Volume 6, No. 4, April 2005


Imperialism, Liberalisation Regime and the Devastation of Indian Agriculture

Dr. Gupta


Liberalisation, privatisation and globalisation, (LPG) have brought above vast changes in the world economy. After the GATT, since 1994, more stringent and devastating rules of the WTO are meant to string together all the economies under imperialist hegemony, in the guise of globalisation. The victims of these imperialist- controlled rules are invariably and basically the agrarian 3rd world countries. India, a semi-colonial and semi-feudal country, with three fourths of the population living on agricultural production has been passing through a dangerous phase, faithfully submitting to the WTO, World Bank and the TNCs. The imperialist designs of LPG were courted by the Congress (I) government in the early 1990s, then by the BJP led NDA and now the CPI (M) supported Congress (I) government of Mr. Manmohan Singh. In the full-fledged liberalisation policy under this Congress (I) regime their purpose is to sell the country’s interests down the drain to foreign predators, where, the so-called ‘Left’ will be offering the crucial life-line. The agrarian sector has been already crisis-plagued, the latest proposals are to devastate it even further — as those to remove the minimum support price scheme, to totally wind up the already PDS, and a further massive cut in subsidies on fertilisers, food, etc. all this combined with the proposals for a massive hike in electricity, water and other charges is going to sound the death knell of the peasantry.

The neo-liberal and North-centric globalisation has already devastatingly impacted on the Indian people and society. The new economic policies in India have directly brought about a serious crisis in Indian agriculture. The impact of falling prices for agricultural produce, declining per capita income and increasing poverty has had serious results in the agricultural sector. This has a direct link with the declining opportunities for employment and man-days and the increasing death rate of children. Andhra Pradesh, the experimental land for the new policies under Chandrababu Naidu dispensation, is a blatant case in point to show this disastrous impact. Farmers’ suicides on such a vast scale there is directly linked to the reforms policies. The crisis in agriculture is also accentuated by the dangerous policy of shifting cultivation from traditional crops like rice, maize, etc. to capital-intensive commercial crops.

The UPA government declared a new trade policy at the end of August 2004. Obviously this policy is connected with the WTO norms and trade agreements between India and other countries. This policy also is a continuation of earlier Exim policy, admitted former by finance minister of the BJP, Yashwant Sinha. In this policy a blank cheque is given to freely allow the import of seeds. This means peasants would have to get fertilizers and pesticides too from the same manufactures, the TNCs.

The entire crisis in agriculture is rooted the extremely backward semi-feudal relations prevailing in the countryside. And over and above these conditions of deep distress the policies of economic reforms have created devastation on a gigantic scale. The consequences of globalisation have not only aggravated the problems, they have brought in their wake new deadly elements of devastation. The push towards commercialisation of the agricultural economy, linking it to the imperialist controlled world market under so-called globalisation, has already caused disaster particularly for the poor peasants. On the side of input costs we find a phenomenal increase in costs. With the reduction of fertilizer subsidies, the supply of fertilizers has been liberally handed over to the private agents. Added to this is the increasing cost of credit since the implementation of Narsimha Committee report. The banks have generally withdrawn from providing loans to the peasants at low interests. It is notable that with these wholesale efforts at hitching the Indian economy to the world capitalist market this has already helped the massive growth of private moneylenders, usurers and also trader cum usurers. Obviously this will strengthen the semi-feudal structure of the economy. The sharply rising costs of inputs automatically force the peasants to fall into the grip of moneylenders. Besides that, the ups and downs in the international market play havoc with the lives of the peasants who have already switched over to commercial crops. As for instance with the international cotton price soaring the cotton producers were initially forced to produce more in the early 1990s. But with increasing costs of inputs cotton producers hit roadblocks. By falling into the grip of moneylenders for paying out increased inputs costs, the farmers find no way out of the crisis. Besides, today international cotton prices have crashed causing disaster all around. The traditional rain-fed crops or conventional cultivation would not have been so affected the peasants even in case of crop failure. The exportable commercial crops have as such led to such a gloomy scenario. The world prices of crops like cotton started crashing by the end of 1996 onwards. The already indebted peasants, the high prices of inputs, etc., the increasing withdrawal of banks from providing loans to the poor peasants etc. have left a ruinous effect on the agricultural sector under the liberalisation regime.

The reigning Congress-‘Left’ combine government’s Finance Minister at the Centre declared, in his last budget, about the allotment of substantial sums for food-for-work programmes in 150 backward districts. But the reality proved otherwise. The increase under these schemes is actually cancelled out by an actual decline in allotments for rural development. Further to such neglect, he has paid special attention to cash crops and agribusiness, completely disregarding the crucial fact that malnutrition and the calorie deficiency are due to shortage of cereals. The same emphasis is found in the CPI (M)’s peasant front’s clamour for cash crops and agro business. Such worshippers openly or surreptitiously follow the liberalisation and globalisation policies strengthening the village landlords and rich peasants. Land reforms have been practically and of course theoretically shelved both by the Congress(I) and the CPI(M), electoral promises notwithstanding . Large scale capital intensive units have vigorously grown in tune with the policy of growth minus job generation. However, the financial dole by the so-called reformers to the corporate sector has not yielded a corresponding increase in investment rates.

