Aug 11, 2016

Agriculture has paid the price for keeping economic reforms alive.



Twenty-five years after the economic reforms were unleashed, the first-ever socio-economic survey for rural areas, published in 2015, paints a gloomy picture. Portraying a stark reality the survey says that for 70 per cent of India’s 125-crore population, which lives in rural areas, poverty is the way of life.

Rural India is poorer than what was estimated all these years. With the highest income of a earning member in 75 per cent of the rural households not exceeding Rs 5,000 a month, and with 51 per cent households surviving on manual labour as the primary source of income, the socio-economic survey had exposed the dark underbelly of rural India. Considering that the bulk of rural population comprise of farmers, what the socio-economic survey tells is how the reforms have very conveniently bypassed agriculture.

The National Sample Survey Organisation (NSSO) consumption expenditure data for 2011-12, done a few years earlier, tells us the same story. If you live in a village and spend more than Rs 2,886 per month you are among the top 5 per cent of the country. For the urban areas, the cut-off limit is Rs 6,383 per month. That makes me as well as you, the reader, in the same category as Mukesh Ambani, Ratan Tata and Narayana Murthy. While we may fall in the upper 5 per cent bracket but imagine the fate of 95 per cent of the population which is unable to spend more than Rs 6,383 per month in the urban areas every month? Isn’t that the real India that we don’t want to talk about?  
Now, let me break-up the rural income slab for you. Economic Survey 2016 tells us that the average income a farmer gets from farming activities, including what he keeps for his family consumption at home, in 17 states of India is Rs 20,000 a year. In other words, the monthly income of a farmer in these States is a paltry Rs 1,666. On a national level, the NSSO works out the average monthly income that a farmer derives from farming operations to be just Rs 3,000 per family. Compare this with the basic salary of a chaprasi at Rs 18,000 per month it become obvious how agriculture has been neglected all these years.

The deplorable condition of farmers is certainly an outcome of economic reforms. Simply put, economic liberalization or economic reforms or market economy whatever you prefer to term it has not only bypassed the majority population but has been actually a pre-requisit for the success of economic reforms. Agriculture, like other unorganized sectors, has been deliberately kept impoverished so to make economic reforms work. 

It was in July 1991 when Dr Manmohan Singh delivered the historic budget speech as Finance Minister that opened up the country to economic liberalization. I recall the speech wherein he unshackled the industries from the control regime and showered all bounties on industries and in the very next paragraph acknowledged that agriculture remains the mainstay of the economy. But since agriculture is a state subject, he left it to the state governments to provide the much needed impetus to farming. But what he forgot to say was that industry too was a state subject and should have been left to the state governments. The bias therefore was clearly visible.

This was simply not unintended fallout of the process of economic liberalization. It was actually part of a design. Later, in 1996, the World Bank directed India to move 40-crore people out of rural areas to the urban areas in the next 20 years, saying that land is a precious asset in the hands of people who are inefficient producers, meaning farmers. Since the younger generations among farmers do not know anything except farming, World Bank suggested that India set up a network of training institute to train these people to become industrial workers. This should be accompanied by land rentals and land acquisitions. This suggestion was made in the 2008 World Development Report by the World Bank and a year later, in 2009, India made provision for setting up 1,000 Industrial Training Institutes (ITIs). 

Going by the World Bank prescription, successive governments have been blindly playing to the tune. As Prime Minister, Manmohan Singh had time and again said that 70 per cent farmers in India were surplus and need to shift to urban areas. RBI Governor Raghuram Rajan is on record saying that the big ticket reform will be when India moves a large share of the farming population to the cities. And more recently, Finance Minister Arun Jaitley has blamed agriculture for not being able to provide subsistence to a large section of the population thereby increasing inequality.

What he forgot to say was that successive governments had deliberately starved agriculture of financial resources and had kept the farming population impoverished. This is evident from the way agriculture remains a low priority area when it comes to budgetary allocations. In the 11th Plan, agriculture received only Rs 1-lakh crore as budget outlay for the 5 years. In the 12th plan period, agriculture got Rs 1.5-lakh crore. Incidentally, the budgetary support for agriculture, which employs 52 per cent of the population, is less than the annual provisions being made for MNREGA. In addition, the Minimum Support Price (MSP) for wheat and rice had remained almost frozen, with annual increase in farm prices not exceeding 4 per cent on an average. No wonder, 48 per cent farmers want to quit agriculture if given an alternative.

