Ground Reality - Devinder Sharma

Food being served in Amma's Canteen in Chennai - Hindu photo 
In the midst of all the heated discussion on the relevance of the proposed National Food Security bill, the news of 'Amma Unavagams' (or Amma's Canteen) has failed to catch the nation's attention. The canteen was inaugurated by Chief Minister J Jayalalithaa on Feb 19 as part of a pilot scheme to meet the needs of the lower strata of society and migrant workers. Operated by women self-help groups, in neat and hygienic conditions, these canteens became an instant hit. 

Charging Rs 1 for a piece of idli, Rs 3 for curd rice, and Rs 5 for sambar rice, these canteen will now serve dinner too. Says a report in The Times of India (May 22, 2013): "Jayalalithaa's promised evening fare of chapathis and dal will be available from 6pm to 9pm. Welcoming this, councilors on Wednesday also demanded additions like beverages and side dishes. The Chennai Corporation will buy modern cooking equipment that can produce 3,000 chapathis in an hour. "A group of six women can make only 50 chapathis an hour. So, we decided to opt for this machine," said mayor Saidai S Duraisamy, during the council meeting. The corporation estimates the demand to be around 2,000 chapathis per canteen, or 4 lakh chapathis a day at all the 200 canteens. Chapathis are to cost Rs 3 each and will be served with dal and korma on alternate days." 

Seeing the popularity of these eateries, the Tamil Nadu government is now extending the network of Amma's Canteen to nine corporations across the state -- Madurai, Tiruchrapalli, Coimbatore, Tirunelveli, Salem, Tiruppur, Tuticorin, Vellore and Erode. 

Despite what some economists might call it as a wasteful expenditure looking at the amount of government subsidy that would be flowing in to keep Amma's Canteens operational, in all fairness the Tamil Nadu Chief Minister deserves all praise. To my understanding this is true inclusiveness. Unless the benefits of the State's economic growth reach the masses, it is no use to talk of inclusive growth. Tossing the GDP figures, as the UPA-II report card does, hides more than what it reveals. I would be more than happy if the GDP growth slackens but more importantly the number of hungry and malnourished also come down drastically. 

A hungry population is a drag on any country's economy. 

A majority of the millions who throng Amma's Canteen are daily wage earners, migrant workers, rickshaw pullers, auto drivers, bus and truck drivers/conductors, and includes various other sections of the lower economic strata of the society. Often many of them go hungry or remain undernourished in a quest to save money for the family. By providing them cheap and affordable food, and too under safe, clean and hygienic conditions, Ms Jayalilthaa has demonstrated that she cares. Whatever be the costs involved, there is an urgent need for the State to step in to meet the daily food requirements of the people. Often the economists fail to work out the economic gains accruing from a well-fed workforce.    

When I first read about Amma's Canteen, I was reminded of the UNI Canteen near the Constitution Club in New Delhi. This popular food joint, providing tasteful south Indian food but under completely unhygienic conditions, is so popular that I have seen political bigwigs and even some of the best known Corporate honchos walking in for a plate of idlis. I am sure Amma's Canteen must be also attracting business executives and well-to-do people who wouldn't mind rubbing shoulders with the aam aadmi.

And this also reminds me of a similar effort I had unsuccessfully made several years back in New Delhi. Accompanying a senior journalist, I had met the Delhi Chief Minister Shiela Dikshit at her residence. I had explained to her quite in detail of the way I thought New Delhi could pioneer in ensuring food security. My idea was to draw in religious institutions, philanthropic organisations, social groups, SHGs, and others in a manner that a daily kitchen could be set up in each of the zones. She listened to me patiently, and then suddenly retorted: "Where is hunger in Delhi?"

I was shocked. I told her politely that probably she has been in power for quite long to become so disconnected from people that she doesn't even know whether hunger prevails in the city or not. She probably realised what she had said, and then came out the truth. "So far people migrate to Delhi in search of a job and livelihood. If they get to know that Delhi also provides food, my problem will only grow."

The meeting abruptly ended. We walked out of her home. I don't think she would even remember this meeting. But several years later I was quite surprised when she inaugurated a subsidised canteen. Except for a few media reports at its launch, what is quite evident is that the Shiela Dikshit canteen has failed to draw the needy.

Wheat arrivals have slowed down in India
Wheat arrivals in the mandis have slowed down. Compared to 2012 marketing season, wheat arrivals this year have come down to a trickle. Although food procurement agencies believe it is because farmers are anticipating a higher return in the months to come and so are holding up the harvest, the question that cannot be ignored is whether the estimates of mandi arrivals were exaggerated?

According to a news report in Dainik Jagran (May 17, 2013) the daily arrivals in different mandis of the wheat belt have shrunk to 1.71 lakh tonnes as against the average of 4 lakh tonnes in the same period last year. The total arrivals in the mandis till May 15 (the procurement season begins from April 1 and lasts till June) was 27.3 million tonnes compared to 31.6 million tonnes last year. This is a clear drop of 4.3 million tonnes till now.

In Punjab, the wheat bowl, as against 81,000 tonnes arrival in 2012, the arrivals this year have slowed down to 25,000 tonnes. In neighbouring Haryana it is much worse. The arrivals, 28,000 tonnes in 2012, have now been reduced to a trickle. The average daily arrival now is 4,000 tonnes. In Madhya Pradesh too, wheat arrivals have slowed down, from 12.1 million tonnes in 2012 to 73,000 tonnes in 2013. Uttar Pradesh too is faced with the same dilemma. Against 14.1 million tonnes in 2012, the arrivals have come down to 36,000 tonnes now.

It is expected that by the time the marketing season ends in June, and with such low arrivals, the procurement will be down by about 10 million tonnes. This shortfall is against the record estimate of 44 million tonne of wheat procurement that has been announced with much fanfare. I am aware that the Ministry of Food & Consumer Affairs is worried at the slackening procurement figures in the light of the ambitious targets set under the proposed National Food Security bill, but what needs to be ascertained is whether the procurement estimates were deliberately inflated and blown out of proportion to provide a feel good factor for the slowing economy? Were the production and procurement estimates magnified to make a case for wheat exports?

In the past fiscal, India has exported 10 million tonnes of wheat at a time when the international prices were not favourable, and the argument was that the country will get a bountiful harvest in 2013 thereby creating more problem for food stocking. Against 82.3 million tonnes stocks (wheat and rice) on June 1, 2012, the Ministry of Food & Consumer Affairs was anticipating stocks to touch an all-time high of 90 million tonnes by June 1, 2013.

There is something going wrong. While I find every year more research tumbles out on the harmful effects of chemical pesticides, its usage continues to grow substantially. Its either that we don't care and give a damn to these research reports or perhaps we leave it to the policy makers to take a final call. Whatever be it, the facts remain that the concentration of pesticide residues in our bodies is reaching an appalling level. 

So far we knew about pesticide residues in mothers milk, and we have also been told that the damage is not only restricted to agriculturally farmed lands. Even in the Antarctic, researchers have detected pesticide residues in penguins. The reach of the deadly chemicals therefore is far and wide. 

The US-based Environment Working Group had recently reported: "Most babies today are born with persistent pesticides and other chemicals already in their bodies, passed from mother to child during fetal development. 21 different pesticides have been found in umbilical cord blood, suggesting tremendous potential damage at a critical developmental time. Since a baby's organs and systems are rapidly developing, they are often more vulnerable to damage from chemical exposure.  The immature, porous blood-brain barrier allows greater chemical exposures to the developing brain." I find this to be not only alarming but worrying. 

If you are still not moved, here are a few more startling facts that might give you a jolt. Thirty years after it was banned, DDT still exists in the cells of Americans. US consumers get upto 70 daily exposures of pesticide residues from persistent organic pollutants (POPs) through their diets. In a well-documented analysis, Organic Valley website (http://www.organicvalley.coop/why-organic/pesticides/) reports:

Many pesticides are known to pose significant, acknowledged health risks to people—including birth defects, damage to the nervous system; disruption of hormones and endocrine systems; respiratory disorders; skin and eye irritations; and various types of cancers.

