what a chaprasigets?
If Rs 2115 is the monthly income of a farming family (in Punjab, it hovers around Rs 3,200) shouldn't we as a nation hang our head in shame? If agriculture was indeed profitable, I see no reason why rural despair would increasingly drive farmers to take their own lives. Even in the frontline agricultural state of Punjab, two farmers commit suicide every day. As per a recent house-to-house survey, 19 people succumb to cancer ever day in Punjab ostensibly from the excessive use and abuse of chemicals in agriculture.
If Rs 2115 is the monthly income of a farming family (in Punjab, it hovers around Rs 3,200) shouldn't we as a nation hang our head in shame? If agriculture was indeed profitable, I see no reason why rural despair would increasingly drive farmers to take their own lives. Even in the frontline agricultural state of Punjab, two farmers commit suicide every day. As per a recent house-to-house survey, 19 people succumb to cancer ever day in Punjab ostensibly from the excessive use and abuse of chemicals in agriculture.
Farmers were made to believe that putting more inputs would bring them more profits. They are now being told that free markets -- commodity exchange, future trading and food retail – will make farming profitable and economically viable. What is not being told is that it didn't work in the US and the European Union. And it will therefore not work in India.
Look at the way such a flawed approach is being aggressively promoted in India. The beneficiaries of future trading and commodity exchange are not the farmers but speculators, the consultancy firms and rating agencies, and the business. And again, this is being done in the name of farmers. On the other hand, farmer unions have been only asking for a higher minimum support price (MSP). None of them have visualised that there are barely 35 to 40 per cent farmers in the country who ultimately get the benefit of procurement prices since they have some surplus to sell in the mandis.
The rest of the farming community, which is in a majority, also produces food. Even if they hardly have anything to sell, they at least produce food. If they were not to produce food for themselves, the country would be importing that quantity of food. In other words, they produce economic wealth. Therefore they too need to be adequately compensated for the economic wealth they produce for the country. #
After China, it is now the turn of India. Bt cotton 'silver bullet' bites the dust.
As Prof Glenn Davis Stone points in his blog post, Indian farmers are responsible for not turning the Bt cotton tide in favour of Mahyco-Monsanto. They don't know how to adapt to the GM technology.
The Bt cotton controversy refuses to die down. Before Bt cotton was introduced in India, in 2004, we were flashed with the China story. China had an upstart and had already brought in some 5 million farmers to cultivate Bt cotton, we were told. The genetically modified cotton was projected as a 'silver bullet' for the Chinese small cotton producers, and so how could India afford to miss the technological revolution?
India did bite into the bullet. The media strategy to show how China was racing ahead of India certainly paid dividends. The Genetic Engineering Approval Committee (as it was then called) gave a green nod for commercialisation of Bt cotton, in 2004. In fact, GEAC was ready to allow the entry of Bt cotton in India's cotton field even a year earlier in 2003, if it was not for the opposition by a few of us who challenged the scientific data. Nevertheless, the approval came.
It has been roughly eight years since Bt cotton was introduced, and we are repeatedly bombarded by industry drones of how successful the introduction has been for the farmers as well as the country. But surprisingly, if you noticed, the Chinese success story has disappeared from the headlines. If Bt cotton in China was a classic case of a 'silver bullet' before 2004, there should have been an unprecedented boom in cotton production in China. By now, considering all the promises made in increasing 'productivity', China should have emerged as the global supplier of cotton. On the contrary, no one talks of China's foray into GM cotton anymore. There must be some reasons.
In 2006, a study conducted by Cornell University along with the Chinese Academy of Sciences showed that after seven years of introduction Chinese farmers had to undertake 20 times more pesticides sprays to control pests. "The study -- the first to look at the longer-term economic impact of Bt cotton -- found that by year three, farmers in the survey who had planted Bt cotton cut pesticide use by more than 70 percent and had earnings 36 percent higher than farmers planting conventional cotton. By 2004, however, they had to spray just as much as conventional farmers, which resulted in a net average income of 8 percent less than conventional cotton farmers because Bt seed is triple the cost of conventional seed." (Joint study shows genetically modified cotton less profitable in China, People's Daily, July 26, 2006. http://english.peopledaily.