The last Parliamentary election results are a pointer to the pent-up grievances of basically the rural voters and so the Common Minimum Programme (CMP) of the UPA govt. verbally responded to it by making tall promises like increase in outlay on agriculture, dryland farming, etc. It also promised to ease the debt to check large-scale suicides. In contrast the followers of liberalisation and globalisation in Delhi betrayed the peasants on all those issues. The Congress (I) and the CPI (M) Manifesto went a step farther spelling out an alternative path of development. Facts belie all such claims.

So far as the CPM - propped up UPA govt. budget of 2004 is concerned it is clearly seen that the liberalisation regime has reduced the budgetary outlay for the development of the rural sector by 26% compared to the 2003 budget. The double-standards of the CPI(M) are quite evident in their policies and practices. In Andhra Pradesh and other states they choose to verbally oppose the liberalisation policies in agriculture, while in West Bengal it is the CPI(M) and even its peasant front that emphatically preaches commercialisation of agriculture as per the advice of the American consultancy company, McKinsey. In its 23rd Conference of Andhra Pradesh agricultural workers a strong view was placed that one reason for the crisis in agriculture was for "the farmers shifting their cultivation from traditional crops like maize to capital-intensive commercial crops like chillies and cotton." [People’s Democracy, October 31, 2004]; but in Bengal it implem,ents precisely that policy at the instructions of McKinsey.

Agricultural Growth Deceleration

The globalisation rath is now knocking down the entire gamut of agricultural operations. While economic growth in the 1990s and first years of the new century recorded a down-turn compared to the pre-reforms period, agricultural growth declined from 3.4% in the 1980s to 3% in the 1990s. What is significant is that in the post-reforms period it declined from 4.7% of the 8th plan period to 1.8% in the 9th plan period. This deceleration is the direct fall-out of the neo-liberal policies formulated at the behest of the World Bank, WTO and such institutions. This down-turn in agricultural growth reached its nadir at –3.2% in 2002-03. This is obviously a negative down slide, pronouncing the disastrous situation the Indian agriculture has been thrust into. A clear contrasting picture is visible in the above-mentioned agricultural growth rate in the pre-reform and post-reform periods. In the post-reform period, since 1990, there was a clear deceleration in the growth of production and yields of food grains and in all crops. Compared to the just preceding decade of the 1980s, food grain production in this reform period declined from a growth rate of 2.81% in the 1980s to 1.98% in the 1990s. Yield growth too declined and all such negative factors impacted on the livelihood, employment and incomes of the peasantry. According to the Reserve Bank of India [Report on Currency and Finance 2001-02, RBI, Mumbai, 2003] the causes of the decline in agricultural growth were inadequate irrigation facilities, unbalanced use of inputs, decreasing public investment and a weak credit delivery system. There has been a secular decline in public investment. In the 9th plan against a target of 3.4 million hectares per annum, the actual irrigation potential harnessed was only 1.8 million hectares per annum. The 2001-02 estimates show that the investment is far lower than what was in the mid-1990s. About the availability of credit, it is clearly found that poor peasants continue to remain outside the fold of the banking system in the post-reform period. In fact the growth rate of agricultural credit for small and marginal farmers declined in the 1990s as compared with the 1980s, the RBI Report on Currency and Finance 2000-01 published in 2002 states. But in this reform period the big farmers did not find disfavour from the banks as the RBI Report in 2002 clearly observes. This lack of credit facilities from banks has thrown the poor and marginal peasants to the clutches of usurers and traders cum moneylenders. The large numbers of suicides by peasants are the consequence of this menacing situation. The brunt of the burden of the liberalisation policy is basically borne by the poor and landless peasants. The government data shows that the proportion of agricultural labourers increased from 42.6% in 1993-94 to 48% in 1999-2001. [K Sundaram and S.D Tendulkar, ‘Poverty in India in the 1990s: Revised Estimates’, EPW, Nov. 15, 2003]. This number has further increased in the last few years.

The State Winds Up Its Earlier Role:

It is to be stated that the Indian comprador capitalists utilised the state sector to the hilt to develop their own industries in the aftermath of the Transfer of power. It is they who put forward the Bombay Plan in 1944 and had exploited the state sector grown and nurtured by the politics of the ‘socialistic’ economy under Jawahar Lal Nehru and then under Indira Gandhi. There has also always been incessant pressure from the people through their various movements to force the state to take some definite measures as regards their livelihood, health, shelter, education, etc. The Indian state, like every other state, had taken up certain steps in the market process in regard to the domestic producers and other sections, in a bid to bring some order in distribution within an unequal system. Now, under the liberalisation regime, the Indian state has virtually withdrawn from such an intervening role in the market processes. Since the 1990s, the elaborate structure of controls on domestic and international trade has been increasingly dismantled. Modification has been uncannily made in respect of the Essential Commodities Act, Agricultural Produce Marketing Act, the Small Scale Industry Reservation Act, and the storages, marketing and processing of agricultural produce and its restrictive movement, etc. With the withdrawal of the state and the introduction of an open-door policy, now the TNCs and the Indian comprador bourgeoisie have entered the scene to loot the peasantry. The infrastructural facilities generally provided by the state are now on the decline due to a fund crunch and the free market policy. The power sector has now gone in for privatisation through the latest reforms in the power sector. The EXIM policy for the import of agricultural commodities has been bidden adieu even much before the WTO stipulated period. For primary commodities, Indian producers and consumers are now directly facing the onslaught of the international market, controlled by the imperialist countries. Banks have already closed the doors for the marginal and poor peasants. The altered priority of the banking sector has slashed down direct advances to agriculture made by commercial and co-operative banks. All this has emboldened and encouraged the enhanced role of the private moneylenders in the rural areas. Even traders are now playing the role of moneylenders via supplying inputs, equipments, etc. To add salt to the injuries, multinational and private companies have directly entered the market to provide seeds (on many occasions, spurious ones) with the rapidly reducing subsidies by the governments. Now, not only agricultural lands are gifted away to the industrialists, native and foreign, a definite pressure is being exerted to remove land ceiling and tenancy regulations. The corporate sector and TNCs have already made significant moves to enable them make inroads into direct firm operations. The West Bengal ‘Left’ government have already started moving to that end.