• Exposure to persistent organic pollutants through diet has been linked to breast and other types of cancer, immune system suppression, nervous system disorders, reproductive damage, and disruption of hormonal systems.
• Male Reproductive Development: Hormone-disrupting chemicals in commercial pesticides have been linked to testicular cancer and low sperm counts in men, and to birth defects in baby boys.
• Public health costs associated with pesticide-related acute poisonings and cancer alone, add up to an estimated $1.1 billion dollars per year.
• Parkinson's disease has been linked to pesticide exposure.

This brings me to the issue whether we have alternatives to the deadly chemical pesticides. In an evaluation of the non-chemical alternatives to endosulfan, the latest among the chemicals whose production and use is being phased out, a working paper of the the United Nation's Environment Programme (UNEP)  has talked of ecosystem approach or agro-ecological approaches to crop production. It quotes the UN Special Rapporteur on the right to food Dr Olivier de Schutter, who in his report delivered to the 16th session of the UN Human Rights Council listed out various options that are being successfully tried.  
The UN report says: "De Schutter references a report by Pretty et al12 which found an average crop increase of 79% in 286 sustainable agriculture projects based on agroecology, in 57 countries covering 37 million hectares, rising to 116% for all African projects and 128% for East Africa. He also refers to a study commissioned by Foresight Global Food and Farming Futures, of 30 projects in 20 African countries, which found a an average 213% increase in yields with sustainable agro-ecological practices within 3-10 years. He concluded that scaling up agro-ecological practices can simultaneously increase farm productivity and food security, improve incomes and rural livelihoods, reverse the trend towards species loss and genetic erosion, and assist adaption to climate change."
Quoting Dr G V Ramanjaneyulu and Raghunath of the Centre for Sustainable Agriculture, Hyderabad, the UN report further says: "CMSA (Community Managed Sustainable Agriculture) has significantly reduced the costs of cultivation without significantly reducing productivity, resulting in a net increase in farmers’ income and significant health and ecological benefits. By 2009, over 300,000 farmers on 550,000 hectares of farmland in Andra Pradesh had adopted CMSA in four years. In 2011, those figures were reported to have grown to over 10 million farmers on over 10 million hectares." This is no small achievement. If pesticides-free agriculture can be successfully practiced in 10 million hectares, I see no reason why it can't be replicated in the rest of the country. 
It is therefore not correct to always quote the TINA (there is no alternative) factor when it comes to chemical pesticides. It is high time we, the average consumer, becomes aware of our own health as well as the safety of the environment we live in. The onus of safe and correct policy approaches actually lies on us and not the policy makers. It is just because you have kept mum all these years, and continue to suffer in silence, that the policy makers have promoted unsustainable options. Time you woke up. 

In March, US President Barack Obama signed the HR 933 continuing resolution -- popularly called ‘Monsanto Protection Act’—that effectively divests the federal courts of their constitutional power to stop the planting or sale of genetically modified (GM) seeds and crops regardless of the health and environmental consequences. In other words, whether you like it or not, despite the havoc it plays with your life and environment, you have no choice but to quietly accept GM foods.
On April 22, amidst the din and noise over the 2G Spectrum and Coal-Gate scams, the government introduced in parliament the Biotechnology Regulatory Authority of India (BRAI) bill 2013. No sooner the bill was introduced the Association for Biotechnology Led Enterprises (ABLE) expressed jubilation thereby making obvious the incestuous relationship industry has with the government. Setting aside all concerns expressed by the 2004 Task Force on Agricultural Biotechnology led by Dr M S Swaminathan, which stated:  “the safety of the environment, the well- being of farming families, the ecological and economic sustainability of farming systems, the health and nutrition security of consumers, safeguarding of home and external trade and the biosecurity of the nation”, the bill is an hurried attempt to remove all possible obstacles in the promotion of the risky and controversial technology.
In lot many ways, I find the BRAI bill 2013 to be a precursor to the ‘Monsanto Protection Act’ in the US. While the US government has removed all regulatory hurdles in the promotion of GM crops, the BRAI bill too makes the task much easier and quick by providing a single-window, fast-track clearance for GM crops. While in the garb of ‘confidential commercial information’, the BRAI bill imposes restriction on the application of Right to Information Act, it also has certain clauses that limit the jurisdiction of the courts over the decisions taken. The BRAI bill therefore provides a strong and legally-tight protective shield to the biotechnology companies and the conspiring government officials.
The need to curb transparency and accountability arises only when something dangerous has to be kept hidden from the public glare. It first begins by the pro-industry scientists, occupying senior government and university positions, to create scare by misrepresenting facts in the name of a ‘science-based’ debate.  I have seen luminaries, many of whom are part of the science advisory panel to prime minister, leading this brigade. It happens elsewhere too. Writing in The Guardian, George Monbiot points to the particular instance when the chief veterinary officer of UK had ‘discounted fears that BSE could jump from one species to another’. The failure to acknowledge the scientific fact and take remedial measures led to the emergence of mad cow disease.
In India, the Indian Council of Agricultural Research (ICAR) has been aggressively pushing for the spread of GM crops in the name of food security. When the Ministry of Environment & Forests questioned the veracity of scientific claims, and imposed in 2010 a moratorium on the genetically engineered food crop – Bt Brinjal, the GM industry was pushed on the back foot. Adding to its woes was the 2012 report of the Standing Parliamentary Committee, which in its exhaustive report found biotechnology regulation to be too small a focus on the vast canvas of biodiversity, environment, human and livestock health and therefore recommended an all-encompassing Biosafety Authority.
Subsequently, after seven states – West Bengal, Bihar, Odisha, Madhya Pradesh, Chhatisgrah, Karnataka and Kerala – refused to go in for open field trails of GM crops, the only option left was to bulldoze public resistance through a legally binding mechanism. The Prime Minister’s Office (PMO) then swung into action, and knowing that the Ministry of Environment & Forests is no longer a natural ally, moved the introduction of the bill to the Department of Science & Technology, which incidentally is a promoter of the technology. The conflict of interest therefore is clearly visible. But a defiant PMO continues to look the other side.
At the same time, citing ‘public interest’, the BRAI bill has taken away the role the states have over agriculture and health. The states can no longer refuse permission. They are left with only an advisory role. What makes the BRAI bill a perfect subject for a serious, healthy and widespread national debate, besides of course looking into the role being played by PMO in promoting corporate welfare, is that it concerns as well as impacts everyone in the country. Whether you want to know or not, the bill provides biotechnology companies with unlimited powers to tamper with your food, health and environment. I therefore leave you to decide whether you would like the government and the GM companies to exercise complete control over what you eat. #
Source: Tehelka, May 11, 2013. Issue 19 Volume 10http://tehelka.com/who-decides-what-we-eat/

