An enlightening (and frustrating) article by P. Sainath. He is an authority on state of Indian agriculture, and has travelled extensively throughout the country, documenting the disgraceful mess created by this entity called “the Indian government”. One of the most popular books he has written, which will send shivers up your spine is, “Everyone loves a good drought“.

http://www.indiatogether.org/2008/apr/psa-foodprice.htm

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19 April 2008 – The bailout of Bear Stearns by the U S Federal Reserve was worth $30 billion. That is roughly twice the ‘loan waiver’ given to millions of Indian farmers. The latter move has been scorched by the ideologues of the free market and neo-liberalism as ‘fiscal insanity’ or ‘irreversible damage.’ The media – even those mildly critical – have been far more muted in their criticism of the ‘rescue’ of Bear Stearns. That is, one of the biggest global investment banks and securities trading and brokerage firms anywhere on the planet.

Think of it: a tiny Wall Street cabal which gave itself bonuses worth billions of dollars just weeks before the crash gets a bailout of Rs.1,19,520 crores. That’s almost double the Rs.60,000 crores given to tens of millions of farmers in dire straits in this country. A country where one farmer kills himself every 30 minutes in despair. The problems of farmers do not even begin to end with that waiver.

On the other hand, a bunch of thugs in tuxedos who did pretty much whatever they wanted, laying a minefield across the world, have got the waiver of a lifetime (or many lifetimes). The lifejacket for the bank does not require the return of their bonuses. So much so that Jim Rogers, CEO of Rogers Holdings and a staunch free marketer, calls it “Socialism for the rich.” In his words “the Federal Reserve is using taxpayer money to buy a bunch of Bear Stearns traders’ Maseratis.” He points out that hundreds of billions of dollars are being spent to bail out Wall Street as a whole. The theologians of the global market are between a rock and a hard place. Hypocrisy has rammed into reality.

Three of the basic principles the believers of corporate-led globalisation swear by have been so eloquently summed by Professor James Galbraith Jr. of the University of Texas at Austin. One: all successes are global. Two: all failures are national. Three: the market is beyond reproach.

This is election year. So we see Minister after Minister, the latest being Kapil Sibal, tell us that the price rise and food shortages in India are the result of global factors.
What a lovely waiver!
Protect at home, preach abroad

For over a decade, we were assured that everything good that ever happened was because we had embraced corporate-led globalisation. All the negative effects visible were the result of our own national inertia and corruption. And of course, the market would heal all wounds. The notion of state meddling in economic matters was blasphemy. Now the nations feeding us this rot – which we recite by rote – are nationalising banks, bailing out brigands and pouring in funds to stop factories from closing down.

Now having to blame ‘global factors’ for the price rise at home must seem a bit galling. Failures at home? Er, well, you see, let’s not go there now. This is election year. So we see Minister after Minister, the latest being Kapil Sibal, tell us that the price rise and food shortages in India are the “result of global factors.” Nothing to do with us. No less amusing to see the World Bank and the IMF warn of starvation and riots. It’s hard to think of anyone who has contributed more to those phenomena than they have. And now Finance Minister P. Chidambaram calls for an urgent “global consensus on the price spiral.” Without this, social unrest would conflagrate into a “global contagion.”

To be fair to the Union Agriculture Minister, he alone has not laid the blame at the door of faceless global forces. Sharad Pawar locates the problem closer home. In his view, south Indians are eating too many chapathis, leading to shortages of wheat. (DNA page 1, April 2, 2008). An entertaining view but there’s a problem with it. Even while dietary changes do affect consumption patterns, these occur over decades. There is little evidence of an outburst of wheat-centric gluttony in the southern states these past six months. (Unless, of course, with great cunning, the southies are hoarding it up for future chapathi orgies.)

Someone is hoarding it up, though, and it is not the general public, south or north. The presence of very large traders including MNCs buying directly from farmers has been on awhile. A process aided by our strangling of the old Agricultural Produce Marketing Committees’ Act. We’ve set the soil for contract farming and corporate agriculture. Meanwhile, the lip service paid to higher Minimum Support Prices (MSP) has proved worse than a sham. In practice, producers are being pushed towards private trade. Fewer procurement centres, delays in purchasing and, still worse, delays in payments are the norm. Then, when procurement is poor, we announce that the farmers are doing so well in the market, they don’t want to sell to the state.

The present mess was arrived at with much celebration of the farmer’s right to sell as and when he liked, to whom he wished. In effect, millions of farmers, deep in trouble, have been selling their produce at distress rates for several seasons now. The bargaining power of individual farmers on their own is zilch.