The Role of Banks And The Sway of Usurers

Not only have the banks withdrawn from the rural areas to provide loans to the poor agriculturalist, the entire banking function is now going to be linked with and controlled by foreign banks. The present finance minister, P. Chidambaran, has already declared that the Centre might allow foreign banks to acquire private banks in India. He emphatically stated "The Government would allow a level playing field for the public sector, private and foreign banks and the Reserve Bank of India was putting in place necessary guidelines." [The Hindu, October 30, 2004]. Obviously, Indian agriculture can not expect any positive role from this policy. Now the banks, foreign, private Indians and nationalised ones, will eye those agricultural operations more directly tied to the international market. The consequences will be severer in the days to come. But this is not limited only to the banking sector; the UPA government has now roped in the US consultancy firm, McKinsey, to corporatise the Food Corporation of India. The FCI suffers from lots of problems in respect to procurement of rice, management, pilferage, storage, etc. But the corporatisation policy under the liberalism regime will only further aggravate the conditions of the agriculture-based food sector.

The crucial and most relevant question is whether the whole-sale preference for globalisation is at all beneficial for Indian agriculture. By the first few years of the 21st century the neo liberal regime has caused vast changes the world over. The national economies have seen perceptible changes through the global circuit of production, exchange, and finance. Instead of solving the chronic problems of Indian agriculture the new mantras of liberalisation, globalisation and privatisation shall only further pauperise the peasants, reduce production, and throw thousands of peasants out of agricultural activities with almost no scope for their absorption into manufacturing and the service sectors or any other fruitful employment. This situation calls for a restructuring of the entire economy, the agricultural sector in particular; freeing itself from the clutches of imperialist powers and their native agents and bringing it out of its extreme backwardness.

India has been thrown back to the age of direct colonial rule in many respects by the structural adjustment programme and the WTO trade regime by which the surplus extraction and utilisation are mediated by imperialist capital.

Debt continues as a legacy. Even after suicide by peasants in large numbers, loans from the private moneylenders and also banks haunt their successors who are forced to bear the burden of the dead men. Since the Indian government decided to pursue the aggressive liberalisation policy, in Vidarbha (Mahrashtra), crops loans sanctioned by banks cover barely 70% of the input costs, say district officials. Farmers claim that in Vidarbha, another place for farmers’ suicide, bank credit provides for only 15% of their needs. They rely on moneylenders and traders for the rest, who charge interest at rates varying between 30 and 120 per cent a year, which is enough to kill any hope of the peasant to generate a surplus. The Vidarbha farmers mainly grow cotton, soyabean and jowar during the kharif season. Still most crops depend on the monsoon, irrigation providing for only 15% of Maharashtra’s gross cropped area, as against the national average of 32.9% in 1989-90 [Frontline, August 13, 2004]. The policy of liberalisation, geared more towards creating a pan-Indian primary commodity market with a unified price, in alignment with global prices, have already worked dangerously against farmers in the states. In Andhra Pradesh an unsustainable cash crop like cotton was introduced by cajoling the farmers into producing it for about a decade ago and soon they faced odds in producing paddy. It costs 16% higher to produce cotton in A.P. than in Gujarat; similarly the cost of groundnut production which was also introduced in AP is 38% higher compared to that in Gujarat. Such crops have caused further uncertainly in the lives of farmers. Here too, with a stress on market-based agriculture, about 8 to 9 lakh pump sets were installed. But under the TDP regime power tariff was also increased and power was irregular creating havoc not only of the standing crops, but also of the motors. Now the cropping pattern have been changed. The commercialisation of agriculture, with the change in cropping patterns, compelled the peasants to depend on the market, ultimately controlled by international capital.

The state did not come up to purchase the produce in any significant way, leaving farmers in the lurch. This was also one of the main reasons behind farmers’ suicides.