While addressing a joint session of Parliament, President Pranab Mukherjee said “in due course the direct benefits transfer system will also cover wages and subsidies on food.”
The enthusiasm for routing the food subsidy in the form of cash transfers has severe political advantages but at the same time has serious fallout in the fight against hunger and malnutrition. The political advantage was spelled out by Rahul Gandhi the other day when he  made it abundantly clear that cash transfers could win them not only 2014 but also the 2019 general elections. The entire academic euphoria over the proposed aggressive rollout of Aadhar-based cash (electronically generated unique identification number UID) therefore is simply overbearing and needs to be seen in the light of political bias. In fact, the visible trend in the ongoing national debate is more towards being seen as politically correct.
A World Bank working paper, entitled: “Conditional Cash Transfers, Political Participation and Voting Behaviour,” studied the voting behaviour for a conditional cash transfer programme launched in Colombia just before the 2010 elections. Subsequently, a 2011 study of an unconditional cash transfer programme in Uruguay clearly established that cash transfers did help the ruling party get a large share of the votes, and thereby helped the party to romp home at the back of cash transfers. In India, the political urgency and the aggressiveness with which the massive cash transfers are expected to cover the entire country by April 2014 is therefore quite obviously aimed at bringing electoral benefit to the ruling party.
The unconditional direct cash transfer programme that was proposed to be launched from Jan 1 in three phases started with 43 districts involving a cash provision of Rs 20,000-crore*. Eventually, all forms of subsidies to the poor, including food and fertiliser, will be in the form of cash flow, and would add up to Rs 300,000- crore annually. I fail to understand how and why such a massive cash outflow pipeline will reach the beneficiaries without first putting up a fool-proof delivery system in place. The Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) too was envisioned with a lot of expectations but has miserably failed to deliver. Several studies have pointed to nearly 70-80 per cent leakages, and yet somehow the impression is that MNREGA has transformed the rural economics.
With only 40 per cent of the population having access to banks, and with the over ambitious target of reaching the remaining population through banking correspondents – who will be operating like the village postmen except they will now be equipped with portable handheld machines acting like micro-ATMs – we are perhaps expecting too much from the most important human link between the technology and the money delivery. So far, there are only 70,000 banking correspondents and the experience has not been very encouraging. In the next one year, the number of banking correspondents will have to increase ten-fold to reach a staggering figure of 7 lakh.
Knowing that the entire rural and agricultural banking operations are rooted in corruption, I wonder how we have accepted that the banking correspondents will not be swayed by corrupt practices. If 60 per cent of the beneficiaries have to be reached through an army of banking correspondent, who will be handling over Rs 150,000- crore by any conservative estimate, the delivery mechanism is certainly fraught with over-confidence stemming from political urgency. This is where I think the policy makers and bureaucrats have failed to rise above assumptions. This is where I think the aadhar-based cash-for-vote will end up being no different than the hype generated at the time of launching MNREGA.  
Nevertheless, what worries me more is when cash transfers move to the next phase, and that means meeting food entitlements directly with cash. Thanks to the concerns raised by the civil society, the government has deferred cash-for-food for the time being. It was more because of the fear that the cash-for-food programme could go completely out of control, and therefore could negate the political advantage that the ruling party is hoping to garner, that it has been kept in abeyance. At a time when the proposed National Food Security bill is pending introduction before the 2014 elections, any tampering without a proper evaluation could backfire.
But still, the hawks are keen to push it through as early as possible. The government has already announced that cash-for-food will begin in union territories in about a month’s time.
It is true that more than 60 per cent of the food that is channelized through the public distribution system is either wasted or siphoned off in transit and the entire system is mired in corruption. What reaches the poor beneficiaries is often not even fit for consumption. The answer however does not lie in dismantling the Public Distribution System (PDS), but reforming the world-largest food delivery system to riddle it of corruption, and make it more effective. This is certainly possible, but given the extent of political meddling in the allotment of ration shops to transportation of grains, it has never been attempted in right earnest.
For several decades now, the international emphasis has been to force India to dismantle the PDS. The first attempt was made at the time of the infamous Arthur Dunkel draft during the primitive years of world trade negotiations. WTO aimed at curtailing the PDS role, and wanted markets to ensure food security. Strong opposition from India, cutting across political lines, forced the WTO to eventually withdraw that clause. Subsequently, in the name of decentralisation of food procurement and storage system, an attempt was made during the tenure of former Prime Minister Atal Bihari Vajpayee to divest the Centre of its onerous responsibility of procuring foods for the central pool, and leave it to the States to manage grain procurement, storage and distribution.
Several chief ministers had opposed the decentralisation move thereby forcing the government to retreat. For several years now, the emphasis has once again been on discarding food procurement. Allowing Food Corporation of India (FCI) to increasingly take on a commercial role by shifting focus from its sovereign role of ensuring domestic food security to looking for opportunities for grain exports, and finally to engage in future trading in wheat so as to offload and earn profits from the mounting surplus it carries. This has also to be seen in conjunction with the proposal to cap food procurement to the country’s buffer stock needs, and thereby deprive farmers of getting benefit of the assured price of wheat and rice. At present, FCI is under an obligation to purchase the surplus grains flowing in to the mandis(market yards) at the Minimum Support Price. Once this role is withdrawn, farmers would be left at the mercy of trade.
Providing cash in the hands of poor beneficiaries means less emphasis on the PDS ration shops. The idea is to provide coupons or provide food entitlements in the form of cash, and leaving it to the people to buy their quota from the market. Whether the money provided would be used primarily to buy liquor, junk foods or other consumer goods is an important issue, but what is more important is to understand how it is aimed at dismantling the food procurement system. This subtle way, very cleverly designed, would undo the gains of food self-sufficiency so assiduously achieved after the advent of Green Revolution. 
The underlying objective is very clear. Once the direct cash transfers begin, the ration shops would be gradually phased out. Once the PDS shops are removed, the cap in food procurement that is being suggested for FCI will come into play. With food procurement limited to meet the buffer requirements, which is somewhere between 14 to 22 million tonnes a year (against 82.3 million tonnes stocked with the FCI in June 2012), wheat and rice farmers would no longer get the benefit of the minimum support price. Farmers would be left to face the vagaries of the trade, and as has been the experience in those States which do not have a robust system of mandisand thereby unable to provide farmers with assured prices, distress sale will become a norm.
Withdrawal of food procurement system will have an impact on food production. This would help farmers to abandon farming, and migrate to the urban centres. This is exactly what the World Bank has been proposing for several years now. The 2008 World Development Report had called for land rentals and providing farmers with training opportunities so that they can be absorbed in the industry. The government, as directed, made budgetary provisions for setting up 1000 industrial training institutes across the country. It is therefore obvious that the government had wanted to withdraw from food procurement and distribution for quite long now, following the dictates of the World Bank/IMF. Cash-for-food will facilitate the process and make it easy. Food requirement will then have to be met from imports, and there is already a dominant thinking within the government which advocates importing subsidised food off-the-shelf from the western countries rather than spending more on growing food within the country.
FDI in retail comes at a time when contract farming is receiving greater attention. The idea is to link the farmers growing cash crops with the supermarkets. This will help the government from doing away with the system of announcing the minimum support price and thereby reduce the subsidy outgo. This is exactly what the World Trade Organisation (WTO) had wanted several decades ago. The process to dismantle food procurement, a highly emotive issue in India, actually began in mid 1990s. It is now receiving the final touches.
Prime Minister Manmohan Singh had repeatedly said that the country has 70 per cent more than what is required. Cash-for-food will provide the smokescreen needed to accomplish what the WTO/World Bank/IMF have been telling India for long. It is only when of the farming population is moved out of the villages that the agribusiness can find a stronghold in India. The predominant economic thinking is that the population in agriculture has to cut back drastically for any country to grow economically. Cash transfers will deliver to the bigger promise of igniting country’s economic growth. # 
Source: Governance Now, May 1-15, 2013. Vol 04 Issue 07

These were launched with a great fanfare. Successive Agriculture Ministers had appreciated the role of Krishi Vigyan Kendras (KVKs). In fact, there was so much of demand for setting up KVKs, that I remember political representatives making a beeline. These farm extension centres, set up in almost all the districts of the country, were expected to be the outreach arms of the State Agricultural Universities.

The first KVK was set up by the Indian Council for Agricultural Research at Pondicherry in 1974. The KVKs had the mandate for on-farm testing to identify the location specificity of agricultural technologies under various farming sustems; frontline demonstration to establish its production potentials on the farmer's field; training of farmers to update their knowledge and skills in modern agricultural technologies and training of extension personnel to orient them in the frontier areas of technology development.

A news report by intrepid journalist S P Singh in the Hindi daily Dainik Jagran (April 28, 2013) exposes the shocking plight and neglect of these important farm extension kendras. The 632 KVKs are not only gasping for breath but for all practical purposes have been left to die. Gung-ho on private agri-clinics, perhaps the government has no space left for the public sector extension outlets. These have been rendered irrelevant.

Consider this:

1) Over 100 KVKs do not have office buildings. Agricultural scientists sit and work from under a tree.
2) 175 KVKs do not have the basic soil testing facilities.
3) 1,500 jobs of KVK scientists are lying vacant.
4) Scientific equipment and machinery is lying unused and rusting at a number of places.
5) 234 KVKs do not have facilities of demonstrate improved technology, and that includes research farms.
6) No KVK has residential facilities for its staff.
7) The annual budget for agricultural extension has been drastically reduced from Rs 10,000-crore to Rs 4,000-crore. This is bare enough to meet the salary requirements.
8)  In the name of contingency, each KVK can get only Rs 5 lakh a year.

The modus operandi is the same. To promote privatisation, the first step is to starve public sector institutes/bodies of funds. Once the financial lifeline is disconnected, the end is nearer. It is happening across the board in India, and KVKs are no exception. The death-knell for KVKs is being sounded because the government is keen to pass on farm extension into private hands. Agri-clinics are now being promoted (of course with government subsidies).

