Feb 1, 2011

On Food Crisis and Corruption. An Interview with One World South Asia: "Corruption has fuelled India's economic growth."

OneWorld South Asia: Could you elaborate on the most pressing concerns of the farm crisis and its reasons?
 
Devinder Sharma: The biggest and the most fundamental crisis agriculture faces is the low economic viability of the farms. The issue is not how much growth we have in agriculture, when we will have 4% growth, which we go on ranting at every given opportunity. The country has to come out of the obsession with agricultural growth. The critical issue that is linked to sustained production levels is the precariously low farm incomes. The National Sample Survey Organisation had last worked out the farm income of an average Indian farm family in 2003-2004. It works put to be Rs 2115 on an average for the nation per farm family, each family comprising five person plus two cattle. Only three states are above the national average – Jammu & Kashmir, Punjab, and Tamil Nadu, which means farmers in the rest of the country are living below the poverty line. Isn’t this a national shame? Shouldn’t raising farm incomes be the real thrust of any sound economic thinking?
 
Internationally, the UNCTAD had in a report said that the farm gate prices have remained static for the past 20 years. If you adjust for inflation, the price the farmer gets for any commodity today is almost the same as what he used to receive 20 years back. Imagine if you and I were to live with frozen wages for 20 years, we would have committed suicide by now. If a farmer is surviving and still producing food for us, he/she needs to be applauded and thanked.
 
Over the years the input prices have been on an upswing. The costs of seeds, fertilizer, chemical pesticides and machinery have gone through the roof. As UNCTAD tells us, while the input prices are going up, the output prices have remained stagnant. As a result, the entire farm equation has gone topsy-turvy. The rich countries were the first to sense this, and knowing that the markets will not be able to do justice to farmers, they brought in direct income support for farmers. Between 1995 and 2009, the US alone has paid a quarter of a trillion as farm subsidies. Farmers not only get ‘direct support’, they also received the benefit of ‘counter-cyclic payments’, ‘market loss payments’ and subsidies for crop insurance and now for bio-fuel production. On an average the wealthiest 10% US farmers have walked away with $ 445,127 in subsidies in the past 15 years, small farmers have managed $ 8,862 in the same period.
 
While US farmers can plan to go on a cruise because of these subsidies, more than 2,50,000 Indian farmers have taken to the gallows in the same period.
 
This is because Indian farm economists have misled farmers to believe that the more they produce the more will be their income. If this was true, US and the European Union wouldn’t have pumped so much of financial support, including direct income, to keep the farm sector alive. In the Netherlands for instance the average farm income is 265 higher than that of an average household. This is simply because these farmers receive direct income support. Withdraw Green Box subsidies under WTO, and I can tell you agriculture in America and Europe will collapse.
 
In India and for that matter in other developing countries we have deliberately kept the farm incomes low. If in the years 2003-04 the average monthly farm income in India was Rs 2115 per family, which may have risen in 2011 to Rs 2400 per month, shouldn’t the country be doing something radical and meaningful to raise farm incomes? Instead, we are bringing in big food retail chains under the guise of delivering a better price to farmers as well as consumers. If after 40 years of Green Revolution, farmers have been pauperized year after year what kind of food security are we talking about? How long can you feed the urban population by keeping the farmers hungry? I therefore feel that the time has come when we should be providing farmers with direct income support, based on the land area they own, the production potential and a sizeable profit. Farmers too should get a take home income package. He also produces economic wealth for the country. He needs to be adequately compensated for feeding the country.
 
OWSA: What is the road ahead?
 
Devinder: I don’t see any positive thinking or related developments that the society at large is trying to do for the farming community. No one seems to be concerned about the plight of the farming community. In fact, the government is speaking the language of the industry. It is asking farmers to get out of agriculture, expecting them to be become industrial workers. As per the recommendations of the World Bank, India has already made budgetary provisions for setting up 1,000 industrial training institutes across the country where young farmers will be taught how to become industrial workers. And don’t forget, any crisis or calamity becomes an opportunity for business. The farm crisis is coming in handy for the industry to take control over food production. It is an opportunity for business. All important laws pertaining to soil, water, and seed are being modified to make it easy for the companies to take over. So, on the one hand the government is encouraging corporate sector to get involved in contract framing, which means taking the first step towards corporate agriculture, it is also planning to dismantle the procurement system and is ready to allow FDI in multi-brand food retail.
 
