How farmers have been deliberately kept impoverished. They carry the burden of providing cheaper food to you and me.

New Delhi is in a state of shock. A 41-year-old farmer Gajendra Singh from Dausa in Rajasthan has brought farmer suicides right to its doorsteps. What was earlier a distant problem, far away from the seat of political power, is now staring at them in a discomforting close-up. So much so that even Prime Minister Narendra Modi was forced to acknowledge that he is shattered and disappointed, and in a subsequent tweet wrote: “At no point must the hardworking farmer think he is alone. We are all together in creating a better tomorrow for the farmers of India.”

In the past 6 weeks, in the aftermath of unseasonal rains, a little over 150 farmers have taken to gallows in Uttar Pradesh, Haryana, Rajasthan, Punjab, Madhya Pradesh and in Maharashtra. While all these suicides were tragic and should have shaken up the administration, but I didn’t see the kind of shock and awe that we see now for any of those farmer suicides that happened outside New Delhi. In fact, all out efforts by State Governments are to deny that these farmers had even committed suicide because of a lingering crisis on the farming front.

While the politicians are battling it out in and outside parliament, blaming the other party for ignoring the farmers, the fact remains that both the major political parties have blood on their hands. Farmer suicides are not a recent phenomenon. In the past 20 years, almost 3 lakh farmers have committed suicide. On an average about 14 to 15,000 farmers are taking their own lives in a year, with two farmers dying every hour. Those who were committing suicide, and it does require tremendous courage to take your own life, were actually trying to make a political statement with their death. They failed to shake up the callous and insensitive system even by their death.

Soon after Gajendra Singh hanged himself at Jantar Mantar I find the TV channels have swung into action re-enacting scenes from the film Peepli Live. They are in Gajendra Singh’s village in Rajasthan, talking to each and sundry and telling us why he preferred to wear a particular kind of colourful pagri and so on. Every channel is now holding panel discussions calling spokespersons from different political parties who simply are using the media platform to say how white his shirt is by listing the number of steps taken to help farmers. There is hardly an effort to make a serious attempt to track down the fundamental reasons behind this serial death dance.  I am getting calls from newspapers who are asking me which areas their reporters should go to. A new face, a new name but the story will remain the same.

If I were to point to the primary and the most significant reason behind the continuing farmer suicides over the past two decades, I would narrow it down to the declining farm incomes. The 2014 report of the National Sample Survey Organisation (NSSO) tells us that the average monthly income that a farm family derives from farming activities is a paltry Rs 3,078. To make the ends meet, a farm family has to work in some other non-agricultural activities, including MNREGA. That makes for an average of Rs 6,000 per family per month. No wonder, 58 per cent farmers go to bed hungry, and 76 per cent want to quit agriculture if given a choice.

To look deeper, a colleague has meticulously done a comparative analysis. In 1970, the minimum support price for wheat was Rs 76 per quintal. Forty five years later, in 2015, wheat procurement price is Rs 1450 per quintal. In other words, in 45 years, wheat price has been raised by approximately 19 times. Let’s compare this increase in wheat prices for farmers with the increase in salaries for different sections. The average salary of central government employees has risen by 110 to 120 times; of school teachers by 280 to 320 times; of college/university teachers by 150 to 170 times; and of mid to high class corporate sector employees by 350 to 1000 times. In the same period, school fees have increased by 200 to 300 times; medical treatment cost has gone up again by 200 to 300 per cent; and average house rent in cities has risen by 350 times.

Farmer therefore is being made to pay the penalty for keeping food prices low. This year also, the wheat price has been raised by Rs 50 per quintal only so as to keep food inflation under control. Similarly, rice price for farmer has been raised also by Rs 50 per quintal. This increase comes to a paltry 3.2 per cent. Meanwhile the government employees have got a second installment of DA, a jump of 6 per cent. The employees will soon get the 7^thPay Commission where the salary of the lowest employee – a chaprasi – is being demanded at Rs 26,000 per month.

If I were to go by the lowest rate of salary increase seen in the past 45 years, the wheat price for a farmer should have been raised by 100 times. This means, against Rs 1450 per quintal now, what farmers should have legitimately been paid should be 100 times of Rs 76 per quintal that he was given in 1970. This comes to Rs 7,600 per quintal. That is his due whether we like it or not. Now don’t get panicky. I do not want food inflation to go through the roof. All I am suggesting is that instead of putting the entire burden on the poor farmer, the way out should be to pay farmer a higher price and then subsidise the produce for the consumers. It is done in Japan, and it’s also done in other rich countries.

Unless the farm incomes are raised significantly, I don’t see anything working in favour of a farmer. To say that farmers need to raise crop productivity and utilize every drop of water is simply a way to sell newer technologies. Neither will loading farmers with more credit help them to be out of the debt trap. A farmer does not need credit, he needs income. We have deliberately deprived him of a reasonably good income over the years. Successive governments have deliberately kept him poor. #

Agriculture is not only in a terrible crisis, but is fast decaying.