This is the Queen's Sandringham Estate that received £7million in farming subsidies -- Picture in Daily Mail

Some years back I had detailed out the agricultural subsidies that go to the wealthy. It made a very interesting read, and provided an insight into how the rich and powerful in European Union and the United States quietly pocketed farm subsidies. One of the objectives of giving subsidies is to ensure a reasonable standard of living for farmers, and I wonder how the subsidy bonanza to the rich and wealthy in the name of farmers could be justified.

Here is that analysis -- Farm subsidies: The report card (http://www.stwr.org/imf-world-bank-trade/farm-subsidies-the-report-card.html).

At a time when the economy is faced with recession, and country after country is resorting to austerity cuts, I find no mention of restricting farm subsidies. Specially after the economic meltdown of 2008-09, I had expected the industrialised countries to cut farm support to the wealthy and divert the precious financial resources to creating employment opportunities. With this intention, I thought of doing a reality check.

No, nothing has changed.

Take the case of Britain. I was reading today that the British economy is growing at a snail pace of 0.3 per cent in the first quarter of this year. And yet the British Queen fails to set an example by walking the talk. According to a news report in Daily Mail (March 5, 2012), the Queen received a subsidy of 7 million British pounds in the past ten years (http://bit.ly/A8TSTw). Earlier, in my report card I had said: "Britain’s Queen Elizabeth II is not a farmer, but she is amongst the highest recipient of agricultural subsidies. In 2003-04, she received nearly US $ 1.31 million in farm payments. Her son and heir apparent to the British throne, Prince Charles, received more than US $ 480,000 as agricultural support for his personal estate, the Duchy of Cornwall, and the Duchy's Home Farm."

One of the richest person in Britain -- Duke of Westminster -- was quite close to the Queen when it comes to subsidies. He received 6 million pounds during the same period. Estimated to be worth 7 billion pounds, Duke of Westminster "owns about 55,000 hectares of farm estates, received a subsidy of US$ 480,000 as direct payments in 2003-04, and in addition gets US$ 550,000 a year for the 1,200 dairy cows he keeps." Among the others receiving the subsidy bonanza is Sir Richard Sutton who features in the Times Rich List, and still got 1.9 million pounds in farm subsidies. 

Well, the message is loud and clear. For the rich and powerful, life goes on as usual. Whether it is economic recession or depression, the rich remain untouched. It is only the average citizen who has to bear the brunt and be prepared to rough it out. 

Some years back, a top Indian negotiator for the Indo-Asean Free Trade Agreement (FTA) shared with me an interesting insight. As is the normal practice, the negotiating team went to meet Prime Minister Manmohan Singh, before leaving for the talks. The underlying idea being to get the final limit -- where to draw the Lakshman Rekha -- to which India can agree to on several tricky issues during the negotiations.

The Prime Minister listened to them, and finally said: "Just go and sign."

The negotiators were shocked. But I wasn't even surprised. The little that I know of Manmohan Singh, our ever obliging Prime Minister has been too ignorant (or is it deliberate?) about the dangers of acceding India's interests at international trade negotiations. At the time of the Uruguay Round discussions of the World Trade Organisation (WTO), I recall his statement in Parliament (as the country's Finance Minister) that those who are concerned about the negative fallout of WTO have actually not read the WTO documents. 

I bet if Manmohan Singh had ever read the WTO papers. I doubt if he even knows what is being negotiated at the FTAs. All he knows for sure is which Head of the State has been wanting what kind of concessions from India. And he has been more than willing to oblige.

We are now in 2013, and the Doha Development Round has failed. Even now, there is so much of mistrust in what is going on at the WTO talks, where the rich industrialized countries have still not given up on the grip, that many believe the talks have reached a dead end. In any case, the United States and European Union, the two prime pushers for an unjust and unequal trade regime, have meanwhile shifted gears to focus on bilateral and regional trade agreements. Free Trade Agreements therefore are part of the Plan B and are being pursued aggressively.

While India is in an undue haste in signing an FTA with European Union, reports have now started appearing that most of the signed FTAs have turned out to be a win-lose proposition -- win for the trading partner, and loss for India. The Economic Survey 2013 observes: "Trade deficit (on customs basis) reached a peak of US$ 184.6 billion in 2011-12 from US$ 118.6 billion in 2010-11 with the highest growth of 55.6 per cent since 1950-51." (Page 156 para 7.18). This itself should be a cause for greater worry. 

In a report entitled: Foreign trading partners getting more out of free trade agreements (Times of India, April 15, 2013. http://bit.ly/129rTqO): "Experience with half-a-dozen pacts that India has signed since 2004-05 shows that usually, it is the trading partner that ends up being the winner. Be it Thailand, Asean, South Korea, Japan, Singapore or Malaysia, in almost all cases, imports have grown at a faster pace than exports after the government agreed to slash tariffs. In case of Singapore, where the spurt did not take place in the first year, the growth in imports from the island nation in the second and third years more than made up for the absence of the trend at the start." 

The EU-India free trade agreement is no exception. The trade agreement is being signed to boost employment and prosperity in both the EU and in India. But the way the negotiations are going about, with the EU making it abundantly clear that the hiking of FDI in insurance from 26 to 49 per cent is an absolute must, and with the concerns being expressed by the domestic auto industry in India, the Gujarat Cooperative Milk Marketing Federation (GCMMF) and the Indian Pharma Alliance, it is quite clear as to whose interests the EU-India FTA will serve. 

In reply to a question (E-009465/12 and E-009466/12) in EU Parliament, the European Commission's response was: "A comprehensive coverage for the EU would imply a meaningful package on tariffs (industrial and agricultural goods), high level of ambition in services, public procurement, sustainable development etc. India has an average applied tariff rate of 14.1% (wines & spirits: 150% and cars: 60% to 75%) and a substantial reduction in these tariffs would be necessary. In services, India will need to take commitments in sectors of EU interest such as retail banking and insurance. Legal certainty for EU companies is invaluable as they contemplate investments in these sectors which are just opening in India. As regards public procurement and sustainable development, this is the first time India is including these issues in a Free Trade Agreement. Public procurement could be a significant opportunity as India has forecast an expenditure of 1 trillion USD in the next five years, a significant portion of which will be spent by public authorities."

The Indian Pharma industry is therefore rightly worried about the introduction of an IPR clause that leads to seizure of a generic manufacturer's bank accounts and immovable property on mere suspicion of a patent infringement. Such a step can imperil local industry. At the same time, imports of highly subsidised and cheaper dairy and poultry products from EU, the Indian dairy industry, employing 3.2 million farmers, will be hurt. India is the biggest producer and consumer of milk and dairy products. So far India has been protecting its dairy industry. But with pressure mounting from European Union, Australia and New Zealand for opening up the dairy sector, India is giving in. Similarly, the sharp cut in import duties for cars will impact job creation in the automobile sector. These are just broad three concerns that India cannot afford to overlook. 

