It is turning out to be an unreliable marriage vow. The new buzz on the economic horizon - public-private partnerships - is a marriage of convenience; as soon as the dominant private sector partner finds the going tough, the partnership is abandoned to the public sector, leaving it in the lurch.
Genuine public-private partnerships are not new to India. Such arrangements actually began when the Commission for Agricultural Costs and Prices (CACP), then known as Agricultural Prices Commission (APC), drew up a unique model to enable the domestic textile industry to turn competitive. The textile industry was in the doldrums ever since the British left our shores. Under pressure to bail out the industry, and not knowing what else to do, the APC did exactly what it is known for. It reduced the cotton prices. This quiet and little known manoeuvring succeeded because policy makers and economists have always treated farmers as a national burden, ready to be off-loaded at any given time. I still remember a CACP report in the late 1980s that stated clearly that cotton farmers had been deliberately paid 15 to 20 per cent less for the past 20 years. The same pricing system continued thereafter.
So for 40 years, nearly 17 million cotton growers have actually been subsidising the textile industry. I had thought this was a classic case of public-private partnership. And at what cost? Since 1993, nearly 75 per cent of the 150,000 farmers who have committed suicide were cotton growers, who ended their lives because they were unable to face the humiliation that comes along with growing indebtedness. These farmers were unable to bear the brunt of rising costs of cultivation and the static output prices. They didn't even know that they were victims of an economic policy that was aimed at benefiting the textile industry. They are the unsung heroes of India's textile revolution, which claims to be the second biggest employer in the country.
If only these farmers had got the right price for the cotton they produced, the number of suicides would have been far less. Instead, cotton prices have been on a steady decline thereby acerbating the farm crisis.
The textile industry, I thought, would remain eternally grateful to toiling cotton farmers. They would always ensure that cotton farmers were a happy lot. But I was completely wrong. None of the textile majors have even made a cursory move or effort to share even a fraction of their booty with the struggling cotton farmers. At least, the textile majors could have launched a massive rescue operation for the 12 lakh cotton farmers in the Vidarbha region of Maharashtra. But who cares? What the textile industry wants is still lower prices! Unmindful of the serial death dance being enacted in the cotton belt, the textile industry instead forced the government to allow cheaper imports. During the period 1990- 2005, the import of cotton lint increased at a compound growth rate of over 75 per cent. This was despite the customs duty being increased from zero to 5 per cent in the year 2000. The industry was visibly happy at the availability of low-cost cotton.
Cheaper imports are coming at a fast clip because of the massive subsidies cotton farmers get in the United States and European Union. With the US providing nearly US $4.7 billion in subsidy support to its 20,000 cotton growers (one Arkansas cotton grower received US $6 million, equal to the combined annual earnings of 25,000 cotton farmers in Vidarbha), cotton farmers in India are priced out. At such crucial times, it should have the responsibility of the textile industry to seek adequate protection for farmers, its partners in the value chain.
Unashamed of its past performance, the textile industry is now proposing a public-private partnership that draws a tripartite MoU between a select group of farmers, the Cotton Corporation of India (CCI) and the textile mills. The idea is to provide farmers with inputs and conduct demonstrations, and the mills would then agree to buy the produce at a premium of 5-10 per cent of prevailing market price. But this generosity would only apply to a few select farmers, and the other cotton growers would still face their penury and hardship.
The industry, meanwhile, continues to grow. With a turnover of Rs 1,50,000-crore, including export earnings, textiles are now poised to take advantage of the phase-out of the multi-fibre agreement under WTO. The market is growing not only at the cost of farmers' sweat and blood, but also the state exchequer. The Cabinet Committee on Economic Affairs, under the chairmanship of Prime Minister Manmohan Singh, recently cleared four more textile parks bringing the total to 30. The development of the textile parks is aimed at facilitating additional investment, generate employment and increase textile production. To make this possible, it is the textile ministry that is expected to provide infrastructure facilities, such as roads, electricity supply - including captive power plants - and telecom lines to firms willing to set up textile units. The private share in this 'development' is missing.
Amidst all the talk of creating models of public-private partnerships based on transparency and commitment, the cotton debacle provides an important lesson in economic exploitation. Cotton farmers were very conveniently duped for four decades. They still are being fleeced by crony capitalism. What could have turned the public-private partnership between the textile industry and the cotton growers into a replicable global model has in reality turned out to be a national model of shame. Social inclusiveness does not only mean setting up village schools and hospitals to demonstrate corporate responsibility. The private sector cannot get away by setting up a few schools or hospitals for the poor. Public-private partnerships can only turn into a 'win-win' situation when both partners measure up at the time of need.