For instance, take the undue haste with which the government is trying to accord approval to FDI in multi-brand retail. What is conveniently being brushed aside is the fact that big retail has not helped farmers anywhere in the world. The Department of Industrial Policy and Promotion (DIPP) has put a flawed and biased discussion paper to ignite the debate. FICCI and CII are putting all the pressure to lift the curbs, and allow Wal-Mart and Tesco into the country. Now, this is simply scandalous. Let us look at the US from where we are trying to borrow a faulty model. In America, there are only 7,00,000 farmers left on the farm now and interestingly around 70,00,000 people are in jail, or bail or on parole. Despite the farm subsidies, farmers are moving out of agriculture. Let us not forget, US has the Wal-Mart. It has the world’s biggest commodity exchange at Chicago. Farmers are computer literate, and do dabble in future trading. But if all this was working well please tell me where was the need for US to shell out monumental subsidies for agriculture? If Wal-mart had helped farmers get higher incomes, if commodity trading had helped farmers with price realization, why US farmers need to be given direct income support?
 
No country wants to pump in money for agriculture, especially to give income to the farmers. But, if a country is doing so, like the US and European Union, it clearly means that the big retail is hasn’t worked, the commodity and futures trading has not worked. The 2008 Farm Bill that America has, which makes budgetary provisions for the next five years, had allocated US $ 307 billion for agriculture. Of course, much of this will be cornered by the agribusiness companies in the name of farmers. So, aren’t we borrowing a failed model of agriculture from the US in the name of economic growth? If you think the situation in Europe is much different, think again. Despite the existence of Tesco and the likes, and despite pumping in huge subsidies under the Common Agricultural Policy (CAP), studies show that one farmer quits agriculture every minute.
 
In India too, we want farmers to quit agriculture.
 
OWSA: Successive governments have been blamed for the state of agriculture in India today. But what drives the government to behave in this manner?
 
Devinder: Ever since India became “self sufficient” in food grain production, the nation has become too complacent. We have started to believe that food is something which can be bought off the shelf. We need not therefore worry about farmers. India has 600 million farmers. Together with China, we make half of the world’s farming population. But or agricultural policies are being dictated by the west. We blindly tow the line. What is not being realised is that while the model of agriculture that we have adopted in India is similar to that in US, except that the scale is different, we are also committing the same mistake of pushing farmers out. We forget that unlike US and Europe, farmers in India are not only producers but also consumers themselves. By depriving them of their livelihood and by driving him out of farming we are deliberately laying the foundations for a much bigger socio-economic crisis. India cannot provide alternate employment to the teeming millions who are being displaced from agriculture.
 
What we need is an agricultural model where farming is made economically viable and sustainable. We need to remind ourselves what Mahatma Gandhi had once said. We need a production system by the masses, and not for the masses. We need to aggressively push in food sovereignty as the answer. We need our own people to produce food for the nation. This is possible provided we throw away the American cloak and put our heads together to develop an Indian version of agriculture and farming. We can chart a sustainable path for the rest of the world to follow. We don’t need to follow the West, we need to look inwards and come up with policies and structures that are feasible given the conditions we have.
 
OWSA: Is it possible?
 
Devinder: Yes it is. It is definitely possible to chart out a sustainable and economically viable pathway for agriculture. The only thing we need is strong determination and political will. Rest everything will automatically fall in line. As a nation, we need to understand that the entire scientific and economic thinking is driven by Western thoughts and designs.
 
Let me illustrate with what happened in case of agriculture. India has the second biggest public sector research infrastructure in the world. The 50-odd agricultural universities (and approximately the 105 national institutes) were actually set up under the Land Grant system of education, research and extension that we borrowed from America. G B Pant University for Agriculture and Technology at Pantnagar was the first university set up by USAID. The university research and education system was therefore tailored and anchored to the American model of farming. The education curriculum and the textbooks came from the US. I remember when I was a student some 30 years back I used to read a textbook of soils written by two American soil scientists.
 
The same book is still in curriculum. Nothing wrong, you would say. I agree. But that book was for temperate soils, and not tropical soils. No wonder, Indian soils are now poisoned with chemical fertilizer and have fertility levels close to zero. Moving beyond soils, I am aware that the university curriculum makes the students to believe that Indian agriculture is backward, substandard and unproductive. If we really need to pull Indian agriculture out of the monsoon trap we need to follow the American system of farming. We have therefore changed the mindset of a couple of generations of young scientists who genuinely believe in the American approach. So, we shouldn’t be surprised when Indian farm scientists invariably look for solutions to our problems in the west. That is what they have been taught to do.
 