In fact, the plight of agriculture is not only deliberate but has for all practical purposes sustained the economic reforms. If the farmers were paid their economic due by way of let’s say a higher MSP, the industrial and business sector would have gone for a toss because of the additional costs involved for paying higher labour wages that incorporates resulting high food prices. At the same time, a higher price for farm produce would have raised the cost of production of many industries. In addition, a high paying agriculture would have also reduced the rate of migration and thereby reduced the availability of cheaper labour for infrastructure and real estate.

The reluctance on the part of the government to implement the Swaminathan Committee report, which recommends 50 per cent profit over the cost of production, also stems from the same concern. In a written affidavit before the Supreme Court, the government has made it clear that providing a higher price would distort the markets. It is primarily for this reason that the Ministry for Food and Consumer Affairs has directed the State governments not to provide any bonus for wheat and rice over and above the MSP announced. 

The real cost of economic reforms therefore is being borne by rural India, of which farmers constitute the majority. The first-ever Socio Economic Census has clearly brought out the stark reality. India’s performance when measured as per the Human Development Index too shows the burgeoning inequality. India ranks 130 among a ranking of 188 countries. The economic reform that we talk about therefore has largely been pro-rich. The rich 1 per cent own 51 per cent of country’s wealth. The economic wealth of 15 families in India equals the economic wealth of 600 million people.

Keeping agriculture impoverished all these years has sustained the economic reforms. Going by the income parity norms, the MSP for paddy, which has been fixed at Rs 1,450 per quintal this year, should have been Rs 5,100 per quintal. In case of wheat, the MSP should be Rs 7,600 per quintal. This is the legitimate right of a farmer, if we were to maintain a parity with other sections of the society, which has been denied to him. I have time and again stated that at the pace at which the salaries of government employees, college professors and school teachers has been hiked, agriculture has been denied that parity as a result of which farmers are dying.

The big bang reform India needs is essentially in agriculture. Providing the rightful income into the hands of farmers is what will push domestic demand and at the same time revitalize the rural economy. If the 7th Pay Commission is being seen as an economic booster, as it is expected to create more demand for consumer goods, imagine the kind of shot in the arm a higher income in agriculture will give to the Indian economy. If wheat farmers for instance were to get Rs 7,600 per quintal as the MSP, imagine the economic growth that it will result in for the rural areas. In fact, the fact remains agriculture alone has the capability to boost the Indian economy.

Unfortunately, agriculture is been knowingly sacrificed to keep the present phase of economic reforms somehow moving. In other words, 60-crore farmers are paying the cost of unjust economic reforms. #

Aug 9, 2016

Kerala sets a welcome trend by imposing 'Fat Tax'


www.chicagonow.com

Some years back I was invited to be the chief guest at the annual day function of a well-known public school in New Delhi. After the march past and the award distributions were over, I had to address the students. Instead of talking about the role models they need to follow or giving them a lecture on the moral attributes required to be a good citizen, I decided to focus my talk on junk foods. I asked them how many drink at least a Coke or Pepsi every day and almost all hands went up. When I asked them about burgers and pizzas, the response was the same. I wasn’t surprised for this is what I had anticipated. 

I spent the next half an hour telling them how harmful the sugary drinks and junk foods were. The junk foods contain no nutrition but only empty calories. That is why most children were becoming obese, which eventually leads to lifestyle diseases like diabetes, heart disease and hypertension. I vividly recall that when I talked about the colas being an efficient toilet cleaner there was a loud applause. When I told them about how the sweet yoghurt for instance contains more sugar than ice-cream the children clapped. I concluded by asking them to educate their parents, their family members, and tell them why they should not be stocking their fridge with colas, and fried foods.

A week later, the Principal of the school called me. She told me of the huge response she had received for my talk, this time from the parents.  Many parents had conveyed how their children had insisted on getting them away from junk foods and colas. She told me that the school administration too had decided to stop the sale of colas and junk foods in the school canteen. 