So it’s all working according to the plan. The latest round of National Sample Survey Organisation (NSSO) report on the “Situation Assessment Survey of Agricultural Households” for 2012-13 clearly shows what was largely expected. Agriculture is not only in a terrible crisis, but is fast decaying.  

I am not surprised. After all, the demise of Indian agriculture is on the lines suggested by the World Bank way back in 1996. The World Bank had estimated that in the next 20 years, by 2015, the number of people migrating from rural to urban areas in India will be equal to the combined population of Britain, France and Germany. The combined population of these countries is 20-crore, and the World Bank had anticipated that 40-crore people would be moving out of the rural areas in India by the year 2015.

This is only possible by creating conditions that make farming uneconomical forcing farmers to quit agriculture and migrate to the cities looking for menial jobs. In its 2008 World Development Report, the World Bank had wanted India to hasten the process of taking people out of agriculture by going in for land acquisitions and launching a network of training institutes across the country to train the younger people in rural areas with skills that make them eligible to become industrial workers.  

With over 300,000 farmers committing suicide in the past 17 years, and with 42 per cent farmers wanting to quit agriculture if given a choice, the deliberate effort to keep agriculture starved of public sector funding, and thereby help the exodus process is finally becoming clearly visible. With no efforts to remove the scourge of growing indebtedness, and with over 58 per cent farmers sleeping hungry, there is not much that farmers can do but to migrate. The Census 2011 tells us that more than 2,400 farmers quit agriculture and migrate to the cities every day.  Many independent estimates point to the number of people migrating to the cities is around 50-lakhs a year.  

Raghuram Raman had echoed the same sentiment when he took over as Governor of the Reserve Bank of India. He had said that the real growth in India would be when we are able to move people out of agriculture into the cities. He is not the only economist to say so. Most mainline economists have been parroting the same argument for several decades now thereby influencing the public policies to ignore farming.  Agriculture has disappeared from the economic radar screen of the country.  

With 70 per cent of the farmers owning less than one hectare of land, and with over 40 per cent of the farmers in possession of a MNREGA job card, it only shows how uneconomical farming has become over the years. According to the survey report, an average household of five people earns Rs 3,078 a month from crop cultivation, and another Rs 765 from dairy.  Add to it an average of Rs 2069 from wages/salaries and Rs 514 from non-farm activities, the total monthly income for a household stands at Rs 6,426.

In other words, crop cultivation and livestock rearing brings a monthly income of Rs 3,843 to a family. In other words, agriculture brings only 60 per cent of the monthly income for an agricultural household. If this is what the Indian farmers earn after 45 years of Green Revolution isn’t this a national shame? Does it not mean that the intensive farming techniques that were aggressively pushed in the name of technological development have failed to usher in economic prosperity for the farmers?

Although, the NSSO tells us that 57 per cent of the 15.61-crore rural households are engaged in agriculture, which means they have at least one person who does farming or has dairy animals, the number of farming families now stand at 9.02-crore. But even these agricultural households are a victim of continuous neglect and apathy. In the 11^th Plan Period, the total budgetary support for agriculture was Rs 1-lakh-crore. For the next five years of the 12^th Plan, the budgetary support was increased to Rs 1.5-lakh-crore.  This year, in 2014-15, agriculture which employs 58 per cent of the population, received only Rs 24,000-crore. The industry sector on the other hand got tax concessions of Rs 5.73-lakh-crores this year.

Incidentally, even MNREGA gets a higher budgetary support than agriculture.

With agriculture being deliberately starved of funding, the deleterious impact it has on the viability of the farms was expected. The only saving grace being the Minimum Support Price (MSP) being paid to farmers. But in the past three years, MSP for wheat and rice has been raised by a paltry Rs 50/quintal every year. This is not even enough to offset the rate of inflation that the country has witnessed. On top of it, all efforts are now to dismantle the procurement system, which means removing the MSP and leaving farmers to face the vagaries of the markets. The Commission for Costs and Prices (CACP) itself has been demanding the removal of MSP for farmers and letting the markets decide the price that farmers should be getting.

What is however not being spelled out is that only 8 per cent of India’s farmers get the benefit of MSP every year. In any case, 92% of the country’s farmers remain depended on the private trade which has been ruthlessly exploiting them. Punjab farmers for instance get an assured MSP every year whereas Bihar farmers do not. Removing the MSP would mean that Punjab farmers too are forced to resort to distress sale as is the practice in Bihar. A beginning has already been made by the Food Ministry directing the State governments not to provide any bonus over and above the MSP that is announced by the Centre.

The deliberate destruction of the food self-sufficiency that has been so assiduously achieved is being attempted at a time when globally it is now recognized that food shortage will trigger the next world war. Whether it is because of the impact of climate change or the corporate control over agriculture, food is likely to be the biggest political concern in the years to come.  A warning was sounded in 2007-08 when a sudden spike on food prices led to an unprecedented global food crisis resulting in ‘food riots’ in 37 countries.  