Let me illustrate with another example. India is the land of holy cows. It has close to 300 million cows, probably the largest population of cattle in the world. We have been made to believe that our cows are unproductive and sub-standard. We never worked to realize the potential of our own cow breeds. For over 40 years, ever since the launch of cross-breeding programme with exotic breeds, and then through Operation Flood, the National Dairy Development Board (NDDB) has been for enhancing milk production. Nothing wrong you would say. Yes, I agree. But it was our over-emphasis on exotic breeds like Jersey and Holstein-Friesen that has led to nearly 80% of our cattle now being rendered non-descript. It bought in additional stress for these animals, both biotic and a-biotic, as a result of which the farmer had to pay additional cost to keep these animals on the farms.
 
Never mind. But what always puzzled me was that how come the Indian cattle breeds, revered by Indian Kings in history, suddenly became unproductive after Independence? If these cattle were so unproductive, these would have been partially disappeared following Charles Darwin’s theory of survival of the fittest. Or was it that we failed to recognize their inherent potential? Not many people know that while we despise our domestic cattle breeds, Brazil has become the biggest exporter of Indian breeds of cows. There are at least four Indian breeds, including Gir, Kankrej and Ongole from India, that Brazil has developed pure bred. At a recent milk competition in Brazil, the cow that stood first clocking an average of 48.8 litres of milk based on three day milk performance was Gir from India. The cow that came second and third was also from India. Should we not feel ashamed as Indians when our breeds do exceedingly well abroad while we have been told all these years that the indigenous breeds are good for nothing? If we had worked on our own cattle, I am sure you will agree that our cows wouldn’t be roaming the streets.
 
I can go on citing such examples. The point I am trying to make is that we did commit blunders by not looking into the strength of time-tested technologies that existed in the country. We chased an American dream, and thereby ruined the Indian hope. Agriculture is in distress because we the intelligentsia failed the farmers. You can’t build food security for long on borrowed feathers. In many ways, I feel that the economic policies and scientific approaches too are driven by corruption. It is a scam that people don’t usually get to comprehend. So these scamsters go Scott-free destroying livelihoods and usurping the natural resources.
 
Corruption
 
OWSA: Its not like there was no corruption pre-liberalisation. But the current discourse stresses only on the post liberal policies as if they are the only ones to blame for the state India is in.
 
Devinder: We are made to believe that the economic growth we see in the urban centers is because of the GDP going up. We are made to believe that GDP is the touchstone to growth and development. The argument is that the higher the GDP, the less will be poverty and hunger. In my understanding this is a complete fallacy. We have been seduced to believe in the magic of GDP. This façade has been created by the mainline economists who are actually pushing for policies and reforms that have turned the world upside down. We are so in awe of these economists that we fail to stand up. I am glad the UN General Secretary Ban Ki-moon had the courage to say on a Davos panel at the recently concluded World Economic Forum: “The world’s current economic model is an environmental suicide”, he said, and added: “Climate change is showing is that the old model is more than obsolete. We need a revolution on how best to make the global economy sustainable.”
 
How true? The ecological disaster that we face today is from a global illusion of economic growth that the mainline economists have successfully created. I remember the former Finance Minister of Pakistan and the founder author of the UN Human Development Report, late Dr Mehboob-ul-Haq, had once told me that he too had believed in the magical powers of GDP to control hunger and poverty. This is what he was taught in Yale and Cambridge from he had studies. When he became Pakistan’s finance minister, and that was several decades ago, the economy was growing at a steady 7% per annum. When the elections came, he was sure that his party would be voted back to power. “But we lost miserably,” he told me, and “that gave me the rude shock. GDP does not reduce poverty. But if we were launch a frontal attack against poverty, GDP goes up.”
 
Translate this for India, and you will get a clearer picture. We are repeatedly told that India is among the top when it comes to corruption. We all know of the extent of corruption that prevails. We are a corrupt nation, all of us know that. If every second man in the street is corrupt, and I think this is quite true, then where is the corruption money being siphoned off to? Not everyone can look for a safe haven in Switzerland or Mauritius. There are only a handful of people who have the clout to deposit their ill-gotten billions in foreign banks. Rest of the corruption money is very much within the country. It is primarily after economic liberalization was unleashed in 1991 that the corruption money has got an opening. You can invest in stocks, commodity trading and realty.
 