So when Kerala’s Finance Minister, Thomas Issac, imposed 14.5 per cent tax on pizzas, burgers, and pastas served in branded restaurants, I was delighted. While the food industry, led by the Confederation of Indian Industry (CII) has sought a review of the ‘fat tax’ saying it “would adversely affect growth of the quick service restaurant segment of the food industry and might set a similar trend for other segments as well’, I don’t think there is any need for Kerala government to even take notice of the industry’s representation. In my understanding, Thomas Issac should be complimented for a path-breaking decision and more importantly he has set a trend that I am sure will soon be followed by other States. One of the main reasons behind the rising sales of junk food is because they are cheaper. 

Childhood obesity has now reached severe proportion globally. The United State’s National Centre for Biotechnology Information (NCBI) estimates more than 22 million children to be affected worldwide. Not only in children, obesity is also growing among the adults and that too at an alarming rate. Worldwide, 39 per cent of the adults are over-weight, of which 13 per cent are obese, and this is leading to the growth of lifestyle diseases like diabetes, cardio-vascular diseases and blood pressure. If we take diabetes alone, the World Health Organisation (WHO) estimates show 422 million people suffered from the disease in 2014. This is roughly 8.5 per cent of the global population. Of this, India also is home to 69 million diabetic patients, and the number is expected to swell to 100 million by 2030.

Denmark started the trend in 2011 by imposing a tax on foods that contained more than 2.3 per cent fat. Many countries have since introduced similar taxation measures with Mexico bringing in a ‘sugar tax’ on sugary drinks, and Hungry has a tax on foods that contained high levels of sugar and salt. In April this year, UK has imposed a sugar tax in a bid to curb growing obesity and diabetes. South Africa is also considering slapping a 20 per cent tax on sugary beverages.

Imposing additional taxes on sugary drinks and junk foods is certainly a welcome sign and should help discourage the consumption of junk foods. This should however not be taken as a stand-alone measure. Fat tax should be accompanied by consumer awareness campaigns. The US First Lady Michelle Obama perhaps sensed it early and soon after Barack Obama took over as President she launched a campaign on fighting junk food ads of sugary breakfast cereals, fast food and soft drinks aimed at school children. Five years after she launched a nationwide campaign called “Let’s Move!” the US Department of Agriculture had last year phased out junk food advertisements from vending machines in schools across the country. Even billboards of Coke and Pepsi were removed from school eateries. The big retail giant Walmart has promised to reduce salt content in its products by 25 per cent and sugar by 10 per cent.

Childhood obesity is known to a huge problem in America with obesity rates among those between 2 and 19 years being as high as 17 per cent. And it is here that Michelle Obama’s campaign is slowly making an impact. At least obesity levels in children between the age of 2 and 5 are coming down in America.

Although, India is reportedly planning to bring in a tax on sugary beverages and soft drinks but any such measure draws a loud protest from the TV channels, which more or less have an allegiance to a business house. With industry bodies like FICCI and CII jumping saying it will hit industrial growth the government normally goes on the back foot. But I see a possibility of a big national campaign, which will certainly leave behind a significant impact, if a campaign on the lines of popularizing yoga is undertaken by the Prime Minister Narendra Modi. He is already seeking the application of yoga for reducing diabetes and cracking down on the consumption of junk foods and sugary drinks in a Swasth Bharat campaign only makes it complete.

Kerala’s ‘fat tax’ has certainly woken up the nation to the need for stringent measures to control the growing threat of diabetes and other lifestyle diseases. I propose two action points: First, is to introduce a high level of tax on sugary drinks, including colas, and junk foods. This must be accompanied by a nationwide Swasth Bharat campaign, which should also aim at looking afresh at some of the policy decisions. For example, 100 per FDI in processing industry should not be allowed in foods which contain more salt and sugar. Breakfast cereals, like cornflakes and its variants, are more of a desert than healthy foods. 

Kerala's Fat tax wakes up the nation, Deccan Herald, Aug 4, 2016 

सेहत के लिए सही पहल Dainik Jagran, Aug 7, 2016.