A few months ago, Railway Minister Pawan Kumar Bansal was at pains to explain the desperate need to raise rail fares. The hike is expected to raise additional annual revenue of  Rs 6,600 crore and reduce fiscal deficit.Union Finance Minister P Chidambaram has been looking at every opportunity to reduce the burgeoning subsidy bill. The undue haste in launching direct cash transfer, the prolonged calibrations in containing the Food Security Bill, and the failed experiment in promoting balanced use of fertilisers were all aimed at clipping wasteful subsidy expenditure.The partial decontrol of sugar therefore comes as a surprise. That the mills will no longer be forced to sell 10 percent of their produce at low prices to meet the requirements of the public distribution system, is certainly a sweet decision for the Rs 80,000 crore industry. In addition, as per the recommendations of the Rangarajan Committee, the release order mechanism has been abolished. This means that the mills will no longer have to wait for a direction from the government as to when and how much sugar they will release in the market.What is baffling is the doubling of the subsidy bill from the existing Rs 2,600 crore to an estimated Rs 5,300 crore. While the sugar industry will stand to gain by approximately Rs 2,700 crore from the abolition of levy sugar quota, Chidambaram has already acknowledged that the annual subsidy bill will now grow by an additional Rs 2,600 crore for the next two years. All that the government has done is free the sugar mills of the financial burden, and take the liability on itself. This is “privatisation of profits, and socialisation of costs”.The annual increase in the subsidy bill will in turn increase the fiscal deficit. But no questions have been asked. Decibels are only raised when subsidies are doled out for the poor; for the rich it constitutes economic reforms.Moreover, a day after the decision was announced, sugar stocks of the same “cash-starved” companies jumped. Stocks of Shree Renuka Sugars, Balrampur Chini Mills, Dhampur Sugar Mills, Sakthi Sugars, Bajaj Hindustan and others continue to rally high.Providing a financial bounty to the sugar industry in an election year has its own rewards. The timing of the crucial decision has to be seen in light of the changing electoral configurations. It has killed two birds with one stone.First, the decision is certainly aimed at appeasing Sharad Pawar of the NCP and to some extent Mulayam Singh Yadav of the Samajwadi Party (SP). In the wake of the talk over the revival of the Third Front, keeping the sugar barons happy will impact the fortunes of the ruling party alliance. Like the 12,000 crore package expected for Bihar in the 12th Plan period ostensibly to appease Nitish Kumar, keeping the remaining flock together is the immediate priority.At the same time, the government has refrained from fiddling with the cane pricing formula as per the Rangarajan Committee recommendations. Doing away with the State Advised Price (SAP) for cane, which the industry has always been complaining against, has been kept in abeyance, and rightly so. Price decontrol may help big cane growers who can afford the market risk, but for the small farmers, only SAP provides an assured price. Also, for the time being, the government knows that the sugarcane growers lobby is strong in Uttar Pradesh and Maharashtra. Electoral tremors will also be felt across the country, from Punjab to Tamil Nadu. But this is only a temporary reprieve. Once the impending elections are over, the industry will push for completing the remaining decontrol process.And this is where a wider consultative process should happen rather than simply going by the recommendations of the Rangarajan Committee. In Punjab, Haryana and UP, for instance, sugarcane cultivation requires 1,60,00,000 litres of water per hectare. Sugarcane is a water guzzler and poses the biggest threat to food production. At the same time, world over, the emphasis is on reducing sugar consumption in wake of the growing awareness about its negative health impacts. It is time India moves away from what is good for the sugar industry to what is good for its people. It is time to make a historic correction. Source: Bitter Politics of Sugar, Tehelka, New Delhi, April 20, 2013http://tehelka.com/bitter-politics-of-sugar/

The erstwhile Plant Breeding Institute at Cambridge (UK) 
Margaret Thatcher, 87, died yesterday. She is being hailed as the Iron Lady who transformed Britain. Every newspaper across the globe has paid rich tributes to her. Some have even carried her obituary on the front page, which is quite a rare honour. 

I only know that she had a steely resolve. Whatever she thought of doing, she did it. That's what I have read over the years. And knowing the determination with which she destroyed public sector science, I can understand why and how she earned the title Iron Lady. Nevertheless, let me share this story of how Britain's only woman Prime Minister, the unyielding Margaret Thatcher, eclipsed one of the world's best known research centre in plant sciences, which was emerging as a global leader in plant molecular biology and genomics. 

I am talking of the famed Plant Breeding Institute (PBI) at Cambridge. 

For any plant scientist, Plant Breeding Institute at Cambridge was a Mecca. As a student of plant breeding I too nourished the desire to make it one day to PBI. But by the time I reached the age to visit PBI as a researcher it had already been sold-off to Unilever. Later, in 1998, Unilever sold it to Monsanto. I remember the controversy over the priceless plant germplasm collections that PBI had at the time it was sold to Unilever. After a lot of public pressure, the plant collections were shifted to another public sector research institute, John Innes Research Centre in Norwich.  

The sale of PBI to Unilever was a great loss to independent science, and of course a loss to humanity. 

It was in 1996 that I went to Cambridge as a Press Fellow. One fine day I called up Sir Ralph Riley, a very distinguished plant geneticist, who also happened to be the founder director of PBI. He came to see me at the Wolfson College, and very politely offered to give me a detour of Cambridge to show me around some of the better known places for plant genetic research. This was indeed a treat. 

After showing me the pub where Watson and Crick had dashed to after discovering the DNA structure, he drove me around to what used to be the PBI. Parked his car somewhere, got out and pointing to the research farm, he said: "This is where plant breeding died." 

I can never forget those words. 

I asked him whether PBI was incurring losses because that's the only economic reason why a research institute would be sold-off. "On the contrary, he said, when PBI was sold by Margaret Thatcher to MNC Unilever, it was bringing in a revenue of (British) Pound 10 million a year against an expenditure of Pound 4 million/year." I don't know how you would take it, but how can any sane person justify selling-off a profit earning research centre? But then, that was Iron Lady. She earned the title because of her dictatorial role in pushing privatisation. 

Not being able to recall certain other notable things that he had shared, I did a quick search today. In one of the Royal Society publications, I find this paragraph: "When Riley became Secretary of the Agricultural and Food Research Council (ARC) in 1978, Shirley Williams, as Secretary of State for Education and Science, had increased the science vote spending and this no doubt encouraged Riley to take the position. However, after the election of the Conservative government led by Margaret (later Baroness) Thatcher (FRS 1983) in 1979, cuts were imposed immediately and further reductions occurred in the years that followed. Throughout his six and a half years in office there were continual major reductions of budget in real terms. This made the job of Secretary difficult, stressful and not a particularly happy one. Whole institutions had to be closed (the Letcome Laboratory and the Weed Research Organisation) and reductions in others led to fewer research sites being sustained. 

So the first step before you privatise is to cut the life line. In this case, budget cuts and staff reduction programmes was actually aimed at stifling public sector research and thereby justify the need to bring inn private funding. This is exactly what happens in other parts of the world, including India. 

"Reductions in staff numbers were necessary across the service, some by compulsory redundancy and closure of programmes. All this made the planned expansion in molecular and cell biology, the new science, more difficult and controversial." 

Subsequently, Sir Ralph Riley wrote: "Unfortunately after I had ceased to have any involvement with the AFRC the government privatised that part of the PBI activity concerned with variety production even though it was generating a return to the Government of about £10 million per year from a total cost in the Institute of about 4 million pounds per year. Thus the work that we had done to bring fundamental and closely applied work together, to permit easy crossfeeding was destroyed. Nevertheless, it may be that it (the former PBI) provides a model that will subsequently be followed by others." (See page 395-396 of this Royal Society publication: http://rsbm.royalsocietypublishing.org/content/49/385.full.pdf).

From communalism to economic polarisation, the trend is worrying. While every sensible person decries communalism, I am equally worried at the growing fanaticism not only over political ideologies, but more and more over market fundamentalism. For most economists, academicians, market analysts and business journalists, economic reforms (an euphemism for privatisation) has become a religion. The moment you point to a flaw in the system, you meet an angry uproar that can go to any length to defend the system howsoever flawed it may be.