I see around in my neighborhood. And this is true elsewhere too. More people have disposable incomes, more people are now travelling abroad, more people are flying around in the country, more people throng the super malls, more cars (including the luxury models) clog the roads, and more restaurants are now dotting the streets, and so on. The rich have become super rich and the middle class is fast catching up.
 
Is it because of the higher economic growth rate? Think again. We read every other day how money is being squandered in the name of development, how the traffic police makes money, how the government officials move the files (unless it comes weighted with money), and how the public services have to be 'paid' for. The list is endless. And this has been going on for decades now. It is not a new phenomenon.
 
Rajiv Gandhi had once said that only 15 paise from a rupee that is allocated for the rural areas reaches the true beneficiary. Rahul Gandhi now says that it is only 10 paise. Those who share the 90 paise in the process surely have prospered. A recent news report made an effort to quantify the amount. In the past five years, Rs 2,394 billion, earmarked for rural development alone, is the amount that has been siphoned off if Rahul Gandhi is to be believed. This is only rural development funds that I am talking about.
 
Where has the rest of the unaccounted money gone? No where. It says within the country.
 
Let us face it. Over the years, our relatives and friends (of course there are exceptions, and a lot many honest people live simple lives) have made money by illegal means. It is quite obvious those who indulged in it are/were somebody's relative. And when economic liberalisation came, it provided an opportunity to take out the unaccounted money and invest. Real estate boomed. Stock market grew. People invested in expensive cars and expensive gadgets, dining out every other day, and frequent holidays abroad, among other activities.
 
Corruption has really paid us well. We all crib at someone else's corruption, but we try to remain discreet when it comes to our own share. Nevertheless, it is the tainted money, the unaccounted wealth that has propelled this country into a new-found economic prosperity. Economists will not accept this because it falls outside the gambit of their textbooks. Private sector will only tarnish the public sector as corrupt, maintaining complete silence at the massive swindles that take place while seeking government approvals and land acquisitions.
 
India has seen a boom in growth of the software industry. But this industry does not employ more than 2 million people. Rests of the sectors are either doing moderately well or are underperforming. Industrial growth has been skewed, manufacturing has been largely down, and agriculture is in terrible distress. Than where is the prosperity that we see around us coming from? Well, my understanding is that the new found prosperity in the urban cities is primarily because of the corruption money that has come out of the cupboards. It is being very cleverly passed off as an outcome of economic growth. It is well known that it was the parallel economy that rescued the Indian business and industry at the time the world was faced with an unprecedented recession in 2009-10.
 
Mainline economists will not accept this and for obvious reasons. But the fact remains that what makes corruption in a developing country like India different from the rich and industrialised countries is that in India corruption is decentralised. Every one can make money the illegal way. In the developed countries, there is massive corruption but at the top level only. Corruption is centralised in developed countries.
 
This isn’t the case only with India. All developing countries as well as rich countries like America and European nations are plagued with corruption. Corruption is also a by product of globalisation. A country like Switzerland is built entirely on the foundations of black money. Nobody has ever questioned the growth model of Switzerland. You can’t be that prosperous manufacturing watches and Swiss knives.
 
This is not to say that we should be encouraging corruption. But to use tainted money and paint it as economic growth is not my idea of what growing economies should be all about.
 
OWSA: Is this the case only with India? What is the status in countries like China, Brazil?
 
Devinder: China is worse. The US-based Global Financial Integrity ranks China at the top of the pyramid. China has over $300 billion stacked in safe havens whereas India, which ranks fifth in the world, has about US $ 27 billion flowing illegally out of the country every year. China is still worse because there is no freedom to debate in the country. People have to accept as it is. Whereas in India rampant corruption is becoming a political issue.
 
Let us not forget, globalisation has brought together the rich and the crooked from across the globe. Every country has a North, each country has a South. The North of all the countries, which means the rich and powerful have come together. That is what globalization in reality means.
 
OWSA: Given your extensive work in the rural areas, what is your opinion about the implementation of MGNREGA. Do you consider it a failure or success or an in-between?
 
Devinder: Well. NREGA was a good idea but not implemented well. When you do things in a hurry, you try to push in wrong approaches which are not practically doable. We should have known from the very beginning that this will not work. The simple reason being when you have a structure which is completely corrupt, you cannot expect it to deliver. There is no denying that NREGA has turned to be a big pot for the intermediaries rather than the true beneficiaries. If you look at NREGA, the real beneficiaries are the people in the chain who get the money for distributing to the poor. They should be called the true beneficiaries.
 
