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How World Bank’s economic chakravyuh is trapping Indian farmers


From GGI News: In 1996, the World Bank directed India to move 400 million people out of agriculture. Former PM Manmohan Singh had repeatedly expressed the need to shift 70% farmers. Only then will cheap labour be available for infrastructure development. The economic design is well laid out. Agriculture is being killed for economic growth.

Devinder Sharma, Great Game India News

“Woh Subah Kabhi to Aayegi” – When Will the Sun Dawn on Indian Agriculture?

Whenever I see the face of a farmer I am reminded of this Raj Kapoor song from a yesteryear film. With misery writ all over, the resulting despondency is clearly evident. But while Raj Kapoor was able to sing his way out for a happy ending, the Indian farmer is getting deeper and deeper into the clutches of a chakravayuah.

It has been an endless wait. For 70 years, the farmers have toiled hard to produce bumper harvests. Year after year, the records have tumbled. But with each passing year, the plight of a farming family has only worsened. For a country, which was somehow surviving not long ago in what is generally referred to as ‘ship-to-mouth’ existence, with food aid rescuing a large section of the population from starvation; the valiant farmers have pulled the country out from the throes of what many writers had predicted to be a fit case for a mass slaughter.

Once the pride of the nation, farmers have now become an economic burden. An ungrateful nation is waiting for every available opportunity to offload the burden.

It was in 1965 that the then US President Lyndon Johnson had got upset over a statement the Indian Prime Minister made. In an interview toa US newspaper Lal Bahadur Shashtri had termed the American war in Vietnam as “an act of aggression”.  But this was unacceptable. How could a hungry nation dare to call the US an aggressor? The US stopped food supplies, sending the Indian government into a tizzy. The then food minister C Subramaniam later told me that there was a time when the country was left with food stocks for only seven days. There was panic all around.

In response to the deepening food crisis, Shashtri had appealed to the nation to fast on Mondays. Realising the great role farmers can play in bringing food self-sufficiency, he coined the popular phrase Jai Jawan, Jai Kisan.

After Lal Bahadur Shashtri successful launched the milk cooperatives, which later brought in the white revolution, Prime Minister Indira Gandhi literally sowed the seeds of Green Revolution. While the government imported high-yielding seeds of dwarf wheat from Mexico, and made available irrigation along with external inputs like chemical fertiliser and pesticides, farmers did the rest. In 1967, the first harvest after the Green Revolution technology was introduced was a record 5 million tonnes higher. Since then the country has not looked back. From an era of food imports, India graduated to food self-sufficiency.

But what is little known is the financial impetus the government provided to farmers. In 1970, when the salary of school teachers was Rs 90 per month, the Minimum Support Price (MSP) for wheat was Rs 76 per quintal. Giving a higher assured price to farmers as well as an assured market (by setting up the Food Corporation of India), the policy makers have to be appreciated for ushering in what was essentially a famine-avoidance strategy. For a country which witnessed 28 famines during the British Raj, the remarkable turnaround was only made possible by a valiant farming community.

Defying all prediction, famine had become history in India.

The ‘glorious’ period for farmers lasted for a decade and a half. Although Green Revolution had bypassed small farmers, an effort was made to paint a rosy picture of prosperity. The image of a progressive farmer driving a tractor was flashed as a sign of prosperity. In reality, the increase in production was not commensurate with an accompanying increase in farm incomes. While the successive governments were content with bumper harvests, farming as a community remained neglected. Coupled with a declining rate of public sector investments, the demise of agriculture began soon after the mid-1980s.

I remember when Punjab and Haryana, comprising the food bowl, registered a shortfall in wheat procurement in 1983-84; the then Prime Minister Indira Gandhi had made an air dash to Chandigarh. She was visibly upset and made it loud and clear when she pulled up the Chief Ministers – Darbara Singh of Punjab and Bhajan Lal of Haryana – at the airport itself. She was furious at the failure of Punjab and Haryana to meet the food procurement targets.

And then began the downslide.

By 1991, when the World Trade Organisation (WTO) came into existence, a complacent nation began to shift focus from agriculture. With Europe and America too building mountains of food, milk and butter surpluses in the same period, the dominant economic thinking turned to global competitiveness thereby reducing import tariffs to allow for cheaper imports. At the same time, the entire burden of keeping food inflation under control was passed on to farmers. Farm output prices globally remained frozen. According to an UNCTAD study, between 1990 and 2010, a period of 20 years, farm gate prices had remained static.

The dismal trend has since continued. While farmers were denied their rightful income, huge salary jumps were provided to other sections of the society. From a monthly salary of Rs 90 per month in 1970, the salary of school teachers for instance jumped by 280 to 320 times by the year 2015, a period of 45 years. In the same period, salary of government employees went up by 120 to 150 times; and that of college professors by 150 to 170 times. Wheat price for farmers on the other hand increased by a paltry 19 times in the same period. Agriculture turned uneconomical, and repeated demands for providing a level playing field fell on deaf years.

Also read: Bolivia Declares Freedom From Central Bankers. Can India Do The Same?