In this crisis situation, hounded by moneylenders, particularly the usurers and traders, hundreds of peasants commit suicide. Since the onset of the liberalisation policies, institutional credits are not forthcoming. Even the government-declared proposals prove to be an eye-wash. For instance, the Chandrababu Naidu government in AP did announce a debt relief package after the wave of suicides in 1997-98. However, by the end of 1998, the institutions rescheduled the loans to the extent of only Rs. 182 crore against a target of more than Rs. 700 crore. Moreover, the large-scale dependence on private moneylenders in this semi-feudal system is not getting reduced, but is rising alarmingly. This shows how usurious capital holds sway in the neo-liberal regime dictated by the International Monetary Fund, World Bank, etc. — an example of how imperialist sponsored ‘modern development’ fosters backward institutions and relations of production.

The Crushing Burdens on Peasants

The major irony of the reforms programme introduced in the name of liberalisation was that it miserably failed to cast a glance on the sector that provides the largest share of the country’s workforce. An eloquent testimony of this gross neglect meted out to agriculture during the past 10-year period is the steady decline of the share of this agricultural sector in the capital formation of this country. The stark fact is that during the 1990s, the share of agriculture in the gross capital formation, if counted at constant prices, shows that it has remained in single digits, bitterly pointing to the slackening growth towards a blind alley. As a consequence, this phenomenon has contributed to the overall decline in the share of the agricultural sector in terms of Gross Domestic Product from around a third in the early 1990s to below a fourth a decade later. The steadily deteriorating agricultural sector points to the fact that despite almost no change in the rural population; a clear decrease in the agriculture- dependent population is noticeable. This indicates a vast displacement of the peasantry from agricultural production, with no alternative source of job generation. The huge cuts in the government’s rural employment schemes have added to the woes of the agricultural labourers and poor peasants.

It is notable that since 1997-98 there has been a marked fall in the global primary product prices triggering untold misery to the Indian. This has been aggravated by the government gradually disbanding the agricultural price support schemes and throwing the peasants to the vagaries of the market. The increasing strain made by the falling output prices and the rising input prices along with the almost negative monetary backing by the banks and such organisations, the peasants are forced to alienate their lands and many are forced to commit suicide. Growing landlessness has become the order of the day. Even a section of the rich peasants is ruined. Many cultivating households are thrown to the labour market. With the existing agricultural labourers, the situation leads to further shrinkage of job opportunities and decline in real earnings.

The hell-bent journey in the name of liberalisation has helped in the rise in farm debts and loss of purchasing power of the peasants. This is clearly visible in the decline of grain absorption per capita in India as a whole to around 155 kg. per annum in comparison to 175 kg. only six years ago. The central policy dictated by the WTO has an obvious negative impact on the country as a whole; the so-called Left ruled state like West Bengal is no exception. Actually speaking, the livelihoods of the agricultural population have decreased manifold with the country being forced to reduce tariffs as demanded by US imperialism during negotiations at the WTO. A look at the monumental problems can be guessed from the prevalent tariffs and the trends in international prices of some of the major commodities particularly in the later half of the 1990s. In this period prices at the international level descended to their lowest levels due to the weight of subsidies granted to agricultural commodities by the most powerful countries, with the USA at the top. Those products are obviously export-oriented. The members of the European Union have for long been using very high subsidies on certain products like wheat, corn, sugar, diary products, etc. For example, in case of wheat the production related subsidies that the producers got in 2002 were almost 84 percent of the total value of output, while for milk and sugar it was 50 and 51 percent respectively. After the establishment of the WTO in 1995 the US government of the WTO enhanced subsidies to rice from US $ 16 million to more than US $ 700 million while for soybean, from US $ 16 billion to more than US $ 3.6 billion, in the period from 1995 to 2001. One can imagine the huge power of those countries in introducing distortions in these markets and the increased uncertainties therefrom. In the current negotiations at the WTO severe pressure was brought on India to reduce its tariffs even further. This spells further dangers for the Indian peasantry in respect of their livelihoods and food security, as international prices of most agricultural products have remained sticky, at low levels, under the overwhelming controlling powers of those western countries that are inducing high subsidy-based production.

It is argued by the protagonists of globalisation and market-based economic growth that Indian agriculture should increasingly go in for exports for ensuring growth. They say that relatively low cost agriculture in the global market will be providing advantage for generating additional markets. The fact is that Indian subsidies to farming is negligible compared to the west and so stands little chance in competition. Also it suffers disadvantages from little to no infrastructural support, relatively high credit rates, poor yields, and exceedingly backward modes of production. At best those that will gain are the Sharad Pawar type big landowners with vast capital resources; the rest will be pushed into deeper poverty.

Commercialisation of Crops

The enhanced area under non-food crops cultivation in India is a lingering threat to the lives of the peasants and agriculture itself. The food crop area and non-food crop area in India were 70.34 and 29.66 percent respectively in 1981-82. By 1998-99 food crops area got reduced to 65.44% and non-food crops area was enhanced to 34.56%. [EPW, June 12, 2004] This distribution obviously varies from area to area and we can presume that in the current year non-food area has further increased in India.

It is the agricultural labourers who bear the worst burnt of the severe crisis in agriculture. Most of the 11 crore agricultural laboures, mostly comprised of Dalits and tribals, have now been facing extreme economic problems to meet the basic requirements of life.