Jul 29, 2016

'This is not economic growth' -- An interview with Newslaundry


A few days back I did quite an exhaustive interview with the popular news portal Newslaundry. The interview was on a wide gamut of issues ranging from stock markets, economic growth, China's economic model, mainline economists, growing inequalities, agriculture, food, to GM crops, role of scientists, Nobel laureates, FDA etc etc. Although the interviewer came armed with 10 pages of notes, and even if I had known I wouldn't have carried any notes/publications to prove my point. In fact, those of you who have heard me would know that I have never used any notes/visuals for any of my public talks and university lectures. 

Nevertheless, I hope you enjoy the conversation. 





Jul 27, 2016

'Jai Jawan, Mar Kisan' is a potentially fatal paradox



When Madhya Pradesh Home Minister Bupendra Singh made a bizarre statement in the State Assembly the other day stating in a written reply that some of the 418 farmers who committed suicide in the past three years were “possessed by ghosts”, he transcended all limits of insensitivity.

The statement itself led to a round of laughter with a senior BJP member Babulal Gaur wondering whether this was the primary idea behind the proposal for setting up a ‘department for happiness’.

Whatever be the reason, the tactless remark only reflects at the casualness with which political leaders, and regretfully most of them are from the ruling BJP, treat farmer suicides. It certainly shocks me beyond belief when I see a complete indifference towards the massive spate of farmer suicides sweeping the country. With more than 315,000 suicides in the past 20 years it is nothing short of a serial death dance being enacted on the farm. In fact, in lot many ways it is a political statement being made by farmers as an expression of their anger against the terrible agrarian crisis that continues to prevail. But unfortunately the political message that dying farmers’ hope they are leaving behind has failed to stir the nation’s collective consciousness. 

I recall when a Maharashtra BJP Member of Parliament Sanjay Dhotre had earlier said: Let the farmers fend for themselves. If crops fail they will figure out what to do. And, if they are dying, let them die …Those who can afford farming will do it, others will not do it.” Union Minister Nitin Gadkari too had made a shocking statement when in an obvious reference to the lack of irrigation he said he watered his plants in his bungalow in New Delhi with his own urine. I don’t know whether he was expecting farmers to spend the entire time urinating the crop fields like wheat or sugarcane but his statement alone showed how disconnected he was from the harsh ground realties.

Agriculture Minister Radha Mohan Singh too earned the public ire when he made a statement sometimes back ascribing failure in love to be among the several reasons for farmer suicides. Well, let’s accept it. Farmers too suffer failed marriages and failed love affairs. A farmer is also a human being. He also faces the same traumas of failed marriages, broken love affairs, eloped partners, impotency and many a times he is also forced to end his life for social and personal reasons, but to simply trivialize a massive human tragedy is indicative of the apathy with which the farm tragedy is viewed. Nothing can be more tragic to know that every hour two farmers take their own life somewhere in the country.

While nothing so far has even remotely managed to stem the tide of farmer suicides, with Maharashtra Agriculture Minister Eknath Khadse even acknowledging that his government had no solution, I applaud the former Defence Minister A K Anthony for the way he reacted to the news of suicides by Army soldiers. Alarmed by the rising suicides in the Armed forces, he called for a brainstorming session with three vice chief of services, the Defence Secretary and the head of the Defence Institute of Psychological Research (DIPR) to find out the reasons and take measures to stop the increasing suicidal tendency among the lower ranks. This was in 2012.

Between 2003 and 2012, nearly 1,000 soldiers had committed suicide. On the contrary, between 1995 and 2011, as stated in Parliament by the then Minister of State for Agriculture, Harish Rawat, as many as 290,470 farmers had taken the fatal route. This means, about 17,000 farmers were dying on an average every year. While suicide by 100 soldiers a year had prompted the Defence Minister to act, 17,000 suicides by farmers had failed to evoke any emergency response from the Ministry of Agriculture. Sadly, the reality is that farmers can go on dying, no one cares. These deaths mean nothing except they add onto statistics. #

Source: 'Jai Jawan, Mar Kisan' is a potentially fatal paradox. New Indian Express, July 24, 2016.

Jul 17, 2016

Nobel laureates need to look beyond GM crops, focus on food wastage to fight hunger.