This is a worrying trend. And it is no less destructive than communalism. 
The same happens on the twitter. You say something that is not palatable to the two warring camps -- lead by Rahul Gandhi and Narender Modi -- and be ready to face a volley of well-orchestrated pot shots. Similarly, if you question for instance the motive behind postponing implementation of General Anti-Avoidance Rules (GAAR), which effectively allows tainted money to flow into the country, you are sure to meet an angry (and often illogical) outburst from noted economists and some of the TV analysts you see very often (Read my earlier blog post: GARR deferred. Investors, stock markets, industry and media celebrate induction of black money http://devinder-sharma.blogspot.in/2013/01/gaar-deferred-investors-stock-markets.html). 
They rise in defence as if their religious feelings have been hurt. 
Yesterday, newspapers all over the world carried an exposure on where the world's richest people hide their wealth. In a report, a study by McKinsey was quoted saying an estimated $32 trillion is stacked in offshore havens. The International Consortium of Investigative Journalists (ICIJ), which includes Washington Post, The Guardian, BBC, have unearthed a treasure trove which runs into hundreds of billions. This is obviously the tip of the iceberg. The ICIJ will soon be publishing the details. (This is where the richest people hide their money, The Daily Beast, April 4, 2013. http://thebea.st/10fhEzt). 
Reading this news report, I am reminded of a recent lecture delivered by Dr Raghuram Rajan, Chief Economic Advisor to Prime Minister. Speaking at the 38th Convocation of the Indian Institute of Management, Bangalore, he said: "To the extent that the rich are self-made, and have come out winners in a competitive, fair and transparent market, society may be better off allowing them to own and manage their wealth while taking a reasonable share as taxes." The Indian Express had this report on its front page under the headline: Lack of chances can hit free enterprise: Rajan http://www.indianexpress.com/news/lack-of-chances-can-hit-free-enterprise-rajan/1096450/).
I thought Rajan should have known that the rich are not the product of a competitive, fair and transparent market. First of all, there is no such thing as transparent markets. Market is not a season that nature has created. It is the outcome of a manipulative system. In all fairness, let us accept that markets are designed. Secondly, and more worrisome is his argument that the society may be better off allowing them to own and manage their wealth while taking a reasonable share as taxes. I wonder what his suggestion will be after reading the latest exposure about the massive wealth stacked in the offshore havens. These super-rich are not even willing to pay the reasonable taxes that he espouses. I don't think the taxes that the super-rich have to pay in India for instance are punitive, and yet we know tens of billions have been stacked abroad.
I had expected mainline economists all over the world to rise in unison demanding the end to tax havens, and asking for retrieving this ill-gotten wealth for the welfare of the society. But did you notice the complete silence, and the calm that prevails across the oceans? Isn't this a conspiracy of silence? Aren't the economists and analysts part of this conspiracy? Shouldn't they be asking for an urgent and massive correction in the way wealth is being generated and then hoarded? 
It is therefore quite obvious that mainline economists go to any length to defend the clearly visible wrongs. Well, isn't this what the religious fanatics also do? Why then we only blame them? When will we start questioning market fanaticism? 
Another report that I would like to draw your attention is based on a study by the Harvard School of Public Health, and presented by the American Heart Association. Published on March 24, 2013, the report says "soft drinks, sodas, 'sports' drinks and 'fruit juice' are associated with 180,000 deaths every year (Soft Drinks Cause Around 180,000 Deaths Every Year, Research Find. http://bit.ly/YnUGq0). Just because these drinks are the products of business enterprises, some of them too big to be pushed out, no economist or a media house internationally raised concern. Nor did any of the G-20 heads who spare no opportunity to swear in the name of market reforms dared to even mention this report. 
A building collapse in Mumbai, burying 52, has evoked anger from all, and rightly so. How come the death of 180,000 people does not even merit a TV discussion or an article by the same breed of economists and analysts who otherwise try to shout down every sensible voice? 

The entire trade of the enchanting Kashmiri apples is in the hands of commission agents. They decide how much the growers need to be paid and how much you need to shell out. 
For several years now, food inflation continues to pose a serious headache for the government. Nine year after assuming power, Prime Minister Manmohan Singh appears clueless. He told the Confederation of Indian Industry (CII) a few days back that inflation (along with corruption) remains a big challenge. While it is not that he doesn't know what to do, the fact remains he doesn't want to take steps that can bring down inflation simply because these steps would go against the basic tenants of market economy.

For several years now, in almost all the panel discussions that you get to see on the TV channels and also the articles/analysis appearing in major newspapers, the blame has been on supply-demand constraints. Because that is what the text books say. I have always maintained that there is no constraint at the supply side, and the entire fault is with the wholesale-retail trade. If you were to visit a wholesale market (mandi) in the morning hours when the auctions take place, you will find the prices going up by 300-400 per cent just within an hour. And by the time, the produce reaches your home, you end up paying anything between 500 to 600 per cent more than what the farmers have been paid.

Take the case of apples from Jammu & Kashmir. In an eye-opening report Marketing System and Price Spread of Apple in Kashmir submitted by the National Bank for Agriculture and Rural Development (NABARD) the exploitation of apple growers as well as the consumers by a well-knit network of commission agents has been laid bare. While you end up shelling out anything between Rs 105 to Rs 120/kg for the Kashmir apples, the grower get on an average Rs 26 per kg. The production cost is around Rs 35 per kg.

The exploitative system has been perfected over the years. According to a news report in DNA newspaper entitled Agents decide how much you will pay for Kashmiri apples (DNA April 1, 2013 http://bit.ly/17eeRdD) "Supply is manipulated in artificial manner generally at agents level through hoarding of apple in cold stores for short duration and controlled atmosphere stores (CAS) for long duration up to 6-9 months.” Incidentally, traders gets subsidy and also subsidised loans for setting up cold stores and the controlled atmosphere stores (CAS) which is being used by commission agents to their advantage. 

The newspaper further says: "This trend started with Delhi and has spread to all other parts of the country. Though the agents adopted this CAS system in the late 2000s, the scam became big after 2010 when big agents expanded their CAS capacity in Delhi and Kundli (Industrial Growth Center, Sonepat). “Now CAS units are becoming a craze among CAs,” said an area marketing manager of the J&K horticulture marketing and planning department.
It quotes the NABARD study: “The existence of seven cold storages within Azadpur market yard of Delhi and about 100 CAS at Kundli in Haryana (25 km from Azadpur market) is leading to a sort of hoarding’ of Kashmiri apple before it enters Delhi market for auction.” It also blames the banks for extending commercial loans to commission agents instead of growers, who then exploit growers by extending loans at high rates of interest. In 2011-12, apple growers received Rs 1,200-crores of advances of which only Rs 200-crore came from banks. The rest came from the commission agents and others (Agent's apple growers don't get fruit of labour, DNA, Mar 31, 2013, http://bit.ly/16qmEls). 
Reading the reports it becomes quite apparent how the scam has been operating. If we take apple as an example, it become obvious that the price rise being witnessed is not because of supply constraints. Neither can apple growers be blamed for the price increase in the markets. It also negates the view that farmers benefit when inflation goes up. What is at fault, and which unfortunately is brazenly defended by analysts, economists and policy makers, is the exploitative trade. It is the trade that is solely responsible. But why is that no regulation as well as deterring action has been initiated against the nexus that operates between the wholesale and retail traders? 
I agree that it is primarily the poor implementation of APMC Act (1997). Over the years, traders have formed strong cartels which are very powerful and difficult to break simply because the successive governments have preferred to turn a blind eye. These traders also operate as big money bags for political parties and so no one wants to cut the hands that feeds. But to say that the best way forward is to debunk the APMC Act and allow private markets to be set up which will provide a higher price to growers and a better price to consumers is another flawed hypothesis. The prevailing rotten system needs to be set right, but throwing it away is not the right answer.
It is being suggested that foreign direct investment in retail will set the house in order. It will end the exploitation of the farmers by the middlemen. Many fall for this argument. But in the most recent cases of exploitation of dairy farmers by super markets in UK it has been shown that supermarket giants like Tesco and Sainsbury have pushed prices down to unsustainable levels thereby pushing dairy farmers out of business (Retailer aligned milk contracts -- good or bad. http://fairdealfooduk.com/?p=4494). 
Striking at the wholesale-retail trade in India will send a wrong signal for the market economy. The propaganda machinery has so far been telling us that markets correct itself. This is not true. Showing a stick to the trade therefore will go against the fundamental premise of market reforms. Prime Minister is therefore reluctant to discipline the erring trade. He is trying to protect the reforms he unleashed. His commitment is therefore to the market reforms. The nation can continue to suffer and be exploited in the process. #  