The role played by some well-known NGOs to turn a blind eye to the massive corruption that prevails and project NREGA as a historic achievement has come in for a lot of flak. I am glad people are seeing through the politics some civil society leaders play in the name of development.
 
NREGA was probably conceived with all the good intentions. Many say that the renewed interest in panchayat elections is because almost every one is eyeing the NREGA funds. Another fallout, which may prove costly for country’s food security, is that NREGA has taken away the farm workers from agriculture. Farmers across the country complain of the shortage of available labour at the time of sowing and harvest. So somewhere we did not comprehend the structural difficulties a programme like NREGA would create. It has to be integrated sooner or later with agriculture. The sooner the better.
 
The cost of labour has certainly increased. Unless we try to ensure that the cost of labour is included in the cost of production, it may not be remunerative for farmers to sustain farming anymore. I think this is a major concern.
 
Thus, the implementation was done half-heartedly. There is an urgent need to remove the discrepancies in the delivery system. We have to work out a mechanism by which the NREGA wages reaches the workers directly. We can surely ensure that the money goes to those who need it.
 
OWSA: Is it high time that NREGA should diversify into other areas including agriculture and social entrepreneurship? Isn’t a self-sustaining model of employment generation going to be more effective?
 
Devinder: That is what should have been done at the very beginning. We should have done that to create a self-sustaining model of livelihoods. Providing 100 days of employment doesn’t make any impressionable impact on the livelihoods of the landless workers. We must remove the upper cap and ensure that these workers get guaranteed income for 165 days in a year. The recent increase in the minimum wages is welcome, and more social security programme are need to uplift the economic condition of the poor. This is what Mehboob-ul-Haq had meant when he said we need to launch a frontal attack against poverty.
 
Source: One World South Asia, Weekend Special 29.01.11
http://southasia.oneworld.net/weekend/corruption-has-fuelled-indias-economic-growth-devinder-sharma

4 comments:

Dr Sudhir Kumar said...

Each village must have its own currency to pump back the money generated in the village to the village itself, optherwise their money goes to citites or in swiss banks and never returns and that is only available to those who don't need it.
I learned many towns in USA have similar inhouse currency.
see this link for proof
http://utopianist.com/2011/01/stimulus-writ-small-tiny-california-town-prints-its-own-currency/

tamizh said...

When I wanted to know how much a farmer earns per year in India, I got your this post. I read it 75%.

Also i came across another url http://agritech.tnau.ac.in/ta/govt_schemes_services/mmedia/pdf/profit_in_lakhs.pdf

In the above link they say that they have earned in lacs. Are they true stories?

I now live in USA. And people/Indians here say, its tough to go back to India and earn as well as live peacefully as we do here. Is that 100% true?

Though you may not find time to answer to my these silly questions, i will definitely wait till you answer.

Siddhartha said...

Most of the communities in India (such as Bengali), are succumbed in 'Culture of Poverty'(a theory introduced by an American anthropologist Oscar Lewis), irrespective of class or economic strata, lives in pavement or apartment. Nobody is at all ashamed of the deep-rooted corruption, decaying general quality of life, worst Politico-administrative system, weak mother language, continuous absorption of common space (mental as well as physical, both). We are becoming fathers & mothers only by self-procreation, mindlessly & blindfold. Simply depriving their(the children) fundamental rights of a decent, caring society, fearless & dignified living. Do not ever look for any other positive alternative behaviour (values) to perform human way of parenthood, i.e. deliberately co-parenting of those children those are born out of ignorance, real poverty. All of us are being driven only by the very animal instinct. If the Bengali people ever be able to bring that genuine freedom (from vicious cycle of 'poverty') in their own life/attitude, involve themselves in 'Production of Space’(Henri Lefebvre), at least initiate a movement by heart, decent & dedicated Politics will definitely come up.
- Siddhartha Bandyopadhyay, 16/4, Girish Banerjee Lane, Howrah-711101.

yuddandisivasubramanyam said...

there are professions like private schools/institutes and private clinics which do not need investment and income is enormous. this is how black money is generated too. farmers are tempted with real estate to become millionaires selling our their agricultural land. there are many places the corrupt money channels are prospering.