What Ails Indian Agriculture Today

K Varadha Rajan

THE crisis in Indian agriculture, evident among other things from the decline in the growth rate of food production to below the average rate of population growth in the reforms period, has further worsened of late. The reason is that the policies of liberalisation, privatisation and globalisation, that were initiated by the Rao government and are being pursued by the BJP-led NDA government with a vengeance, are causing increasingly adverse effects on the life of peasantry and agricultural workers. The peasantry has been hit by the fall in prices of agricultural produce following the WTO stipulations. Compared to the pre-reform levels, rural poverty rate has gone up. Suicides and starvation deaths are continuing in various states.

The severe price crash in the last decade due to the WTO conditionalties, and the consequent opening up of Indian market to multinationals, is also forcing the poor peasants to sell their land at distress prices. Investment in agriculture collapsed in the 1990s. The last seven years of the 1990s registered a mere 0.67 per cent per annum growth of rural employment, the lowest since 1947.

A recent RBI report indicates that despite the buffer stocks being three times the stipulated level, the per capita food availability has declined. From a high of 505.5 gm per day in 1997, it came down to 470.4 gm in 1999 and further dropped to 458.6 gm in 2000 --- a 9.3 per cent drop, that is, more than 3 per cent per annum.

As for staple diets like wheat and rice, the per capita availability works out to 370 gm per day. This is only 70 per cent of the minimum prescribed by the National Institution of Nutrition, Hyderabad. Of this very situation Professor M S Swaminathan recently said “unless a productivity cum quality revolution take place the apprehension voiced by experts about the India becoming a net importer of food grains in another 20-30 years cannot be ignored.”

Artificial world market priceS

At the all-India level, the prices of agricultural products, both food grains and cash crops, have sharply fallen in this agricultural season also, with a few exceptions. Suicides by farmers are continuing. Procurement and other forms of government intervention to assure the peasants of a minimum support price (MSP) are almost absent in many states.

Because of the high rate of subsidy given in the US and European Union, artificial fixing of international prices, and the removal of quantitative restrictions by India on imports, the crash in prices for many crops continues. The position is threatening to worsen further.  

The Farm Bill 2002, introduced in the US congress in April, led to a further subsidy of 173.5 billion dollars, over and above the 300 billion dollars that was already being provided. This means around 58 per cent increase in subsidy. Subsidy rates for some crops will be hiked by 10 per cent this year. The US government pays 193 dollars per tonne to its soyabean farmers, which is higher than the soybean price at 155 dollars per tonne. Artificially made cheap in this way, this very soya is now being imported with low import duties, destroying India’s edible oil economy and displacing millions of farmers engaged in oilseed production. Our market is also being flooded with bananas, tamarind and milk products, which are otherwise amply produced here. According to the latest estimates, tea exports dipped to 13 per cent whereas imports surged to 23 per cent in 2001, compared to the previous year.

With the hike in subsidy by the developed countries, international prices have been going down systematically over the past few years. This lowering of agriculture prices is not due to any increase in productivity or due to competition. It is due to the anti-competitive practices of agribusiness giants.

International prices have thus been artificially reduced for every commodity.

1) The 1999-2000 price for winter wheat was 18 dollars per tonne, down by 10 dollars from the corresponding period in 1998.

2) The 1999-2000 export price of maize was 89 dollars per tonne, 6 dollars below the comparable period in the previous season.

3) Cocoa prices declined by 37 per cent between 1999 and 2000.

4) Coffee prices declined from 98 cents per pound in January 1999 to 72 cents per pound in September. The composite price averaged to 86 US cents per pound during 1999, 22 per cent less than previous year and lowest since 1993.

5) Cotton prices plummeted to a 13-year low of 198 US cents per bale in December 1999.

6) Sugar price fell to 4.78 cents per pound in 1999, a 13-year low. The price in 1998 was 8.9 US cents per pound.

7) The price for tea was down to 1707 dollars per tonne in 1998, 15 per cent lower than 1997.

With such artificial fixing of world prices by the multinational giants, there can be no question of competition in world market, especially in agriculture.

THE SPREE OF Privatisation

Privatisation and commercialisation of water resources is the latest proposal made by the pro-MNC WTO and World Bank. The recent World Forum on Water, in which all major countries participated, came out with a ministerial declaration that stated: “Because of its scarcity, water must be treated as one of the economic goods and the consumers should be charged the full cost of providing water services.” This is a move in the direction of corporate take-over of water resources. According to reports, a further push to privatisation of water is soon to come through discussions under the General Agreement on Trade Services (GATS), and it is an area that is likely to see intense lobbying by MNCs soon. In Bolivia, water supply has already been handed over to a multinational, against which a protest moment has started.

In India, the recently formed Chhattisgarh state has privatised water supply from river Sheonath. This is the first case in India of river water being handed over to private interests. It is a warning that, under the World Bank diktat the government of India may well go in for water privatisation in the name of its scarcity.

The Anthony government of Kerala too has approached London- and Washington-based multinational companies for privatising river water from Periyar and Malampuzha. In fact, the Anthony government and the BJP-led central government are really vying with each other in ruining the life of the peasantry. Now not only electricity, fertiliser, pest and seed plants but also the rivers are being handed over to MNCs through unbridled privatisation.

FraudULENT claims By GOVT

The progress report of the union agriculture ministry on what it has done in the three years of BJP rule, takes credit for making India number 1 in milk production and number 2 in wheat production in the world, apart from increasing egg production considerably. Thus the BJP is out to take the credit for whatever growth started and/or occurred many years before it assumed office. The Vajpayee government has thus once again showed its enthusiasm to rewrite the history by distorting the facts. The fact is that by handing over milk cooperatives to multinationals and private parties, this government has only done a big damage to the millions of milk producers in the country. If anything, the government has failed to use the vast potential available in the country such as fertile soil, water resources, manpower and the indigenous technology, leading to a decline in productivity and production.

The rural masses, and the rural poor in particular, have also been hit by the changes in our Patent Act 1970. For, these have led to a sharp rise of prices of drugs in recent years. Prices of essential drugs like anti-TB, anti-leprosy and cardiovascular drugs are raising every year. At the same time, health expenditure by the government has declined from 1.3 per cent of our GDP in 1990 to 0.9 per cent in 1999.

As for the government of India’s claim that reforms would boost the export of agricultural produce, experience of the last ten years says something else. According to the details given by the government itself (see the table alongside), our exports during 1991-2000 have consistently lagged behind out imports. Recently even the union agriculture minister lamented that in last 4 years the Planning Commission has allotted only 50 per cent of the funds his ministry had asked for. With such a drastic cut in allocation, it is not at all possible to compete in the heavily subsidised world market, he added.

According to The Economic Times of October 12, 2002, imports of 300 sensitive items have shown a 14.9 per cent increase: to Rs 5,440 crore during April-August 2002, from Rs 4,733 crore in the corresponding period last year. The edible oil segment showed a sharp increase; the import of palm oil alone increased from Rs 2,920 crore to Rs 3,408 crore during this period.

The BJP government has also surpassed all records in cruelly attacking the working people’s livelihood. The last four years saw a spate of closures, retrenchment, etc. The government is refusing to revive the sick industrial units, including those that may yield profits after a small investment. On the contrary, it is selling even efficient and profit-making public sector undertakings to private parties.

It is in this background that, as underlined by the All India Kisan Sabha, the forging of worker-peasant alliance and joint actions all over the country has become a vital necessity for the sake of the country’s regeneration.

(K Varadha Rajan is general secretary of the All India Kisan Sabha.)

Source: Economic Survey, Ministry of Finance, Government of India