1. Rest in peace, food self-sufficiency. IndiaTogether. Dec 24, 2014.

http://indiatogether.org/nsso-report-on-decline-in-agriculture-and-impact-on-farmers-agriculture

2. Destroying food self-reliance. Orissa Post. Dec 24, 2014.

http://www.orissapost.com/epaper/241214/p8.htm

3. Dismantling Agriculture. DNA Mumbai. Dec 31, 2014
http://www.dnaindia.com/analysis/column-dismantling-agriculture-2048227

4. నిజమైన ఏరువాక ఎప్పుడు? Sakshi, Hyderabad. Dec 31, 2014
http://www.sakshi.com/news/opinion/when-will-the-real-held-agriculture-sector-199793

The Poverty Game. World Bank, Asian Development Bank and India's Planning Commission comes out with three magical figures.

Does it really matter if these children earn an equivalent of $ 1.51 or $ 1.25 or less than that per day? 

Picture Ankesh Kothari (from web)

The magicians are out on the stage. The challenge before them is to compute poverty. performing the vanishing trick, and that too without any compassion, they perform the statistical jugglery. Leading the pack is the World Bank. In its latest poverty vanishing trick the World Bank revisits its Purchasing Power Parity (PPP) index, and in one stroke it reduces India’s poverty from over 402 million in 2005 to a very impressive 98 million in 2010.

On the other hand, the Asian Development Bank has revised its poverty line to $ 1.51 per person (from the existing $1.25), and India's poverty in 2010 rises to 584 million or 47.7 per cent of the population. The gap between 584 million and 98 million is so huge that one is forced to dismiss both the estimates as unreal.

Here comes the third magician. An expert committee under Prof C Rangarajan, a former economic advisor to the Prime Minister, submitted its report to India's Planning Commission in July this year. By revising the poverty line to Rs 32 in rural areas and Rs 47 in urban areas, Rangarajan committee actually added another 93.7 million thereby raising the number of total poor to 363 million or 29.5 per cent of the population. 

So now we have three estimates: 98 million, 363 million and 584 million.

Isn’t this shocking? While not many Indians will believe that Rangarajan committee’s estimates are anywhere near the reality, and in fact is a gross underestimation of the extent of poverty in India, the World Bank’s latest estimates only shows that poverty does not require Millennium Development Goals (MDGs) targets to be achieved or any real effort to combat poverty and squalor. All it needs is a few economists who can play around with statistics. These economists can perform the vanishing trick much better than the Indian rope trick.

According to the World Bank’s latest estimates, global poverty has come down overnight from 1.2 billion to 571 million.

The earlier poverty line figure in India was Rs 27 for rural areas and Rs 33 for urban areas as computed by the Tendulkar committee a year back. This had raised a storm over the faulty and impractical estimates necessitating the setting up of yet another committee under C Rangarajan. And if the recommendations of the Rangarajan committee are to be believed, it tells us that there is something dubiously wrong with the way India is trying to deliberately keep poverty low. In all fairness, the new poverty line is nothing but a starvation line. It only tells us how many people need emergency food aid.

World Bank’s projections are still worse. In order to justify economic liberalization, it has been trying to fiddle around with social indicators as well as the poverty line to establish that the market mantrais working. World Bank’s chief economist Kaushik Basu defends the exercise by saying: “In case a dollar in Ghana can buy three times what it can but in the United States, then a person who earns 1,000 dollar each month in Ghana is said to earn 3,000 in terms of PPP-adjusted dollars”. But the reality is that even in the United States, despite being a privatized economy, hunger has shattered 25 years record. A record 49 million people, one in seven, depend upon food coupons to meet their daily food needs. One in four lives in poverty in America.

The World Bank is wrong. In case of India, with or without the new PPP index of the World Bank, I would like to know what can a poor with a daily income of Rs 47 in urban areas buy three times more than what he can buy in America with the same money. It therefore tells us that economists are no different from the famed Indian magicians. They too can perform the vanishing magic trick with alacrity. 

Global empirical evidence is now emerging challenging the World Bank's deliberate underestimation of poverty. Recent studies (ECLAC 2002, 2011) have conclusively shown that in Latin America for instance actual poverty rates are twice than what the World Bank had projected. More recently, on April 11, 2014, a study by the University of Bristol published in the Journal of Sociology concludes that the World Bank is painting a 'rosy' picture by keeping poverty too low due to its narrow definition. Dr Christopher Deeming of the Bristol University's School of Geographical Sciences is quoted as saying: "Our findings suggest that the current international poverty line of a dollar a day seriously underestimates global poverty."

In India too, the entire effort of policy planners as well as the numerous expert committees constituted over time to estimate poverty have simply tried to brush the realities under the carpet. While Rangarajan Committee tabulates a new poverty line, way back in 2007, Arjun Sengupta committee report had estimated that 77 per cent of the population or 834 million people were unable to spend more than Rs 20 a day. But more recently, the consumer expenditure data presented by the National Sample Survey Organisation (NSSO) 2011-12 paints before us the grim realities.

