Corruption has fuelled India's economic growth - OneWorld South Asia interview with Devinder Sharma

Devinder Sharma talks about the pressing farm crisis, the next steps for MGNREGA and howrampant corruption has fuelled India's economic growth.


Devinder Sharma

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 Organization 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. 

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