It was in 1996 that the World Bank directed India to move 400 million people out of agriculture in the next 20 years, by 2015. Since every World Bank loan comes with roughly 140 to 150 condionalities, each loan re-emphasised the urgency to move farmers out of agriculture. Former Prime Minister Manmohan Singh had time and again expressed the need to shift 70 per cent farmers. Raghuram Rajan, former Reserve Bank of India governor had said that the biggest reforms would be when India moves farmers out of agriculture. Then only will cheap labour be available for infrastructure development.

For nearly three decades, more so after the economic reforms were ushered in, agriculture has been a victim of deliberate neglect and apathy. Successive governments had deliberately created conditions turning farming non-viable thereby forcing an increasing number of farmers to abandon agriculture and migrate to cities. Meanwhile, food imports have soared. According to Down to Earth magazine, food import bill for 2015-16 stood at Rs 1,402,680,000,000. This was more than the annual budget for agriculture.

Also read: The Rs 1.4 Trillion Plan To Destroy India’s Agriculture

The shift to imports comes at a time when the emphasis is to drive farmers out of agriculture. As I said earlier, to keep food inflation under control, farmers have been routinely paid less, not even to cover the cost of production, thereby driving them against the wall. Signing MoU with African and BRICK countries for importing pulses, oilseeds and wheat in future is simply an effort to shift from food self-reliance to meeting the domestic food requirement through imports. What is not being realised is that importing food is like importing unemployment. Food imports first hit the small farmers, who are the first to abandon farming and migrate to cities.

But I doubt if such details mean anything to mainline economists and policy makers. Their focus is on creating economic conditions that force farmers to move out of agriculture. This is exactly what the mainline economic thinking prescribes, and Indian policy makers are blindly following a strategy that has failed the world over. After all, with country after country facing jobless growth, and India being no exception, what is not being realised is that only agriculture can bail out the economy.

Nevertheless, with the markets crashing after every harvest, and with the government reluctant to save farmers by ensuring that they get at least the Minimum Support Price (MSP) that has been announced, farmers are pushed deeper and deeper into chakravuyah — a never ending cycle of debt. Even the MSP being given is often less than the cost of production. In Maharashtra, for instance, the production cost of tur dalhas been worked out at Rs 6,240 per quintal. The MSP announced was Rs 5,050 per quintal, and in reality what the farmers were able to sell tur, and that too after waiting for a week or so in the mandis, was between Rs 3,500 to Rs 4,200 per quintal.

Take another case. A farmer in Haryana toils hard for three months, putting all his labour to reap a bountiful harvest of potato, only to find the prices crashing thereby forcing him to sell 40 quintals of potato for just 9 paise a kg. These are not isolated cases. It is because of distress prices becoming a norm rather than an exception that the country faced an angry protest by farmers in Maharashtra and Madhya Pradesh recently. The shock a farmer gets when prices crash often turns fatal. But the fact remains the government has rarely come to his rescue. And in my understanding, the recent protests were only a trailer; the full movie will follow.

Poor farmer has been left to live in indebtedness, which keeps on multiplying with every passing year. The economic crisis farmers are facing is compounded by the denial of a rightful income to farmers for his produce. To keep food inflation under control it is the farmers who have paid the price. In reality, it is the farmers who have been subsidising the nation all these years. Successive governments have therefore deliberately kept agriculture impoverished. An estimated 58 per cent of the farmers go to bed hungry every night.

With each passing year, the economic crisis on the farm has worsened. The Economic Survey 2016 tells us that the average income of a farming family in 17 states of India, which means roughly half the country, is a mere Rs 20,000 a year or less than Rs 1,700 a month. Such a dismal income, merely enough for subsistence, was the outcome of economic policies over the years. I shudder to think how these farming families must be surviving all these years. After all, it is not even possible to rear a cow in less than Rs 1,700 per month. Will these farmers ever be able to witness a new dawn; a new dawn that bring back the pride in farming? Woh subah kabhi to aayegi?

I have my doubts. Despite the farmer protests, the policy push is to drastically cut down the number of people on the farm and move agriculture into the hands of corporations. The National Skill Development Council report makes it abundantly clear. It has already laid out a target of bringing down the population engaged in agriculture from the existing 57 per cent to 38 per cent in the next five years, by 2022. While the job market is drying over the years, with only 1.6-crore jobs created in past 13 years, against 16.25-crore jobs expected to be created in the same period, pushing small and marginal farmers out of agriculture will only worsen the employment prospects. After all, if a daily wage worker or adehari mazdoor is what the government has in mind when it talks of job creation then it is high time to revisit the economic policies.

Agriculture is being killed deliberately to keep economic reforms going. To achieve economic growth, mainline economists tell us that it is absolutely essential to move bulk of the population from agriculture to the cities. Food can be produced by promoting corporate farming or can be imported. This is exactly the roadmap that has been laid by the World Bank and the financial institutions. Credit rating agencies provide a higher ranking for achieving the target. The economic design is well laid out.

Devinder Sharma is a distinguished food and trade policy analyst. An award-winning Indian journalist, writer, thinker, and researcher well-known and respected for his views on food and trade policy.

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