Accordingly, if you are spending more than Rs 2,886 per month in the rural areas and Rs 6,383 in the urban areas you are part of the top 5 per cent of the country’s population. In other words, those spending more than Rs 6383 in urban areas are in the same category as Mukesh Ambani, Ratan Tata, Nandan Nilekani et al. For the rest 95 per cent, roughly 118-crore people, life in any case remains tough. With or without the growth trajectory, their life hasn’t changed. In fact, with the aggressive pitching by the corporate-controlled media, the growing social divide is getting completely ignored. Poor have simply disappeared from the economic radar screen.  

Another estimate exposes the glaring inequalities. The economic wealth of 56 people is equal to the economic wealth of 600 million people. No wonder when we take averages like the rising average income, it hides the rapidly growing inequalities. The mainline economic thinking is that the 600 million would benefit from a trickle-down impact. Now with the number of absolute poor being reduced with a magic stroke, the World Bank will succeed in painting a rosy picture by brushing the poor under the carpet in one single sweep hides the truth. With the passage of time, these unchallenged statistics will be repeatedly used and get accepted over time.

Unless the World Bank makes an immediate correction, all projections of removing 'extreme poverty' by 2030 would be as farcical as the new poverty estimates are. But I doubt if there would be an international uproar forcing the World Bank to redraw the poverty line. At this rate, in the next five years when the World Bank will revise its PPP index, poverty in India on paper will disappear. The poor in India will one day suddenly wake up to find themselves bracketed with those living in opulence. That’s the power of statistical jugglery. #

Painting a rosy picture, Deccan Herald, Sept 9, 2014.
http://www.deccanherald.com/content/429821/painting-rosy-picture.html

गरीबी पर आंकड़ों का खेल Dainik Jagran, Sept 6, 2014
http://www.jagran.com/editorial/apnibaat-figures-on-poverty-11609424.html

Farmers are heading towards extinction.

Some years ago, former President APJ Abdul Kalam was addressing students at an annual event organised by K Govindacharya’s Bhartiya Swabhiman Andolan at Gulbarga in Karnataka. He exhorted students to work hard, educate themselves to become doctors, engineers, civil servants, scientists, economists and entrepreneurs. After he had ended his talk, a young student got up and asked why he didn’t say they should also become farmers.

Abdul Kalam was floored. Whatever be his long winding answer, the young student had actually punctured his argument, and at the same time brought out the great bias towards farming.

This incident came to my mind when I was reading a moving essay by a farmer from the United States. Bren Smith, a shellfish and seaweed farmer writes in The New York Times, “The dirty secret of the food movement is that the much-celebrated small-scale farmer isn’t making a living. After the tools are put away, we head out to second and third jobs to keep our farms afloat.” Accordingly, 91 per cent of all farm households in the US rely on multiple sources of income. No farmer wants his children to take up farming in North America.

This is happening in a country where the Farm Bill 2014 makes a provision for $962 billion of federal subsidy support for agriculture for the next 10 years. In Europe, the situation is equally alarming. Despite 40 per cent of the European annual budget being devoted to agriculture, one farmer quits agriculture every minute. In Canada, the National Farmers Union has in a study shown that while the 70-odd agribusiness companies are raking in profits, farmers are the only segment of the food chain incurring losses. As I have been saying for long, more than 80 per cent of the agricultural subsidies in America and Europe actually go to agribusiness corporations.

Farmers are a dying breed. Writing in Newsweek magazine, Max Kutner says: “For decades, farmers across America have been dying by suicide at higher rates than the general population. The exact numbers are hard to determine, mainly because suicides by farmers are under-reported (they may get mislabelled as hunting or tractor accidents, advocates for prevention say) and because the exact definition of a farmer is elusive.” Well, what is happening in America is not an isolated development; farmers are dying across the globe.

According to news report, nearly 80 per cent of the 2,80,000 rural people who take their own lives every year in China are victims of farm land acquisition. In India, almost 300,000 farmers have ended their lives since 1995. Again, like in the US, farmer suicides are also under-reported in India with some states now trying to hide them by shifting these deaths to some other categories. Even in Europe, which provides massive subsidy support under the Common Agricultural Policy (CAP), the serial death dance continues unabated. In France, 500 suicides have been reported in a year. In Ireland, UK, Russia, and Australia farmers, are a dying breed.

In India, although we keep on saying that agriculture is the mainstay of the economy, in reality it isn’t. Employing some 52 per cent of the population, the share of agriculture in the country’s GDP has been progressively on the decline. It is less than 14 per cent now. I have been saying for long that small farmers have to get into multiple jobs to keep their chulas burning. Such is the pathetic state of Indian agriculture that some studies point to roughly 58 per cent farmers relying on MNREGA, which provides 100 days guaranteed employment.

Still worse, the people who feed the country actually sleep hungry themselves. More than 60 per cent go to bed hungry every night. Nothing can be a worse illustration of the great tragedy on the farm.