The magic bullet had bitten the dust in China.
In India, the Corporate media kept the story alive. Every now and then I find edit page articles being published detailing the promises of GM crops. More often than not these are based on wrong facts. If this is not enough, GM industry ensures that it packs a few 'participants' in every conference/seminar organised by the civil society or farmer organisations. Recently while I was speaking at the Indian Merchant's Chambers in Mumbai, two farmers -- one from Rajasthan, and another from Warangal in Andhra Pradesh -- got up to say how successful the technology has been for the farmers. Incidentally, both farmers happened to be passing through the city when they heard of the conference !
Returning back to the Bt cotton controversy, I draw your attention to an excellent (and provocative) analysis by Prof Glenn Davis Stone of the University of Washington. In a blog post entitled: GM cotton failing in India; blame the farmers! (See the link: bit.ly/Y1lKc0 ), he writes: If you follow GMO debates you will have heard several years of kennel barking about how these figures show a remarkable success." But as I have pointed out (in my blog and in EPW), most of the rise in productivity had nothing to with Bt cotton; in fact it happened before Bt cotton became popular.
He then goes on to explain. "Check it out: the biggest rises were from 2002/3 to 2004/5, when yields rose 56 per cent from 302 to n470 kg. But by 2004/5, only 5.6 per cent of India's cotton farmers had adopted Bt. Do the math: if those 5.6 per cent of planters were really responsible for a 56 per cent rise in yields, then they must have been harvesting 3,288 kg/hectare."
This incisive analysis by Prof Stone is what I would like the business journalists to read. For the policy planners and politicians, who are habitual in having faith in foreign writings (in addition to policy approaches), let me tell you that this analysis too comes from an American anthropologist. I am sure your faith will not be diluted or corrupted.
Dr K R Kranti, director of the Central Institute for Cotton Research (CICR), the institute that monitors cotton cultivation in India, has said: "No significant yield advantage has been observed between 2004-2011 when area under Bt cotton increased from 5.4 to 96 per cent." Shouldn't this statement alone put the entire controversy at rest? Why is that the GM industry and its drum beaters continue to rake false facts again and again to mislead the nation? Well, it is the powerful stakes involved that gains more when more confusion is created.
Whatever be the reasons, I think it is important to rest the controversy on Bt cotton once for all. Let the cotton farmer emerge out of this deadly trap, and lead a decent life. Spare the thought for him. #
See also, Dr K R Kranti's paper:
http://www.cotton247.com/news/
http://cotton247.com/news/ci/?
http://cotton247.com/news/?
How India destroyed its Oilseeds Revolution, and became world's 2nd biggest importer of edible oils.
Agriculture Minister Sharad Pawar has accused US companies for derailing India’s oilseeds production programme. On a visit to Vidharbha a few days back, the minister said: “In the US, the entire soybean production is done with genetically modified (GM) technology. You have adopted GM in your country but you don’t let that happen in India. This is not proper and it is alarming.”
Chairman of the Commission for Agricultural Costs and Prices (CACP) Dr Ashok Gulati, too has been using the argument of growing edible oil imports to push in another environmentally-disastrous plantation crop -- palm oil. A few days later, Chairman of the Punjab Farmer’s Commission, Dr G S Kalkat , asked: “India imports edible oils and pulses. Why can’t Punjab produce these?” But in the very next sentence, he actually asked for a minimum support price and assured procurement for maize, and not for oilseeds and pulses.
It is true that edible oil import bill has multiplied over the past three decades. For the year ending 2012 (edible oil year is from Nov 2011 to Oct 2012, for instance), the imports touched 9.01 million tonnes valued at Rs 56,295-crore. Between 2006-07 and 2011-12, edible oil imports have risen by a whopping 380 per cent. Therefore, there is definitely an urgent need to reduce the imports, and pass on a significant proportion of annual foreign exchange outgo of Rs 56,295-crore into the hands of Indian farmers.