Nobel laureates are a respected lot. So when more than 100 Nobel laureates presented a signed letter defending genetically-modified (GM) crops, blaming Greenpeace in particular for blocking ‘golden rice’ which it claimed has the potential to reduce or eliminate much of the death and disease caused by Vitamin A deficiency, the world would certainly sit back and take notice.

After reading the letter, addressed to “the Leaders of Greenpeace, the United Nations and Governments around the world”, I must say I was greatly disappointed. I have had the privilege of meeting, knowing and talking to many a Nobel laureate over the years, and I must acknowledge that while this was a great privilege I did realize from my meetings that a majority of them had rarely moved outside of their laboratories and conference halls, but this letter simply knocks me out. These distinguished scientists, and we salute them for their scholarship, have little idea how the world outside their lab looks like. But I never knew they were so ignorant. 

Coming at a time when the New York Times (July 14, 2016) reports that the demand for organic food in United States is far outstripping the supply, forcing food companies to make payments in advance even taking care of the transition costs, it seems the Nobel laureates are completely out of sync with realities. But let’s get back to the letter.

‘How many poor people in the world must die before we consider this a “crime against humanity”?’ the letter ends on this impassioned note. The question in particular is related to the acceptance of ‘golden rice’ which the GM industry has always been pushing as the answer to childhood blindness globally affecting 250,000 to 500,000 children every year. According to UNICEF, half of them die within 12 months of losing their sight. But perhaps what the Nobel laureates were not informed by the biotech industry before they signed on the letter is the fact that Greenpeace has nothing to do with the denial of approval for ‘golden rice’. Prof Glenn Davis of the University of Washington has in an exhaustive study shown that ‘golden rice’ has still not crossed regulatory hurdles.

We will come to that later. But first let’s look at the usual scientific rhetoric that I find is repeated worldwide ad nauseam: “Opposition based on emotion and dogma contradicted by data must be stopped.” Whose data? The data produced by GM companies or the data produced based on the research funded by biotech giants? After all, why should scientific bodies, including the Royal Society, always overlook the scientific studies and references challenging these ‘scientific’ claims? I draw their attention to a compilation of more than 400 scientific studies done by the Coalition for GM Free India. This study has a foreword by the well-known scientist-administrator Dr M S Swaminathan. Closer home, the Nobel laureates must see the work of the European Network of Scientists for Social and Environmental Responsibility, which too has questioned the so-called ‘scientific’ claims.

To say that scientific and regulatory agencies around the world, which find GM crops as safe as, if not safer than those derived from any other method of production, is a clever ploy to hoodwink public opinion and thereby push harmful and risky crop production technologies. The way the Food and Drug Administration (FDA) in the United States and for that matter the Genetic Engineering Appraisal Committee (GEAC) in India have been very conveniently turned into a rubber stamp for the GM industry clearly shows how futile and frustrating the search for scientific truth can be. If you want to see the ‘criminal destruction’ of scientific facts you must do a careful perusal of the FDA (or the GEAC) recommendations.

But why should I blame the regulatory bodies if the public opinion of even the Nobel laureates can be so easily swayed? 

If ever any of the Nobel laureates feels like moving out of his/her laboratory to see the ground realities, I would like to invite them to Punjab, the food bowl, situated in northwest India. Last year, nearly 300 farmers committed suicide after a deadly attack of white-fly insect on Bt cotton ravaged the fields. Bt cotton is the only GM crop approved for cultivation India. This year, drawing a lesson, as much as 40 per cent area under cotton dropped while cotton farmers in more than 72,000 hectares in the northwest States of Punjab, Haryana and Rajasthan, have already shifted to non-Bt native varieties and hybrids. Although I am aware that white-fly is not the insect against which Bt cotton has inbuilt resistance, but the fact remains that the virulent insect attack is primarily confined to Bt cotton. The question I therefore want to ask is why shouldn’t the GM seed companies be held accountable for the death of nearly 300 Punjab farmers?