It’s not because of any unexplained natural calamity or the attack of a virus that the farms across the globe are dying. It is part of a global economic design to move farmers out of agriculture, and by doing so to shift food production into the hands of heavily subsidised and environmentally destructive agribusiness companies. It is generally believed that for any country to grow economically, the share of agriculture in the GDP must be brought down. In US, agriculture is only 4 per cent of its GDP. In India, it is less than 14 per cent now. By the end of 2020, I am sure it would be brought down to less than 10 per cent. Small scale agriculture is, therefore, deliberately being strangulated.

Such is the plight of Indian agriculture that in six years — from 2007 to 2012 — 3.2 crore farmers have abandoned farming and moved into the cities looking for menial jobs. According to census 2011, every day 2,500 farmers quit agriculture. Some other studies have shown that roughly 50,000 people migrate from a village (and that includes farmers) into a town/city every day. As per a NSSO study, 42 per cent farmers want to quit if given an alternative.

In Punjab, which is the frontline agricultural state in the country, 98 per cent rural households are under debt. Studies have shown that the average outstanding debt per household is about Rs4.5 lakh per year which accounts for 96 per cent of the yearly income. If farming is in such a terrible state in Punjab, the state of affairs in the rest of the country can be well imagined.

In my understanding, the unwritten economic prescription is to make farming non-viable so that farmers are left with no other choice but to quit. In a quest to keep food prices low, which comes in very handy to freeze the minimum support price for farmers the predominant economic thinking supports large agribusiness conglomerates. This is being made much easier by the growing demand for amending the newly enacted land acquisition law. More and more land will now pass on into the hands of industry and real estate, forcing farmers to do menial jobs in the cities. The demise of the farmer therefore is predetermined. It’s only a matter of time before the farmer as a species goes extinct. That is why Abdul Kalam doesn’t talk of the pride in farming anymore. (this article is an expanded version of one of my earlier blog posts). #

Source: 

1. Nothing to plough back, DNA Mumbai. Aug 27, 2014.

http://epaper.dnaindia.com/story.aspx?id=69990&boxid=19647&ed_date=2014-08-27&ed_code=820009&ed_page=8

2. त्रासदी की शिकार कृषि Dainik Jagran Aug 25 214. http://www.jagran.com/editorial/apnibaat-agriculture-victim-of-tragedy-11579455.html …

Four Tough Steps Modi Govt Should Take

Prime Minister Narendra Modi’s comment on the need for a ‘bitter medicine’ to revive the Indian economy and restore its flagging fiscal health has triggered off a national debate. Coming ahead of the Union Budget, the talk of tough measures is being mistakenly perceived by Capital Markets as an effort to postpone the Acche Din.  Repairing the economy will need some unpopular decisions for which the aam aadmi should be willing to make sacrifices.

When it comes to making sacrifices, it is always the man on the street. So to tell him to once again tighten his belts for the sake of country’s slogging economy is nothing new. They have silently borne the brunt of some of the so called popular economic decisions all these years. Even if they don’t pay taxes, every time inflation shows its ugly head they are the ones who gets heavily taxed indirectly. With the real estate booming, and with property prices going out of the roof, they can’t even think of finding a suitable shelter. They have little choice but to make sacrifices.

I am talking of the 95 per cent of India’s 125 crore people who are unable to spend more than Rs 2,886 per month in the rural areas, and Rs 6,383 in the urban areas. According to the National Sample Survey Organisation (NSSO) consumer expenditure data for 2011-12, only 5 per cent live above this fictitiously drawn prosperity line, which puts you and me in the same category as Mukesh Ambani, Ratan Tata, Nandan Nilekani et al. For the rest 95 per cent, roughly 118-crore people, life in any case remains tough. With or without the growth trajectory, their life hasn’t changed. They have been in any case swallowing the bitter pill every day.

But the wish list of the tough measures that a section of the media is wanting Narendra Modi to adopt are very cleverly shifting the focus from the real issues confronting the country, and is in reality seeking more freebies for the rich and wealthy. In the name of controlling fiscal deficit and the current account deficit all out efforts are being made to divert the resources meant for the poor and needy. Let me therefore present five tough steps that the Prime Minister must take to repair the economy in a way the shine reflects on everyone’s face, and not only the top 1 per cent.

Fiscal deficit: The bitter pill that the country needs desperately is to remove the tax concessions for corporate India, clubbed in the category of ‘Revenue Foregone’ in Budget documents. In 2014-15 interim Budget, Rs 5.73 lakh crore was doled out as tax concessions to India Inc. India’s fiscal deficit is in the range of Rs 5.25 lakh crore. Just by doing away with these additional tax sops for the industry, which is basically income transfer, the entire fiscal deficit can be wiped out. This will mean that the Prime Minister will not have to reduce subsidy on LPG, diesel, food and fertilizer and raise rail fares.

