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Devinder Sharma writes on the impact of the rich-poor divide on agriculture
January 2002 : Finance Minister Yashwant Sinha would like us to be part of his make believe world. After the magical reduction in the poverty ratio from 37 per cent to 26 per cent, which literally means pulling out more than 110 million people from the quagmire of destitution, he now targets a seven per cent growth to fight poverty. Still more surprising is to see him suddenly find in agriculture the growth engine for the nation's economy. "I am convinced that agriculture drives the Indian economy. Much of the purchasing power comes from agriculture and allied activities. Seventy per cent of the people form the backbone of that power engine," he told Outlook, a weekly newsmagazine. Isn't it strange that ten years after the economic reforms were unleashed, and after two of his 'illustrious' predecessors had inflicted immense damage to the agrarian economy, Mr Sinha should suddenly wake up to this daunting reality? Agriculture and poverty are closely interrelated. And agriculture forms the backbone of the Indian economy is something that every college-going student knows. Why is that the Finance Minister then has to be 'convinced' that the farm sector holds the key to economic growth? Why is that the Prime Minister 's Economic Advisory Council invariably refrains from talking about agriculture? Why is that the Prime Minister or for that matter the Finance Minister has never found time to visit a single farm across the country? The answer is simple. For the country's ruling elite and that includes the politicians, the policy makers, the industry and the media, the poor are a hindrance to growth and development. Agriculture and poverty is a 'down market' subject, as the electronic media terms it. Like an Ostrich, they believe that the only path to economic growth is by ignoring the poor and marginalised, and that includes the 557 million farmers. Not realising that in the bargain, poverty actually grows where the benefits of economic development are reaped by a handful of the rich industrialists and the elite. But then, the entire emphasis is to ensure that only the rich should become richer, whether it is by sops that come from taxpayers money or by defaulting the banks or by evading excise duties and taxes is another matter. Mr Sinha doesn't have to go too far to get 'convinced' that despite Planning Commission's jugglery of the algebra of poverty that reduced the poverty ratio, the ground realities are just the opposite. Former chairman of the Planning Commission, Mr Pranab Mukherjee, had done it still better and quicker. He had, in one go, brought down the poverty ratio from 37 per cent to 19 per cent. This was in the early 1990s. And if Mr Mukherjee had stayed on as the Planning Commission's deputy chief, he would have certainly eradicated poverty from India by now! But where are those 110 million poor that Mr Sinha claims to have lifted from the poverty trap? You don't need a smokescreen to see the way poverty and hunger is increasing. Whether it is the case of poverty-stricken tribal eating mango kernel in western Orissa or the story of hundreds of small and marginal farmers taking the fatal route through suicides in Andhra Pradesh and Karnataka or the millions who prefer to migrate to the urban centres in search of menial jobs, despair and tragedy is written all over. New Delhi, Mumbai, Kolkatta and Chennai railway stations itself presents a microcosmic view of the country's economic profile. Just stand on a platform where a long distance train arrives or departs. The teeming population that swarms onto the platform will give you a clear picture of the magnitude and enormity of the poverty crisis that prevails in the countryside. And yet, micro-economists and the powers that be feel comfortable in presenting an untrue development scenario. Strange that successive Finance Ministers, who swear by the World Bank at every step, fail to accept it's warning on poverty. In its report on Global Economic Prospects and the Developing Countries 2000, the World Bank states: "In India, home to almost half of the world's poor, the rate of poverty reduction appears to have slowed down in the 1990s, particularly in the rural areas.these areas will not see much impact on poverty even with higher growth rates." It acknowledges, though belatedly, "the gap between some of India's largest and poorest states exhibit slow progress in human development indicators; low growth rates particularly in the agricultural sector. If the present trends continue, the bulk of the poor in these states will be unable to participate in future growth." If you are still pondering over the reasons behind Mr Sinha's newfound love for agriculture, let me explain. Despite his self-congratulatory claims that India has remained insulated from the global recession that sweeps much of the industrialised world, the illusion of economic strides remains hidden behind fudged figures and statistics. The Economic