A typical wheat mandi in India. While arrivals are heavy, no place to keep these stocks. 
Nothing can explain this strange and criminal paradox of plenty. More than 45 years after Green Revolution began; India provides a unique spectre of overflowing godowns and rotting grains on the one hand while millions go to bed hungry. Having the largest population of hungry in the world, India ranks 66 among 105 countries in the 2012 Global Hunger Index. That too at a time when there is no shortage of food within the country.
To get rid of the huge stocks, India has aggressively resorted to food exports. While rice exports have touched 10 million tonnes, making India the world’s biggest rice exporter, close to 9.5 million tonnes of wheat has also been exported this fiscal. And yet, grain stocks remain unmanageable.
With over 44 million tonnes of wheat expected to be procured once the procurement season begins officially from April, India will be saddled with a massive and unprecedented food grain (rice and wheat) stock of over 100 million tonnes. Already, as on March 1, Food Corporation of India was holding 62.8 million tonnes of grains – 27.1 million tonnes of wheat and 35.7 million tonnes of rice – good enough to meet the country’s food requirement for another year. Storing an additional 44 million tonnes is simply going to be a nightmare. While the all-time high production and procurement is a historic milestone, it provides an equally daunting task for the government agencies to store it, and store it safely.
“We are looking for space in sugar mills, yards and even in rice mills. It’s going to be very tough,” a visibly worried D S Grewal, principal secretary in Punjab’s food and civil supplies department, told a newspaper. Against an expectation of 14 million tonnes of wheat to be purchased, Punjab has space to keep only 6 million tonnes. Although Punjab has a total food storage space for 23 million tonnes, including 12 million tonnes on open plinths, the grain silos are bursting at the seams with food stocks from the purchases made in the previous year’s lying in the open. 
In Madhya Pradesh, fast emerging as the next wheat bowl of the country, there is space only for about 50 per cent of the expected 13 million tonnes that is likely to be procured by official agencies. “We are looking at even school premises and some government buildings for stocking wheat. We have no other option,” said a senior state official. Since wheat harvests begin early in central India, procurement is already in full swing in over 2,770 purchase centres that have been set up in the state. Not only Punjab and Madhya Pradesh, heavy arrivals are expected from Haryana, Uttar Pradesh, Rajasthan and Bihar.
Nothing can explain this gross food mismanagement. For almost 30 years now, successive governments have failed to accord any priority to food storage and distribution. As early as in 1979, under a ‘grow more food’ campaign launched by the Ministry of Food and Civil Supplies, the need for setting up 50 grain silos across the country was envisaged. The underlying objective was to reduce the burden for stock holding of wheat by the producing states by building a network of grain storage capacity across the country, which would also be used for effective distribution among the poor.
It’s all a question of priority. Food has never been on the top of the national agenda. In the past few years, the UPA has made massive investment in building 250,000 panchayat ghars. These panchayat structures have been provided with a computer link-up and are also being dotted with solar power. Isn’t it strange that while the government has the resources to build panchayat ghars, it has no money to construct warehouses across the country? Still worse, since 2004-05, UPA has doled out Rs 32 lakh-crore by way of tax exemptions to the Corporate, trade and business. These exemptions are clubbed under the category ‘revenue foregone’ in the budget documents. For 2013-14, the ‘revenue foregone’ is Rs 5.73 lakh crore.
The entire food production and distribution system therefore needs an urgent overhaul. If only the government was to focus on agricultural production, procurement and distribution in a decentralized manner, much of the agrarian crisis would disappear. Also, no country can claim to be a super power with millions living in hunger. Therefor the need is to follow a three-pronged approach:
1) Set up a wide network of mandis and temporary purchase centers across Bihar, eastern Uttar Pradesh, West Bengal, Odisha, Assam and the other northeastern states. Extending the Green Revolution to northeast has already increases rice production, but farmers are resorting to distress sale getting about 20 to 30 per cent less because of the absence of procurement centers. 
2) Madhya Pradesh has shown that providing a bonus of Rs 150 per quintal over the procurement price of Rs 1350 a quintal has provided an incentive to farmers to produce more. A higher minimum support price for wheat and rice, and also extending it to pulses, millets and fodder would shift focus to other crops essential for maintaining nutritional security.
3) At least Rs 1 lakh crore be taken out of the ‘revenue foregone’ category, and invested in setting up a network of grain silos, warehouses and godowns across 50 places spread throughout the country. All this is doable provided food is accorded utmost priority in national thinking and planning.    

Global financial systems follow very mysterious way of operations. I know there is something terribly wrong but have never been able to nail their lies. Not being an economist perhaps make it still difficult to comprehend what goes wrong and how. Nevertheless, whatever little I can understand I have been sharing with my readers. 
Last week I received a letter from one of my readers. Being a banker himself, S/he has a better inside grip over  how the financial systems work. S/he explained to me how the system thrives on government subsidies, and receives a 'backup' support from the policy makers to make it look for competitive and economical. To illustrate, s/he has used the example of rural cottage industries which have been systematically killed for reasons we think are linked to pure economics. 
Over the next few weeks, I would be seeking more details with examples and analysis. To begin with, certain issues that many of us have been pondering over, have been thrown up. I am pasting the letter below (and of course keeping the writer's identity anonymous) for you to think over. Perhaps it will give you some food for thought. If you have any questions, please do write and we can then deliberate.   
Here it is:      
I am following your writings for some time. I share and appreciate your concerns about the matters related to impending food crisis, the danger of GM foods, the wicked designs and propaganda of MNCs above all the state and plight of rural economics.
So I presume you must be having some interest in the matters of finance and economics particularly the economics of rural India. Sir, I have done some deep research work in the field of “Banking, Finance & Economics” and I think that it may be of interest to you and some like-minded people. The finding of my work is quite revealing and shocking in the sense as to how the so-called “Modern Financial Economic System” actually functions.  Sir, if one sensible person is to actually know as to how in reality the Modern Financial Economic System works he will get a shock of his life. In fact the modern financial-economic system is a parasite that survives by sucking the rural sector. The so-called Modern Financial Economic system sucks and destroys the rural India.
Sir, you would agree that the India (or as a matter of fact every country in the world) can emerge as a self-reliant and stronger nation only after our RURAL COTTAGE INDUSTRIES are invigorated. Once this happens we don’t have to do much to strengthen our populace. In fact looking at the impending environmental disasters like Global Warming and Ecological destruction all around the world, we need to go back to the era of rural-cottage industries. As against the modern industries that are inimical to our ecology and environment, the rural-cottage industries are in fact quite eco-friendly. So one wonders why our rural economic system got extinct. There is an argument in favour of Modern Industries is that they are cost-effective and the Modern Industries defeated the rural-cottage industries in open market competition!!! Sir this is perhaps one of the biggest propaganda in entire human history!! I will come to that a little later. 
Sir, the Modern Banking & Financial system is nothing but a pure fraudulent design. To understand the fraudulent nature of this system one needs to understand the Banking system. Without understanding the banking-financial system we cannot understand the modern economic system.  Even the Professors and other educationists too have read the fabricated propaganda in their own student life therefore they don’t have the vision the see the truth; they have been “programmed” to disseminate the propaganda that they have received as student. What they have been taught by their teachers, they simply pass-on the same to their students. It is the standard mechanism of disseminating any false propaganda.
In following paragraphs I would give you some examples of the lies/deception about the Modern financial economic system. From this you can well understand as to how vicious the propaganda is. Here I am giving only some facts without getting into any analysis (due to space constraint). For the start I would give you only three cases:-  
1.  The conventional wisdom, as per books of economics, is that the factory system (i.e. the industrial economic system) triumphed over the traditional cottage industries (particularly the textile industry) due to so-called economy of scales. In simpler words it is touted in the books of economics that factory system of producing (i.e. Mass Production System or MPS from now onwards) the textiles was/is cheaper than traditional cottage industry of textiles therefore in an open market competition MPS triumphed over traditional cottage textile industries. In reality it is one of the biggest lies disseminated in entire human history. Sir, the MPS was and it still is at least 4 to 5 times costlier that traditional cottage industries of textile making. It is a part of well documented historical facts (I can give you unquestionable references regarding this) and even at present it can be proved mathematically. How the industrialisation (MPS) succeeded is quite a saga in itself. I am not giving much details about that due to space constraint; but it is sufficient to say that industrialisation basically succeeded due to unfair and brutal suppression of the cottage industries (particularly of India) by British colonial powers. Had this unfair and brutal suppression not been given to Indian cottage industries by British colonial regime the British factories would have not even came into existence. For the present scenario it is sufficient to say that on an average per meter of cloth manufactured in MPS industries gets an approximate (but hidden) subsidy of, hold your breath, Rs.1000 per meter!!! In fact almost entire “MPS Economy”—other industries too—run on massive subsidies. In other words the so-called Modern Industries are white elephantsthat survive on subsidies. If this subsidy is not given to MPS industries; our rural cottage industries will wipe out the factories of mass production within no time. In other words the rural economy will surge.
2.  Even bigger “game” is the way in which the so-called modern economy (i.e. the Modern Industries) is “artificially sustained”!! You will shocked to know that despite getting huge subsidies the modern industries cannot sustain even for a moment if a “rear guard” action is not taken by Governments to “artificially boost” their sales. In other words the sales of the so-called modern industries are “artificially sustained” through a combination of government actions and banking system. Remember, that this is IN ADDITION to the hidden-subsidies provided to modern industries. For rural cottage industrial system there is NO NEED for artificially boosting the sales!! But our text books of economics don’t even mention this fact!! In fact the authors of those text books themselves are ignorant of this fact!! Now we should also know something about the pivot of modern industrial system—the Banking system.
3.   The banking system is yet another example of outright lying and heavy distortion of the facts. In fact to understand the Modern economics you ought to understand the Banking system without knowing the banking you cannot understand even an iota of Modern economics. Banking is the AXIS of evil in the context of Modern economic system. Banking, as we are told in the text books, is the CHANNEL between the savers and investors or lender and debtors. In other word it is touted that first money is “deposited” in the bank by the “depositors” and then it is given as “loans to debtors”. It can safely be said that this lie too is one of greatest “successful” bluffs of human history. Nothing can be farther from the truth. If the banking were to be really a CHANNEL there would have been nothing fraudulent about this!! But banking in its essence is a purely fraudulent exercise. If you are interested I will explain you later. But for the present I would explain only briefly. In reality banks are just “money creation machines”. In other words the loan that Banks give to the debtors is NOT the money that has been deposited in the bank by the depositors; rather the loan are made “out of thin air” i.e. by “creating money out of nothing” and once the money is brought into the existence by way of making the loan it is only then that it ends up as deposit in the banking system!! There is one more buffoonery also taught in text books of banking system:-The so-called “credit multiplier”. This too is a big propaganda that needs to be busted. Following comment on the banking system can be considered as final verdict on the Banking system.
Contrary to general belief—that it the depositors’ money that is given as loans to debtors—it is the money that is loaned into existence by BANKS ends up as deposit in the banks! First, the money is “created by making loans” and later this money ends up as deposit in the banks!!
Now just think as to what is the need (or rational) for offering interest for attracting the deposits by the commercial banks!! Sir, I have just stated some of the facts about modern financial-economic system but WITHOUT offering any analytical justification for the same. The reason is that these analyses cannot be covered in a short letter. 
Sir, I am writing these matters to you (1) to show as to how big a propaganda is taught in the name of economics where the teachers/professors themselves are utterly ignorant of the reality and (2) to indicate that Modern Industrial economic system is a fraudulent one and once this fraudulent support is withdrawn the so-called modern industrial economic system will collapse and rural cottage economic system will automatically emerge. The general public is fooled about the cost-competitiveness of modern industries. # 