Since 2004-05, Indian industry has been given Rs 31-lakh crore as tax concessions. This largesse did not help in creating more employment, and raising industrial and manufacturing output. If Rs 48,000-crore LPG subsidy can remove poverty for one year as some economists have calculated, Rs 31-lakh crore can wipe out poverty from India for 62 years, which means for all times to come.

Economic stimulus: With monsoon expected to be below-normal, and with prediction of a drought staring the horizon, it is high time to provide an economic stimulus package for drought-affected farmers. Reeling under economic distress reflected through the never ending spate of farm suicides, agriculture needs an economic booster. Considering that agriculture is the largest employer, directly and indirectly employing 70 per cent of the population, I suggest an economic stimulus package of at least Rs 1 lakh crore. At the time of the economic meltdown in 2008-09, India had provided an economic stimulus of Rs 3-lakh crore to the industry, which was stretched for at least three years.

In addition, it is time to put an end to the scandalous misuse of farm credit. In 2014-15 interim Budget, Rs 8-lakh crore at a subsidized interest of 4 per cent was provided in the name of agriculture credit, which primarily goes to agribusiness industry. With hardly Rs 60,000-crore going to farmers, the remaining Rs 7.4 lakh crore is gobbled by the agribusiness industry. Hyderabad for instance gets a higher farm credit than the entire Telengana region. The farm credit subsidy therefore is being used by the industry. It should also be included under ‘revenue foregone’ category.

Investment climate: I agree there is a need to build investor confidence. There is no denying that investments have dried up in recent years. But I fail to understand why are the Indian companies, which are sitting over a huge pile of cash surplus, are not investing within the country. According to a recent report, 126 companies are hoarding cash. In 2012, the Reserve Bank of India had estimated the cash surplus to be in the range of Rs 9.3 lakh crore. It is therefore high time the Indian industry is made to invest within the country.

To say Indian companies have no avenues to invest is not true. If foreign companies can make a beeline to invest in India, waiting for FDI clearances, how come the Indian industry does not find the domestic investment climate appropriate? It therefore needs a little bit of tough talk on the part of the government to make Indian industry invest. RBI also needs to revisit the rules that allows for the companies to make heavy investments abroad. 

New taxes or Higher taxes: In addition to striking out tax concessions under the category ‘revenue foregone’, the government should consider imposing income tax on IT companies. Infosys and Wipro have a huge cash surplus but do not pay taxes. The IT companies have also shifted to SEZs to seek a further extension to tax holidays.  While the sops and freebies are being paid by tax payers, personal wealth is being generated for the high and mighty in the IT industry.

Higher corporate tax and introducing a 20 per cent tax on sugary drinks like colas/fruit juices can mop up additional revenue so as to enable further tax relief to ordinary tax payers. # 

Believe it or not, Mukesh Ambani and an average guard (including those posted outside his Mumbai home) fall in the top 5 per cent of the country !

My maid servant asked me the other day: “Sahib ji, TV news tells me those earning more than Rs 1000 a month are not poor. How can this be true? Although I am earning Rs 5000 every month working at your home, I mop up your floor and wash your dishes. If I was rich why should I be doing jhhadu-pochha? Kuchch karona Sahib ji. Aap bolo na…”   

  

Mohan used to be a helper in my office. He now works as a guard in the Delhi University. “Sir ji, I earn Rs 6000 every month. I have a wife and two children. I live in a one-room shanty accommodation in Kamla Nagar. I know how I am struggling to run my family. My wife suffers from asthama, and my younger son has a heart problem. If I didn’t have the BPL card, I couldn’t have got them a hospital treatment. They would have died by now. And look, this government tells me that I am not poor…”

While I was grappling with words to assuage their anger at a faulty poverty line being enacted every now and then, here comes another shocker. The National Sample Survey Organisation’s (NSSO) latest set of consumption expenditure data for 2011-12 tells us that if you live in a village and spend more than Rs 2,886 per month you are among the top 5 per cent of the country. For the urban areas, the cut-off limit is Rs 6,383 per month. That makes me as well as you, the reader, in the same category as Mukesh Ambani, Ratan Tata and Narayana Murthy. Time to celebrate, isn’t it?

However, both my housemaid and my helper have narrowly missed being in the top 5 per cent bracket of the country. But they surely can derive some console and of course a lot of happiness to know that they rub shoulders with the top 10 per cent of the country. According to NSSO, those spending Rs 2,296 in rural and Rs 4,610 in the urban areas fall in the top 10 per cent. And that makes me wonder, if a guard outside an office or a swanky home is amongst the top 10 per cent of India, then imagine the fate of the remaining 90 per cent of the population? In simple words, does it not mean that over 110-crore people out of a population of 125-crore in India are simply destitute? Does it not mean that the poverty line that has been worked out time and again is completely fallacious and meaningless? 

If a spending of Rs 96.2 in the rural areas and Rs 212.77 in the cities is what it takes to form the top 5 per cent of the country, then there is something glaringly missing in India’s growth story. The promise and excitement of being the second fastest growing major economy is simply an illusion of prosperity wherein a handful of people/families have amassed huge wealth. The average growth in income that India has witnessed means nothing considering the gigantic income inequality that prevails.