More gory consequences of GM soya cultivation have been documented from Argentina, Brazil and Paraguay. I thought the Nobel laureates would at least Google to know how damaging GM crops have been to the environment, animal and human health in some of Latin American countries. This is the least I had expected from them before they signed the letter. If they had done so, I am sure they would instead have written a letter to the GM companies, the United Nations and Governments around the world warning them to be wary of GM crops and at least learn from the Argentina debacle.

If this is a collateral damage for addressing the bigger issue of global hunger, I am afraid the Nobel laureates have never cared to go beyond the newspaper headlines. According to the US Department of Agriculture, the world produced food good enough to meet the requirement of 13.5 billion people. In other words, the world produces food for double the existing population. In US alone, latest studies show that nearly half of all US food produced is thrown away. If only US food wastage was to be minimized, the food requirement of the entire Sub-Saharan Africa can be met. In Europe too, nearly 52 per cent of the food is wasted. The food wasted in Italy, for instance, if saved can feed the hungry in Ethiopia.

Globally, the world wastes 1.6 billion tons of food every year.

I wonder whether the Nobel laureates are aware that US faces its worst hunger, breaking all previous records, with more than 40 million people sleeping hungry at a time when the US is cultivating a number of GM crops. The US is also the Mecca of GM foods. I thought the question Nobel laureates would first ask is how come US has so much of hunger (and malnutrition) if GM crops were the savior? If GM foods could not reduce hunger in America, how do you think it is the solution for hunger in Global South? Isn’t it time therefore that the Nobel laureates focus on the immediate crisis of growing hunger first in their own neighbourhood?

What has to be accepted is that the food crisis the world witness is not because of any shortfall in production. The problem is because of the absence of food justice, which in other words means access and distribution. If the world was to eliminate food wastage there would be enough food available even at the end of the 21st century given the present rate of production. It is therefore high time the Nobel laureates begin to focus where the need is urgent. Come, join the global efforts being spearheaded by the United Nations on reducing food wastage. Isn’t food wastage at a time when millions of people are living in hunger, with some 20,000 succumbing to it daily, a mankind’s crime? 

I am asking the same question that you asked before: How many poor people in the world must die before we consider this a “crime against humanity”? #

Source: GM Crops are not the solution to global hunger. ABPLive.in July 16, 2016.

Jul 14, 2016

Pulses import -- abandoning food self-sufficiency.



There is something going wrong. A government-to-government contract to import pulses from Mozambique, at a time when farmers in India are increasingly forced to commit suicide, bears testimony to a flawed economic policy that will eventually uproot Indian farmers. I don’t know whether this is being done deliberately or whether Prime Minister Narendra Modi is being kept in dark of the grave consequences of taking contract farming to other countries.

I remember, some decades back, when Balram Jakhar was the Agriculture Minister he too had proposed cultivating pulses in some African countries and importing it. During the UPA regime, the then Agriculture Minister Sharad Pawar too had wanted India to undertake pulses cultivation in Burma and Uruguay, which could then be imported. But all these years, the fanciful idea, a brainchild of some ignorant bureaucrats in the Ministry of Agriculture, had remained only confined to media statements. This time I am told the bureaucrats in the Prime Minister’s Office (PMO) had sternly managed to prevail.

As per the news reports, India will identify a network of farmers with the help of local agents in Mozambique and provide them with appropriate technology, including seeds and improved equipments. These farmers will be assured before they take up cultivation that whatever they produce will be purchased by the Indian government at a rate not less than the minimum support price (MSP) that is given in India. The basic idea, says an official of the Ministry of External affairs, is to grow a network of farmers.

If India can build a network of farmers in Mozambique to grow pulses on a regular basis I wonder why a similar network of farmers can’t be built in India. Why is India not making a similar commitment to pay a higher price and make assured procurement that could have easily raised domestic production and thereby increase its availability. While in India, the government leaves farmers to face the volatility of markets, in Mozambique it agrees to provide an assured market by buying whatever is produced. This is grossly unfair.

The key to increasing domestic production of pulses lies in assured purchase. Although the government has raised the MSP for some of the important kharif pulses, by providing for example a bonus of Rs 425 per quintal to make it Rs 5,050 per quintal for arhar dal, but price alone may not be enough to raise production in the long run. I have always maintained that unless the government launches procurement for pulses, on the lines of wheat and rice procurement, there is little possibility of enhancing domestic production. If the government can assure farmers in Mozambique of buying whatever they produce I see no reason why the same cannot be done within the country.