Not only at the Centre, particularly in Andhra Pradesh and Karnataka rural voters in the last elections rammed the message that they can reject the votaries of liberalisation. Yet the changes at the corridors of power have not brought about tangible improvement in the cotton belts in India. The lowering of water level, drought, increasing input prices and declining subsidies have thrown the cotton belts in India into a deep crisis. The cotton farmers’ suicides are still on. While this backward semi-feudal, semi-colonial India is devotedly tied to the WTO norms, the US in complete disregard of WTO norms and rules has enhanced its cotton subsidies to $ 3 billion a year. This imperialist big power is surreptitiously aiming to reduce the world cotton prices and dump cotton in the markets regardless of the distressing condition of the cotton-growing third world countries. The US has now nearly 6 million bales more than the requirements of the world. This position enables it to exercise its leverage in controlling and pushing out countries like India in the international trade. The US subsidy system is based on direct payments and this enables the farmers to sell cotton in world markets at prices far below the cost of production. The US production costs are $1.70 per kg. but its cotton is sold at $ 1.18 per kg. Its export subsidies for the year 2002-03 was a staggering $300 million. In contrast, India imports cotton unrestrictedly with an import duty of 10% while there is no export subsidy since 2003. [EPW, Oct. 23, 2004] Thus the cotton-growing peasants are forced to be left to the mercies of basically the moneylenders and controllers of the international market. In this year there is worldwide over production of cotton and so this spells further doom for the cotton-growing peasants.

The followers of globalisation clamour for an ‘export-oriented’ agricultural sector in India. They do not bother about food security. They only point to the increased food grains stock as an indicator of self sufficiency in food. They conveniently overlook the vagaries of nature. Markedly monsoon-dependent Indian agriculture, however, does never provide any certainty on crops. The unequal land relations, lack of proper irrigation policy, excessive dependence on fertilizer and HYV seeds, absence of a suitable environmental policy, etc. can not guarantee food security. Those protagonists – the Left Front Government in West Bengal included – now strongly argue for the diversification of Indian agriculture for proper (read improper) utilization of available resources. Those high flying imposters forget the ground reality that basic foods are not available to millions in India. Poverty and malnutrition stalk rural India.

The imperfect nature of the international market brings about a lingering fear of erosion of the agricultural sector. The developed imperialist countries infuse a high degree of subsidization for their exportable foodstuffs and the volatility of the internal markets automatically leaves adverse effects on an agricultural economy like India. The trade liberalisation regimes starting with Rajiv Gandhi’s Congress (I) govt. and then the BJP led NDA and now the ‘Left’ supported Congress (I) led UPA government have been continuously playing with the lives of the Indian peasants and destroying India’s agricultural base by the transmission of international price volatility into domestic markets. The increasing uncertainty in the world prices does have a clear effect on Indian agriculture. It is notable that after the transfer of power in 1947 India did not import agricultural products except basic foodstuffs like cereals, pulses and vegetable oils. There were quantitative restrictions till the mid-1990s, except in case of pulses. And even in the case of cereals and vegetable oils the duties were substantial, while for the basic foodstuffs which were imported through the state trading corporation or its subsidiary, the levels of duties were hardly enough. After the introduction of the liberalisation policy, in the name of economic reforms in 1991-92, the import policy was gradually liberalized. First edible oils, other than coconut oil, were liberalized in 1994. Soon after, the liberalisation regime of India decided to give up all trading monopoly on all oils other than coconut oil. And by March 2000 all the restrictions via tariffs were gradually lifted on milk, milk products and cereals. The dependence on imports substantially increased. As for example, the import of edible oils was about 2-5 percent in 1961-75 and it soared as over 50% in 1999 and 2000. This happened despite the fact that, in case of soyabean oil, there had been a substantial increase in domestic production [EPW, Oct. 23, 2004] The increasing dependence on the imperialist West through agricultural trade liberalisation by joining the WTO is opening the doors of the Indian agricultural sector ajar for loot and exploitation.

Destruction of water resource

So far as India’s Water sector for agriculture is concerned, under the so called reforms regimes its public irrigation systems are falling far short of their designed potential for performance; they do not receive the investment they badly require for even maintenance and upkeep. Despite the much touted policy of Participatory Irrigation Management (PIM), two decades of available evidence provides no indication that the PIM works to improve the public irrigation systems. Similarly, India is stymied by its unregulated groundwater economy that is being depleted due to its anarchic use. In a vast country like India where community based resource management, like in erstwhile Red China, could resolve the water problems for agriculture considerably, the privatisation of water approach preached and followed by the liberalisation regimes under the Congress (I), UF, NDA and UPA at the Centre and state governments including the LF in West Bengal have virtually pushed the country towards doom in respect of agriculture on which the country’s majority of the people depend for their livelihood. In one important study it is shown that increasing dependence on tube well irrigation is causing depletion of groundwater. [Energy – Irrigation Nexus in South Asia: Improving Ground Water Conservation and Power Sector Viability, IWMI Research Report No. 70, Sri Lanka] The Andhra Pradesh Government under Chandrababu Naidu was globally projected as the latest model of large-scale public irrigation management but it proved to run out of steam even as several other states copied Andhra Pradesh’s PIM Act [D. Narasimha Reddy (1999): ‘Designer Participation: Polities of Irrigation Management Reforms in Andhra Pradesh, India’, presented at the International Researchers’ Conference on irrigation at the International Reserachers’ Conference on Irrigation Management Reform held at Hyderabad on Irrigation December 11-14] And it should be mentioned that the PIM programmes in Andhra Pradesh were assisted and dictated by the World Bank