The NSSO’s consumption expenditure data only shows how wide the income gap is. With every passing year, we know the prevailing inequality is further widening. At this rate, probably India would put the US to shame where 400 individuals have amassed economic wealth equal to that of half the American population. In India, economic growth seems to be all about the ultra high net-worth individuals (HNIs) whose number has risen to 100,900 in 2012-13, and is expected to swell to 300,000 in another five years. Ultra high net-worth individuals are those who have amassed Rs 25-crore or more in past 10 years.

The more the accumulation of economic wealth with a handful of families, the more is the projection of rising average incomes and growing prosperity. 

Regardless of how strong the poor feel about the cruel joke being thrust upon them, there is excitement in the air. I mean in the air waves. For the past few days I have been hearing the TV anchors and the Congress spokespersons repeatedly emphasizing on the latest miracle that they claim has been achieved. Poverty has come down by 15 per cent in eight years, between 2004-05 and 2011-12.  Some have even demonstrated their height of insensitivity by claiming that a decent meal is possible in Re 1/5/12.

Past NSSO data shows that the percentage of population below the poverty line has come down from 37 per cent in 2004-05 to 21.9 per cent in 2011-12. Planning Commission has last year (in Mar 2012) announced that poverty percentage has come down by 7.3 per cent, which means from 37.2 per cent in 2004-05 to 29.8 per cent in 2009-2010. And now finally, the data for the eight years the UPA has remained in power shows a magical decline in poverty by 15 per cent.

Interestingly, the reduction in poverty is being flaunted at a time when the Planning Commission is still not sure about the new poverty line. And if my housemaid and helper have crossed the Rubicon of poverty to rub shoulders with the rich and mighty, it is time for a grand celebration. But before that, let's have a reality check. 

Remember the TV serial: "Mungeri Lal ke haseen sapne"

The algebra of poverty. Juggling statistics, India now claims reduction in poverty

There is excitement in the air. I mean in the air waves. For the past two days I have been hearing the TV anchors and the Congress spokespersons repeatedly emphasizing on the latest miracle that they claim has been achieved. Poverty has come down by 15 per cent between 2004-05 and 2011-12.

For a country which loves miracles, this is certainly big.

National Sample Survey Organisation (NSSO) data shows that the percentage of population below the poverty line has come down from 37 per cent in 2004-05 to 22 per cent in 2011-12. Planning Commission has last year (in Mar 2012) announced that poverty percentage has come down by 7.3 per cent, which means from 37.2 per cent in 2004-05 to 29.8 per cent in 2009-2010. And now finally, the data for the eight years the UPA has remained in power shows a magical decline in poverty by 15 per cent.

Interestingly, the reduction in poverty is being flaunted at a time when the Planning Commission is still not sure about the new poverty line. Writing in the Hindustan Times, Chetan Chauhan says: "The politics of poverty is at play with the Planning Commission claiming that the number of poor came down from 29.8i per cent in 2004-05 to 21.9 per cent in 2011-12, but failed to specify the poverty line (No of poor dips, but who is poor remains unclear. Hindustan Times, July 19, 2013. http://bit.ly/15TFG6J)".

Isn't it therefore interesting as well as curious to know how did the Planning Commission arrive at this magical figure when it has junked its earlier methodology of computing poverty at Rs 32 for the urban and Rs 28 for the rural areas. There was a big uproar in the country when the Supreme Court had questioned a very low poverty line. But as the news report said: "The commission’s deputy chairperson Montek Singh on Thursday avoided queries on the new estimates. The poverty number would come down whatever methodology is employed,” he said. If this is the way poverty is calculated I am sure you will agree that we need to revisit the entire methodology and the claims being made on the reduction of poverty.

This reminds me of another interesting fact that I had shared at a number of platforms. Soon after the economic reforms were unleashed in 1991, the then deputy chairman of Planning Commission Pranab Mukherjee (who is now the President of India) had brought down poverty from 37 per cent to 19 per cent in one go. I don't know why the present deputy Chairman of Planning Commission Montek Singh Ahluwalia has not tried to surpass his predecessor. Statistical jugglery could have helped him to reduce poverty not only by 15 per cent, but a more drastic 50 per cent. By doing that, he would have done the UN Millennium Development Goals (MDGs) a big service and at the same time justified the need to continue economic reforms.

In any case, poverty reduction is a miracle considering that inflation as measured through consumer price index (CPI) had remained in the vicinity of 10 per cent for several years now, and at a time when the UPA-II has launched a massive right-based Food Security programme to reach 67 per cent of the population. If only 22 per cent of the population is poor I see no reason why the government should be providing legal food entitlements to 67 per cent of the population.

India's poverty line is amongst the most stringent in the world. Planning Commission can certainly bring down poverty whenever it wishes by simply lowering the poverty line slab. This is what I had said earlier in one of my articles: The Algebra of Poverty (Hindu Business Line, Jan 2, 2002. http://bit.ly/1992e6w). You thought we have learnt something from the past? Well, you can see it for yourself.