Times recently reported that only three per cent of the manufacturing industry is actually pulling up the so-called overall growth rate during April-September 2001. And this includes cottonseed oil (384 per cent), PVC/rubber sheets (355 per cent), photo film/roll film (294 per cent), agarbattis or incense sticks (259 per cent) and dump loaders (157 per cent). The remaining 97 per cent of the manufacturing industry are actually in a negative growth rate of 0.4 per cent if the three per cent of the positive growth industries, showing more than 50 per cent growth, are taken out. Estimate point to a staggering 30 to 40 per cent slumps in the job market. Whether it is the public or the private sector, recession has hit the employment scenario. Indian Railways is to cut down the staff strength by 3,00,000. More than 20,000 employees of State Bank of India have out for VRS package. Maruti has already trimmed its workforce by 19 per cent; National Institute of Information Technology (NIIT) has offloaded 18 per cent of its workforce; more than 10,000 IT jobs have melted out in recent past; StanChart is to cut its strength by one-third; Bajaj Auto has axed 4,785 in two years; Voltas is to prune its staff by 1,000; ACC by another 1,000 and so have numerous others companies. With joblessness picking up, agarbattis and film rolls cannot bring in the high growth rate that Mr Sinha has been predicting for long now. It is, therefore, out of desperation that the Finance Minister is talking of reverting back to agriculture. And here again the focus is not on reforming agriculture to alleviate poverty but to ensure that the industrial sector is able to draw more benefits and the resulting trickle down will fill in the empty stomachs. Once again, the focus is on transferring the economic gains from the rural to the urban centres. And once again, farmers and the rural poor will have to pay a heavy price for keeping the country's industrial and business sector afloat. The agriculture reforms that Mr Sinha is talking about have little to do with helping farmers tide over the crisis of survival and economic deprivation. With land ceiling laws relaxed, and with the new agricultural policy encouraging corporatisation of farming, the reforms that the government intends to launch in agriculture are aimed at helping industry and business to milk the agriculture sector dry. No wonder, the Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce and Industry (FICCI), which were so far opposed to the 'priority ' sector treatment being given to agriculture, have suddenly turned in favour of speeding 'reforms' in agriculture. The government has already announced a series of measures by way of tax concessions and excise relief to the corporate sector for 'boosting' agriculture. For a country, where more than 70 per cent of its 1,000 million plus population is directly or indirectly involved in agriculture, and where the average land holding size has shrunk to 1.47 hectares, shifting to industrial agriculture model of growth is certainly a recipe for disaster. The reforms include gradual disbanding of the assured prices mechanism and the procurement system, removal of State support for farming and leaving agriculture not only at the mercy of monsoon rains but in addition to the market forces. For the small and marginal farmers, who constitute more than 70 per cent of the farming population, government is committed to make it still tougher for them. In Andhra Pradesh, the State which leads the country in ushering in progressive policies to improve agriculture, chief minister Chandrababu Naidu has launched the Vision 2020 programme that aims to reduce the number of farmers from the present 70 per cent to 40 per cent. While what happens to the remaining 30 per cent of the farming force is none of his concern, the State continues to record the highest suicide rate among the farming community in the country. Such is the government's apathy that instead of resurrecting the policies to help farmers tide over the crisis of livelihood security, chief minister has been talking of deputing psychiatrists to advise farmers not to commit suicide ! What happens similarly in the process to millions of marginal farmers who are displaced from the corporate takeover of agriculture is not Mr Sinha's concern. And, rightly so. Given the limited number of years that a political party can manage to remain in power in the days of coalition politics, Mr Sinha knows well that he wouldn't have to face the consequences of whatever he and his government decides today. After all, if the high priests of economic reforms, Dr Manmohan Singh and Mr P.Chidambaram, have got away with economic policies that ended up accentuating the great economic divide aimed at alleviating poverty, Mr Sinha has no reason to be unnecessarily worried. The nation will continue to pay the price. Devinder Sharma
January 2002 Devinder Sharma is a New Delhi-based food and trade policy analyst. Among his recent works include two books GATT to WTO: Seeds of Despair and In the Famine Trap