Distribution of Household Type in Rural India upto 1999-2000





Self Employed in Agriculture




Self Employed in non Agriculture




Agricultural Labour




Other Labour




Source: NSS Employement and Unemployment Survey 1999-2000

Cited by Joya Mehta, Ibid p.33

Rapid ground water development took place in Bihar, as the above figures clearly shows, powered by both government policy and private initiative. Simultaneously bore wells also increased in the period since the middle of 1980s. One important study on this phenomenon concludes that "Agricultural growth remains low in Bihar in spite of increased pump density and access to irrigation. Growth fuelled by ground water development has been short-lived and much less significant…. [Avinash Kishore, Understanding Agrarian Impasse in Bihar, EPW, July 31, 2004, p.3488]. The increasing cost of irrigation, chemical fertilizers [retail price of Urea in the 1980 remained stable at Rs. 2.50/kg. But in the last 10 years it has increased more than two times to about Rs. 5.30/kg. Ibid. p.3489] Lack of electricity facility and obviously lowering of ground water level have caused the stagnation. In addition, with extreme inequality in land ownership this cannot provide a permanent solution to this impasse. How much water tables can get depleted by extensive dairy production plus by the current mantra of emphasizing extraction of water for agriculture has been highlighted in studies in the case of Gujarat, sounding an alarm. [O.P.Singh, Amrita Sharma, Rahul Sing, Tushar Shah, Virtual Water Trade in Dairy Economy, Irrigation Water Productivity in Gujarat, E.P.W July 31 – August 6, 2004; M. Dinesh Kumar and Katar Singh, ‘Groundwater Depletion and its Socio-economic and Ecological Consequences in Sabarmati River Basin’, Monograph 2, INREM Foundation, Anand, 2001].

TNCs Make Inroads

Transnational Agro Food corporations have emerged in the agricultural sector to loot and tightly bind the Indian agriculture-based economy. For intensive farming small holdings are not profitable for TNCs. Now they are pressurising the government for the lifting of the land ceilings acts as well as the conglomeration of small holdings. The Maharashtra government has already decided to grant exemption in the Landholding Act to trusts, companies and cooperatives for horticultural purposes. Fallow waste or khas lands can now be purchased by them and cultivable lands can be taken on lease. This process is already underway in Orissa, the southern states and also in the ‘Left’ ruled West Bengal as per the advice of the Mc Kinsey consultancy firm.

As a part of this process contract farming has entered the scene. Under such system the concerned company provides seeds, fertilisers, technology, credit and also farm equipments to the farmers. The peasants are commissioned to produce and supply specific products, in fixed quantities, maintaining a specific quality, in a pre-fixed time frame and price. HLL, Pepsi and Nijjar have taken up tomato production in Punjab, Markfed entered in Punjab to produce mustard crops, potato cultivation has been taken up by McDonalds, Wheat by Rallis and HLL in Madhya Pradesh etc. [Jaya Mehta ‘Changing Agrarian Structure In 2002-2003 Alternative Economic Survey, Rainbow Publication, Delhi, pp 30-32]

The TNCs were already in the field to control seeds. Though state seed corporations set up their units under the World Bank backed seed projects, the private sector entered the seed industry since the early 1970s. In the year 1987 MRTP and Fera Companies were invited to manufacture seeds. In the same year itself import of seeds was introduced in the Open General Licence category. And then through the TRIPs regulations of the WTO, the TNC seed companies invaded the country as powerful agents to control the seed industry in India. Simultaneously agro processing industries which operated in the small scale industry sector have been allowed to be sucked by the TNCs and big corporations. This will naturally alter the land use and cropping pattern in Indian agriculture. Such opening up of the agricultural sector to the TNCs and big corporations have already impacted on the cropping pattern, causing further decline in employment growth. The capital intensive and import-based agricultural activity has naturally started displacing peasants from land and agriculture on an increasing scale. These are the direct results of the ruthless inroads of the globalisation process in Indian agriculture.