India: A hungry nation proudly exports food

Food and Agriculture Minister Sharad Pawar is visibly excited. Agricultural exports have jumped nearly 56 per cent in 2011-12 to hit a record Rs 187,000-crore. With the government lifting the four-year-old ban on the exports of non-basmati and basmati rice, eight million tonnes of foodgrains were exported thereby swelling agricultural exports. In the process, India has now become the biggest exporter of rice in the world. 

This year, 2012-13, Sharad Pawar is hopeful of an upswing in export of basmati and non-basmati rice to hit an all-time high of 9 million tonnes. To ease stocks, the government has also allowed export of two million tonne of wheat in July, and has set up an expert committee to further examine the issue. No wonder, the Minister is now promising to introduce a long-term export-import policy. “Government is actively considering free exports and imports of agricultural commodities,” he told an economic editors conference at New Delhi recently. 

Either he is oblivious of the repeated UN warnings of global food prices spiralling once again or remains defiant to hand over country’s hard-earned food security to market forces that he continues to argue in favour of freeing food imports of all controls. International prices for wheat have already risen by 25 per cent in 2012, maize by 13 per cent and dairy prices rose 7 per cent in September, warns UN Food and Agriculture Organisation. “It means that food supplies are tight across board and there is little room for unexpected events.”

In such a grim situation, and considering that FAO has placed India among the high risk countries – which may be susceptible to famine and social unrest stemming from food shortages and price fluctuation – along with Pakistan, Bangladesh, Sri Lanka and Yemen, any tinkering with food import-export policies is likely to be disastrous. My worry stems from the pathetic record in addressing the growing concerns of food insecurity and malnutrition that prevails, and that too at a time when the grain silos are overflowing.  

The day Sharad Pawar was brimming with excitement over possibilities of enhancing food exports, three UN organisations – Food and Agricultural Organisation, the International Fund for Agricultural Development and the World Food programme -- came out with its annual State for Food Insecurity report. Accordingly, with 217 million malnourished people, India tops the malnourishment chart. As far as child nutrition is concerned, India is placed at the bottom of the global chart. 

It is a strange paradox of plenty. While on the one hand India is pushing its agricultural exports, on the other nearly 320 million people go to bed hungry. The number of hungry and malnourished in India almost equals the entire population of America. When it comes to malnutrition, several studies have pointed out that nearly 43.5 per cent of children under five are underweight. India fares worst than even sub-Saharan Africa. According to the 2011 Global Hunger Index India ranks 67 among 81 countries, sliding below Rwanda.The 2012 Global Hunger Index prepared by the International Food Policy Research Institute. Welt Hunger Hilfe and Concern Worldwide have ranked India 65^thamong 79 countries. India’s ranking in the hunger chart therefore sees no change between 2011 and 2012. 

With the per capita availability of foodgrains – including cereals and pulses – sliding to 441 grams per day in 2010, from a high of 480 grams in 1991 when economic reforms began, it is quite evident that hunger is actually growing. Although an impression is being given that as incomes are seeing a rising trend, more people have shifted from cereals to nutritious foods like eggs, meat and fruits. This is however not correct. According to a 2010 report of the National Sample Survey Organisation (NSSO), the consumption of cereals as well as nutritious foods like fruits, milk and eggs too is falling in urban and rural areas. Despite the rapid economic growth, per capita calorie consumption is steadily on the decline. The 2007 NSSO too had pointed to the same trend in falling consumption of both cereals as well as nutritious products.  

Continuously rising food inflation over the past several years has certainly widened the gap between the haves and have-nots. Experts agree that for a large section of the population, buying two square meals a day is now becoming more difficult. Several studies have pointed to the growing inability of a majority of households to the per capita calories consumption of 2,100 in urban and 2,400 in rural areas. It means most people are unable to meet the minimum nutritional requirements. 

In other words, hunger is becoming more acute and visible. More and more people are going to bed hungry. I therefore don’t understand the logic of exporting food at a time when millions are living in hunger. The mounting food surplus is essentially because the poor and needy are unable to buy foodgrains even at below the poverty line prices. Opening up the export of wheat (it is banned at present) India will certainly join the ranks of the major food exporters, and in the process earn some foreign exchange. But the bigger question remains as to who will feed the hungry living within the country? 

There can be nothing more criminal for any hungry nation to export its staple food. It is the primary responsibility of the government, as enshrined in the Directive Principles, to ensure that every citizen is well-fed. Unfortunately what is not being realised is the declining fall in per capita availability of foodgrains matches the availability at the time of Bengal famine in 1943. Isn’t it sad that even after 70 years of Bengal famine, we still live in the shadow of hunger and starvation? How can any sensible nation therefore justify food exports? 

Food management essentially means distributing the available foodgrains among the poor and hungry. A beginning must be made by immediately stopping the export of staple foods, and simultaneously launch all out effort to reach foodgrains at the doors of the hungry millions. #