From Mozambique, India expects to import 100,000 tonnes of pulses, which will increase to 200,000 tonnes in a matter of few years. Additionally, India is also exploring the possibility of taking cultivation of pulses to some other African countries, including Tanzania, Kenya and Malawi. The increasing reliance on pulses production in Africa to meet the ever-growing domestic demand will however leave behind a trail of destruction on the farm front which has perhaps not been properly visualized.

Food security is the primary responsibility of any government. Yes, I agree. But in India, unlike countries like Singapore, food security should not be met from imports. Considering that India has a massive army of 600 million farmers, faced with a terrible agrarian distress over the past few decades, what the country needs is production by the masses and not production for the masses. Instead of helping farmers in Africa, it makes political and economic sense to help farmers within the country. This is exactly what was achieved when India launched Green Revolution in 1966. The nation must admire the political sagacity of the then Prime Minister Indira Gandhi to have assiduously built up a public procurement system to pull the country out from a perpetual hunger trap. Grow more food was then the slogan.

There can be nothing more disastrous for any country to abandon the principles of food self-sufficiency as a pre-requisite to ensuring food security. Ensuring food self-sufficiency is the hallmark of ascertaining national sovereignty. Let’s not forget, India escaped food riots in 2007-08 when the world was faced with an unprecedented food crisis. At least 37 countries had faced food riots at that time, and all of these were countries which relied on food imports. India had ample food reserves at that time, an outcome of a continuing policy of maintain food reserves. Any tinkering that allows for dismantling the public procurement system is therefore fraught with dangers.

Secondly, there are lessons to be learnt from the way India badly messed up with edible oils. At present, country imports nearly 74 per cent of its edible oil needs exceeding Rs 70,000-crores despite having the ability to produce it within the country. Although the consumption of edible oils has doubled in the decade ending 2015, the fact remains that India was almost self-sufficient in meeting its edible oil needs in 1993-94. Following the Oilseeds Technology Mission that ex-Prime Minister Rajiv Gandhi had launched in 1985-86 India was producing 97 per cent of its edible oil requirement ten years later.

What went wrong were the faulty trade policy whereby import tariffs were reduced drastically thereby bringing in a flood of edible oil imports. If only India had continued to block cheaper imports by maintaining higher import duties, the Rs 70,000-crore that is spent on imports would have gone to the benefit of Indian farmers. Since oilseed is mainly a crop of primarily rainfed central India, imagine the economic benefits that would have accrued to farmers. But the tragedy is that while Indian farmers suffer, the benefit is being passed to farmers growing oilseeds in Malaysia, Indonesia, Brazil and United States from where the imports pour in.

After oilseeds, it is now the turn of pulses, which carries a zero import duty. With India getting into Free Trade Agreement (FTA) with European Union, Australia, New Zealand, South Korea, among other countries, there is a growing fear that import tariffs on milk and milk products, vegetables, fruits, poultry, and even wheat are on the chopping block. I shudder to think of the socio-economic and political consequences of relying on food imports to meet the food security needs. While on the one hand such a policy will push farmers out of agriculture, it will take the country back into the days of ‘ship-to-mouth’ existence when food used to come directly from the ship to feed the hungry mouths. #  

Jun 30, 2016

7th Pay Commission is welcome, but is the government's largesse only limited to employees?

The implementation of the Seventh Pay commission will turn out to be the real game changer for the Indian economy. Forget about rate cuts, policy paralysis and opening the floodgates to the 2nd phase of FDI wave, it is the much awaited salary hike for government employees that in reality is expected to act as a stimulus for the slogging economy.

No wonder, the Union Cabinet has hinted of a substantial pay hike, more than the recommendations of the 7th Pay Commission. Against the recommended minimum basic salary of Rs 18,000 and a maximum of Rs 2,50,000 as per the Pay Commission, the Empowered Committee of Secretaries is expected to ask for a 24 per cent jump, which translates into a minimum basic pay of Rs 23,500 and a maximum of Rs 3,25,000.