Decreasing Productivity

Low productivity in agriculture is to be seen, particularly in the regions where the World Bank policy of induced distorted development was undertaken in the mid 1960s, with the petering off of the ‘green revolution’. The bourgeois land reforms were also not pursued effectively, and instead with a policy of introducing technological inroads, chemical fertilizers and HYV seeds, a hotch-potch market based mechanism grew apace. The much touted Green Revolution against Red Revolution after some years of a productivity boom has now hit road blocks. Now, with the unchecked and directly WTO-dictated agricultural policy it has further plummeted crops production in those regions. Several studies have shown the negative rates of growth in yields in states like Punjab and Haryana [R.Chanda (1999) ‘Emerging Crisis in Punjab Agriculture: Severity and Options for Future’ EPW, Review of Agriculture March 27 April 2, A Gulati (2002); challenges to Punjab Agriculture in a Globalising World’ jointly organized by IFPRI and ICRIER, New Delhi, May 17; K. Singh and S. Kalra (2002): ‘Rice Production in Punjab: Systems, Varietal Diversity, Growth and Sustainability’ EPW, July 27]. It is necessary to note here that land reforms measures were not only avoided, in its stead technological inputs were introduced as an alternative. And everywhere after some initial boost in growth, agriculture hit road blocks after some years, due to a combination of various factors, including an ecological crisis. The RBI report in 1984 on Agricultural productivity in Eastern India brought the thrust area on expansion of tube well irrigation and the development of water markets. The ‘liberalisation’ regimes furthered this scheme and all the states focused on this for temporary gains in productivity. Some economists too came suggesting to develop land saving and labour-using technology. [Yujiro Hayami, Agrarian Problems of India from an Eastern and South Eastern Asia Perspective, Institute of Economic Growth, New Delhi, 1981] The paradigmatic change of the policy makers during the 1980s did yield record high growth rates of cereals in Bihar. While in the 1990s cereal yields stagnated.

A good number of major crops have been witnessing a sharp decline in productivity growth over the past one decade. In addition to this, a significant aspect is that Indian agriculture faces unfair competition from cheap imports, threatening the livelihoods of the agricultural communities.

Joblessness: Industry and Agriculture

There is a close interrelationship between Indian agriculture and industry. Agricultural production in 2002-03 alarmingly fell by an estimated 12.6% in one year. While in 2001- 02, food grain production was 212 million tones, in 2002-03 it was estimated at 174.2 million tones, a drop of 17.8%. This is the alarming situation comparable to the acute food crisis and food movement period of 1965-66. Similarly industrial growth in 2003-04 was about 6.6%, slightly higher than the 5.8% of 2002-03. It is not a bright picture. As a whole, during the whole period of the liberalisation policy, industrial growth was markedly lower than that of the earlier decade. About this whole period of so-called globalisation, the RBI’s Currency And Finance Report 2002-03 clearly states that Total Factor Productivity Growth (which counts the productivity of labour and capital together) sharply slowed down in the 1990s. This basic problem of generating demand for consumer goods in the vast rural areas stagnated in this period. In contrast, sales of auto-mobiles sharply rose to 30% in 2003-04 with the financial support of banks. These also indicate the inequality, grown many times, in the liberalisation period boosting the sales of items of luxury production. The banks now mainly lend to businesses, to large corporate sectors and earn from investments (mainly Government debts which was to the tune of 36% of the total income in 2002-03) by shifting their loan portfolio for production to lending for consumption of the rich classes and by generously giving away loans for housing, cars, etc. Household loans doubled in 2002-03 to that of the earlier year. Striking was the agricultural sector loans from banks which were just half of those given away for house building.

It should be remembered that joblessness surging from the second half of the 1990s was not related to population growth but was in many ways a direct result of the economic reforms themselves. Indian fertility levels and labour force growth declined fast, but employment growth declined even faster. While labour force growth as per Planning Commission 2002 was estimated to have declined from 2.4% to 1.9% between 1993-94 and 1999-2000, employment growth declined from 2.7% to 1.07% during the same period. Employment growth became negative in the organized sector and was practically zero in agriculture. Prof. Amiya Kumar Bagchi finds that one reason behind such negative results is the increasing withdrawal of the state from economic activities and a precipate decline in public sector investments. Bagchi adds that it was forgotten that in agriculture in particular there is a considerable degree of complementarity between public and private investment. (EPW August 7, 2004)

Condition of the Common People

When we consider different indicators like chronic deficiency among adults, low weight among women and children, etc. we can boastfully claim that about half of India’s population is physically sub-standard for sheer lack of food. The IMF in its annual report in 1999 on agricultural growth in India too clearly stated that although child mortality rates had come down slightly and the rate of literacy had increased a little, India did not make any expected progress in respect of human resource development. 80% of the rural people lacked the capability to have 2,400 calories and the report clearly stated that the claim made by India on 37% of its population living below the poverty level was not correct, the number must be more than that percentage. This pro-globalisation international central body assertively stated that considering 1993-94 as the base year, 30% of the Indians lacked to procure daily food producing 1700 calorie and that 10% Indian could not procure even a bare 1300 calories food daily. This is the result of globalisation!!!

On the agricultural front, thanks to the good monsoons and other effects, there had been considerable food grains expansion before the onset of so-called liberalisation regimes in India. The impact of the pro-imperialist and pro-market policy for the rich under this new policy, was so devastating that India witnessed "deceleration in the rate of growth of production of food grains in the 1990s, and for the first time since the technological changes of the late 1960s and 1970s, the rate of growth of the production of cereals in India in that decade fell below the rate of growth of population…." Writes Madhura Swaminathan [Ending Endemic Hunger, Social Scientist, 374-375, July August, 2004, p.43]

The Public Distribution system (PDS), Targeted PDS (TPDS) and such arrangements have proved faulty and insignificant for the poor. In the present liberalisation regimes the big holes in such systems come apart. Kerala, which is projected as good governance, provides the dismal picture of closing down of ration shops. Before the TPDS were introduced, the average monthly sale of cereals was 7,500 kg. of rice and 2,000 kg of wheat per ration shop. By 2001, those figures drastically fell down to 1400 kg. of rice and 200 kg. of wheat. Many fair price shops are now incurring losses. The food security for the country and its people is at stake due to these WTO prescriptions. All Indian states provide this alarming picture in respect of the PDS or TPDS.