Total procurement has been down. When market prices for the farmers’ produce have been higher than the MSP, this might be expected. But it has happened even when the MSP has been raised. There have also been cases of traders picking up produce from indebted farmers and then claiming the higher MSP on it themselves. On the whole, though, smaller traders are in trouble. The big boys are here. And so even with enough grain within the country just now, the less well-off cannot access it at affordable rates.

The Centre’s pressing the States to act against hoarding is itself an admission of the problem. But there is yet to be a single instance of action against really big hoarders and speculators. These include giant companies operating through a variety of pointmen. The raids now focussed on small traders will yield little.

Meanwhile, the entry and growing entrenchment of giants in retail ensures things will get worse. (Remember this was supposed to provide us with cheap prices? Then look at the gap between wholesale and retail prices.) We have also nurtured the commodities futures market despite its clear links to speculation and price rise. It’s odd how every other small trader will brief you at length on this – but you won’t see much of that story in the media. In fact, with markets tanking around the world, more speculators have seized on foodgrain as a good bet. Which it is.

Through the reforms period, we have pushed millions of small farmers to shift from foodcrop to cash crops. The acreage under foodcrop has reduced across these years. And we also exported millions of tonnes of grain – as in 2002 and 2003. What’s more, we exported at prices cheaper than those we charged poor people in this country for the same grain. The idea was that we had a “huge surplus” of grain and could well afford to export. The truth was that the massive pileup of unsold stock arose from a surplus of hunger rather than of grain. The purchasing power of the poor had collapsed. But the fake “surplus” story came in handy. It allowed the export of grain – heavily subsidised by us – to be consumed by European cattle.

The present mess is no surprise. For years, economists such as Utsa Patnaik have warned strongly that we would arrive at where we are now. As she repeatedly pointed out, the effects of all our actions could be seen in the plummeting net per capita availability of foodgrain. From 510 grams per Indian in 1991 to 422 grams by 2005. With the top fifth of Indians doing better than ever before, this meant that those below were eating far less than they did just a few years ago.

The plunging food intake of the poorer sections has come along with the steady scrapping of the public distribution system. On the one hand, the PDS has been sharply whittled down. On the other, millions who need BPL cards are denied them. In Mumbai, just 0.28 per cent of ration cardholders have BPL cards. Now, even those who do have cards find no supplies to buy. And of course, we’ve spared no efforts to link our agriculture to the volatility of global prices in a world where a handful of corporations control those prices. Their clout within India has grown rapidly. Their control extends further each day from the field and farm gate to the price and sale of the final product.

Meanwhile, each budget takes further the process of “growth” driven by the consumption of the rich. Tax breaks at the top, cuts in state spending, all these too have a major role in making life unbearable below. Yet, even as the edifice crumbles, a few true believers hold out for the Second Coming. “Price rise reflects scarcity,” says one editorial, “and at no time is free trade more effective as a welfare enhancer than when it combats scarcity by quickly getting supplies where the demand is.” But governments are “denying free trade this role.” Well, get set for the global contagion.

P Sainath
19 Apr 2008

P. Sainath is the 2007 winner of the Ramon Magsaysay award for Journalism, Literature, and Creative Communication Arts. He is one of the two recipients of the A.H. Boerma Award, 2001, granted for his contributions in changing the nature of the development debate on food, hunger and rural development in the Indian media.

Between a rock and a hard place

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2 thoughts on “Between a rock and a hard place

  1. It’s rather obnoxious (and a reflection of your own shallow moral character) to call Sainath names. He is an hounourable man, and has proved so with his years of work in the poorest and most devastated regions of India – not many people – and certainly not yourself – have demonstrated any such competence or dedication, and therefore have no moral right, to make such scathing remarks against him and his thought process.

    A more gentlemanly way would be to disagree with a person of such repute and simply write about how you disagree with him, including engaging him in a discussion (writing in the manner you did against Sainath, and posting comments on other blogs about this, seems like hidden agenda to bring hits to your own blog, and in the process earn some publicity in the blogging community).

    Meanwhile, you mentioned:
    “It should also kept in mind that it is immoral to tax some to make job for others.”

    Wow! Excellent thought. It would certainly be immoral to “impose” anything on anyone.

    However, unfortunately, we do not live in such an evolved society which would share part of its earning (say 10%) voluntarily with society (I’m faily certain certain you do not belong to this evolved category, as it shows in the use of the choicest abuses).

    In a world where the rich are getting subsidised at the cost of the children of a lesser God (read the not so rich, and, poor) paying huge environmental costs and creation of life-threatening situations for them, where even basic survival is theatened, is not the ideal world they or any of us bargained for.

    Sainath, in that sense, is a voice among many, of bringing some sanity and policy change, to help us as a civilization evolve and prevent us from self-destruction.

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