Instead of paying Indonesian, Malaysian, American and Brazilian farmers from where India imports edible oils, the effort should be to support the domestic farmers instead.
But is crop technology a problem? Is it because India does not have improved varieties of oilseeds that the production hasn’t picked up? Or are Sharad Pawar, Ashok Gulati and GS Kalkat deliberately harping on a wrong tree? After all, how come India, which was almost self-sufficient in edible oils in 1993-94, gradually emerged as world’s second biggest importer of edible oils?
Former Prime Minister Rajiv Gandhi too was baffled. I recall how in 1985 he had expressed concern at the rising import bill for edible oils, which then stood at Rs 1,500 crore. “I can understand why we import petrol and fertilisers, because we don’t produce enough; but why should we be importing edible oils when we can produce the same, “he once asked.And rightly so, he launched an Oilseeds Technology Mission to increase domestic oilseeds production and thereby reduce imports of edible oils.
His efforts bore fruits. In next 10 years, by 1993-94, India had become almost self-sufficient in edible oils production, producing 97per cent of the domestic needs. The quantum jump in oilseeds production was termed as ‘Yellow Revolution’. This was however not palatable to international financial institutions. It was then, and under pressure from the World Bank to restructure our economy, that India began to reduce the import tariffs on edible oils. Although under the WTO norms, India had bound its edible oil import duties at 300 per cent (except for soybean, which were reduced to 45 per cent to benefit the US interests), these duties were gradually reduced. Imports flowed in. Compared to 1.02 million tonnes edible oil imports in 1996-97, India’s imports doubled to 2.98 million tonnes in 1998-99, and then jumped to 5 million tonnes in 1999-2000.
Since oilseeds are dryland crops, the negative impact was felt by millions of farmers languishing in the harsh environment. What could have been a cash crop for these poor farmers, turned out to be a cash cow for the major exporting countries. Sharad Pawar has himself been responsible for reducing import duties. In 2004, import duty on edible oil was pegged at 75 per cent, with a quota system that allowed still cheaper imports of refined and crude edible oils. In 2010-11, import duties on crude edible oil have been brought down to zero, and refined edible oil to 7.5 per cent. No wonder, imports increased from 4.7 million tonnes in 2006 to 9.01 million tonnes in 2012.
Sharad Pawar therefore is very conveniently using the edible oil import surge to promote GM soybean. What he is not telling is that as per research conducted by the University of Purdue, University of Nebraska, University of Wisconsin, University of Iowa and University of Arkansas in the US, crop yields of GM soy have been found 4 to 20 per cent less than non-GM varieties. I therefore don’t understand his logic of promoting GM varieties of soybean which produce less than the existing improved varieties that are not genetically modified.
To say that producing oilseeds to meet the present requirements would require 30 per cent more land than what is under cultivation is also mischievous. Madhya Pradesh, Chhatisgarh, Rajasthan besides some parts of Maharashtra and Andhra Pradesh can be very conveniently shifted from wheat, rice and cotton to oilseeds, including mustard and soybean. This will reduce the burden on wheat and rice storage, and at the same time provide more income in the hands of dryland farmers. In addition, it will also mean reducing the groundwater usage since oilseeds water requirement is much less as compared.
Palm oil plantations on the other hand have been found to environmentally destructive. Worldwatch Institute has shown how palm oil monoculture adds to desertification, and also acerbates global warming by releasing 10 times more carbon dioxide into the atmosphere than tropical forest.
In any case, as is clear from past experience, no effort to improve production can be fruitful till India restores the import duties to at least 130 to 150 per cent so as to stop cheaper imports. This has to be accompanied by a mission approach to provide assured procurement and assured prices to farmers. Madhya Pradesh, Chhatisgarh and Rajasthan can very easily become the edible oil supplier of the country provided a set of policy decisions are spelled out that can make oilseeds cultivation economically viable. Setting up of processing industries will also help create more employment. Why are we not doing it is the bigger question?
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