During the period of liberalisation, the same Indian government, toeing World Bank instructions, repeatedly hiked the price of foodgrains in the Public Distribution System on which the common Indian masses depend a lot. Between 1990-91 and 1999-2000 cereals prices rose 30% more than the prices of other commodities. It resulted in forced reduction of their annual consumption of cereals between 1991 and 1998 by 16.3 kg per capita or 81.5 kg. for a household of five. Cereals are a much cheaper form of calories and protein than other foods.The poorest 40% of the population spend one third of their food budget on cereals, but get three fourths of the nutrition from them.

According to National Family Health Survey 1998-99, 47% of children below the age of 3 are malnourished by a weight-for-age criterion. Data from the National Sample Surveys clearly show the trend in decline in caloric intake. In rural India, the average caloric intake per capita fell from 2,266 Kcal in 1972-77 to 2,183 in 1993-94 and further to 2,149 in 1999-2000. Among the lowest 30% of rural households in respect of consumer expenditure, the per capita caloric intake fell from 1,830 Kcal in 1998 to 16,000 Kcal in 1998. It is a glaring fact that the caloric intake per diem was less than or equal to the poverty line norm of 2,400 calories for almost 77% of the rural population in 1999-2000. Even if we leave aside the fact of an underestimated presentation in govt. data, the pathetic plight of the vast Indian masses can only be explained by the pro-imperialist, pro-rich policies pursued by the governments, particularly in the present stage of the aggressive globalisation policy chalked out by the World Bank, WTO etc. strengthens the crisis-ridden semi- colonial, semi- feudal system.

It was first the United Front government to institute the Targeted Public Distribution System (TPDS). The following BJP-led NDA government implemented the TDPS raising the prices for those arbitrarily deemed "above poverty line"(APL) - an endeavour to showcase upliftment of the common masses under liberalisation – making them stop buying PDS grains, and in fact reducing their grain consumption. The price was raised even for those poorest section declared as Below Poverty Line (BPL), making this vast section unable to draw its quotas. Along with those factors the constant retrenchment of vast number of people from jobs in cities and the general stagnation of employment opportunities, Indian food grains stocks shot up from 18 million tonnes in December 1997 to 58 million tonnes in December 2001. This is the actual reality behind foodgrains stocks under the liberalisation policy; depriving the poor of food for existence.

However, by February 2004, grains stocks almost ran dry and wheat stocks drastically came below the minimum buffer-stocking norms. Some amount surely passed through the PDS despite price-hike and other welfare schemes but a huge amount went for exports, open market sales to traders and theft. Despite the procurement of 64 million tonnes between April 2002 and November 2003, foodgrains stock dropped by November 2003 to just 22 million tonnes and further by February 2004 and January 2004 there were only 7 milllion tonnes of wheat stocked with the FCI. [Aspects of Indian Economy, 36 & 37, Research Unit For Political Economy, p. 61-63] With the world wide decline in stocks of food grains and declining production, the emerging situation spells further danger for the rising food grains prices in the international market and the possibility of removing subsidies by the imperialist countries on their wheat and rice to enable their sale for a food deficit country like India at higher prices further. The fruits of liberalisation will be enjoyed by the imperialist masters of the world.

Massive Increase in Defence Budget to Crush Protests

While Indian peasants are entrenched in abysmal poverty and many are forced to commit suicide or die in hunger, the Indian state has now been enormously strengthened with increasing investment for its armed might. The officially quoted ‘defence’ expenditure, conceals many things. The expenditure (Govt. of India 2004-05) is to the tune of Rs. 101,128 crore. But it does not include Rs. 990.27 crore allocated to Border Roads Development Boards administered by the army. The total governmental expenditure according to the Govt. of India is estimated to be a staggering Rs. 4,77,829, of which defence alone devours 21.4%. The fruits of the liberalisation, privatisation and globalisation regime under the Manmohan Singh govt. (as also earlier governments) shows a clear case of militarisation of the state. The total expenditure in the budget for social needs of the masses — on heads of education, health and rural development — comes to Rs. 37,726 crore, which is a little more than a third of the resources (Rs. 1,01,128 crore) allocated to the military. [EPW, Sept. 18, 2004] This huge amount does not take into account the vast number of police forces in the states.

This massive expenditure glaringly betrays the all round internal crisis of the system under the crushing blows of the liberalisation regime. These huge (and ever-increasing) armed forces and expenditure are now mainly oriented towards stemming the violent movements of the people in different parts of the country. The new military chief has time and again said that the main danger is no longer external security, but internal security.

It is the call of the hour to oppose, reject and resist these liberalisation policies. Imperialist penetration in agriculture is now a tangible reality to the peasants. The anti-feudal, anti-imperialist struggles alone can alter the situation for a new India.





Home  |  Current Issue  |  Archives  |  Revolutionary Publications  |  Links  |  Subscription

<<  Previous Issue  |  Next Issue  >>