The bonanza for the government employees, coming at a time when the economy is showing no signs of tiding over the continuing crisis, hides the real intentions – it is an indirect rescue plan to bail out the industry.

It is like hitting two birds with one stone.

A report in LiveMint (Oct 29, 2015) says: “A historical analysis of auto sales shows that arrears and pay hikes of government employees have led to immediate spike in the purchase of two-wheelers and passenger vehicles in the country”. Although the wait has been long but the automobile sector is not the only exception. Take the case of the realty sector. Says a report in Indian Express (Dec 5, 2015) based on an analysis by Credit Suisse: “While the Centre’s easing of FDI norms last month was a positive development on the supply front, a new report says that the pay panel’s recommendations will provide a much-needed boost to the demand side.” 

In another report in Forbes India (Jan 18, 2016) all hopes for the revival of FMCG prospects hinged on the expected pay hikes: “Very recently, the Seventh Pay Commission has recommended an average 23.55 per cent hike in salaries and pensions, which could see an additional $15 billion in the hands of consumers, starting 2016. This could give a very good fillip to consumer spending across sectors such as automobiles, consumer durables and non-durables.”

That day has now arrived. As the Financial Express (June 29, 2016) rightly states: “Stocks of FMCG and auto companies will be in focus as the cabinet is likely to approve on Wednesday higher increases in basic pay for over 1-crore government employees and pensioners.” You will see the Chamber of Commerce welcoming it with a glee, and the markets giving a big Thums Up.

It is not only the 45-lakh central government employees and about 50-lakh pensioners who will be the only recipient of the government’s largesse, but as a Credit Suisse report tells us the recommendations will be followed by State governments and Central PSU besides colleges and universities. This means a total of 3.4-crore employees and pensioners will in reality see surplus cash flowing into their pockets. The annual additional burden on account of pay hike alone, for both the Central and the State governments put together, will therefore grow to Rs 4.5 to 4.8 lakh crore every year.

Although the PMO is believed to have directed the Empowered Committee of Secretaries to ensure that the pay hike is ‘sufficient to provide for the life and health of central government employees’, I fail to wonder why the concern is only limited to employees. I have nothing against the government employees being bestowed with huge salary hikes plus allowances but I thought the mandate of the PMO runs beyond the Central and State employees. But it appears as if the country’s economy only revolves around India Inc and the government employees. The rest don’t matter.

Take a look. At the time of economic meltdown in 2008-09, Rs 3-lakh crore bailout package was given to the industry. In addition, since 20104-05, tax concessions to the tune of Rs 48-lakh crore have been doled out for the India Inc. Similarly, for the employees, the 7th pay Commission is going to translate into Rs 4.5 to 4.8 lakh crore bonanza despite the economy not showing signs of any recovery. Exports are down, industrial output refuses to pick up, and job creation remains subdued.

But when it comes to 60-crore farmers, reeling under a back-to-back drought for two years, the government has never been so forthcoming. If it were not for a Supreme Court drubbing, the government was not even willing to acknowledge that a severe drought prevailed in 13 States. I had expected an economic bailout package of at least Rs 3-lakh crore for the drought affected areas, in line with the stimulus package for the industry, but then agriculture continues to remain outside the economic radar screen of the country.

Government employees all across the country work for not more than 150-160 days in a year. Farmers have to work 24x7 bit still have been denied a legitimate income by successive governments. They are being deliberately kept impoverished, penalized for keeping food inflation in control. 

For several years now, the rise in the minimum support price of wheat and paddy has remained at a paltry Rs 50 per quintal. Economic Survey 2016 tells us that the average income of farming household in 17 States has been computed at Rs 20,000 a year. Add to it the farm incomes in the rest of the country; the average a farmer earns from agriculture comes to Rs 3,000 a month. But I never heard the PMO express the same concerns about the plight of farmers as it does for government employees, directing the Finance Ministry to ascertain whether it is sufficient for the life and survival of the farming community. #

Source: 7th Pay Commission is welcome, but is the government's largesse only limited to employees? ABPLive.in June 29, 2016. http://www.abplive.in/blog/7th-pay-commission-is-welcome-but-is-the-governments-largesse-only-limited-to-employees