Big and attractive tractors are increasingly in demand in Punjab. In this picture a farmer is looking at tractors lined up for sale. (Pic courtesy: www.frontlineonnet.com)
Every Monday, second hand tractors start arriving early in Kotkapura grain market in Punjab. By around noon, the grain market turns into a tractor mart. A large number of tractors, of different make and size, are available for a bargain. Many of these are procured by middlemen who market these second-hand tractors in Uttar Pradesh, Rajasthan and Bihar.  You may be thinking that most Punjab farmers are now fed up of tractors and that is why they are keen to dispose these four-wheelers.  No, the reality is that most of those who come to sell have actually acquired a new tractor, much bigger in size, and of course flashier. 
For several decades now, tractor has been a status symbol for Punjab farmers. Unless they own a tractor, irrespective of the fact whether they need it or not, they don’t feel they too have arrived. With over 5 lakh tractors existing in Punjab, once the status symbol has now turned into a symbol of suicide. But still farmers have not given up of tractors. Like the neo-rich in the cities, farmers too have developed a fetish for latest brands. Not many regret the big wheels. The craze for big machines has in fact grown.  
Not everyone of course does it as a style statement. While a large number buy tractors as a necessity, there are some small farmers who often purchase tractors out of social compulsions as it comes in easy instalments and at affordable low interest rates. They buy tractors, even if costs Rs 5 lakh and more, and sell it in a few weeks and from the money they get they buy a small car to be given as dowry for their daughter’s marriage. Many others of course are lured by the marketing blitz and want to join the ranks of progressive farmers since tractor has been promoted as a symbol of pride.   
A tractor alone is not of much use to a farmer. It is the heavy implements, which comes as attachments that are important. So it is the total package -- implements, along with the tractor – that adds on to the growing indebtedness on the farm. In neighbouring Haryana, the subsidy for land leveller has been increased from Rs 50,000 to Rs 75,000; on multiple crop planter from Rs 10,000 to Rs 20,000; on happy seeder from Rs 25,000 to Rs 50,000; on straw reaper from Rs 40,000 to Rs 60,000 and on zero till machine from Rs 15,000 to Rs 20,000. More the expensive implements, means more indebtedness. But this does not mean I am against mechanisation on the farm. What I am asking is the justification in selling the expensive and sophisticated implements and machines to farmers who are already in economic crisis. 
With every second farm household in Punjab owning a tractor, and considering the average farm size is less than 4 acres, tractors have become uneconomical. But still worse, more than 20,000 tractors are being purchased every year. These new tractors are really big machines, ranging from 60-90 horse power, the kind of huge tractors that were available in erstwhile Soviet Union. Generally, the minimum land area required to ensure a tractor remains economically viable is 10 acres. But over the years, under pressure from the industry, governments have reduced the requirement to just 2 acres. Also, a few years back, P Chidambaram, in his earlier avatar as Finance Minister, had reduced sales and excise duty on tractors by 18 per cent making it more attractive for buyers.
It was sometimes in late 1980s that I had visited Cambodia (it was then called Kampuchea). I was appalled to find huge tractors from Soviet Union being used in the country which was devastated under the Pol Pot regime. Since Kampuchea was only recognised by the Soviet block then, the use of massive tractors in the otherwise small farms was therefore quite understandable. I remember having told the Indian Ambassador that it will be good if India could supply small tractors – in the range of 25 to 35 horse power – to Kampuchea as part of the diplomatic initiative to build goodwill among the Kampuchean farmers.
While Cambodia has meanwhile gone for small tractor, Punjab is going for big wheels on small farms. The arrival of huge tractors in Punjab therefore defies any economic logic. I am told some tractor manufacturers are now planning to bring in tractors with 105 horse power.  And so when you hear the next time a story of growing indebtedness on the farm in the frontline state of Punjab, just be sure a tractor is more often than not, the primary reason. 
The tragedy is that the continuing agrarian crisis in the country, which has taken a heavy human toll with 290,470 deaths reported from suicides in past 15 years, provides a huge market for selling machines. In Punjab, despite heavy mechanisation, two farmers are killing themselves every day. Somehow the feeling is that more machines you sell, more sanity would prevail on the farm. Agriculture is being viewed as a machine-deficit sector, and more the machines sell more will be the reduction in farmer suicides. At least, this is what is visible from the way State Governments are aggressively promoting machines for the trouble-torn farming sector employing 57 per cent of the country's workforce.

Interestingly, the price of tractors has gone up by more than 100 per cent in the past five years. Isn’t it strange that while the market price of cars and two-wheelers has not risen by more than 20 per cent (and that too despite the annual inflation), the price of tractors has been on an unprecedented upswing. In other words, who will ensure that the tractor manufacturers do not end up fleecing the gullible farmers? Moreover, I am surprised that the tractor manufacturers have now roped in the agriculture universities in southern parts of India to market tractors. Some universities have reportedly signed MoUs with tractor manufacturers.
I agree that the farm sector faces a terrible paucity of farm workers. But will aggressive sale of all kinds of implements and huge tractors take out farmers from the crisis? Has it helped Punjab farmers tide over agrarian distress? It hasn’t. So why is it that the State governments are blindly promoting tractors? Why can’t the Punjab and Haryana governments and for that matter other state governments instead urge the formation of cooperative societies which help in leasing farm implements to farmers? Why can’t the governments encourage formation of private companies for custom hiring tractors and farm machinery?
I am not suggesting setting up another State cooperative agency, but am seeking encouragement for social entrepreneurship. It is here that I would like to provide the example of Zamindra Farm Solutions in Fazilka in Punjab. It provides big machines as well as farm implements on lease. Over the years, its membership has grown to over 4,000 farmers. Similarly, I know of several small village cooperatives in Punjab which provide implements for a rent. It is time such initiatives are aggressively promoted and encouraged. It is time to save farmers from getting deeper and deeper into a debt trap. #  

Finally, the Comptroller & Auditor General (CAG) report on Rs 60,000-crore farm loan waiver (which was subsequently raised to Rs 74,000 crore) has been tabled before Parliament. The farm loan waiver, announced in the 2009 budget with a lot of fanfare, have come under a cloud. Roughly 8-10 per cent of the beneficiary farmers, which means no less than 35.5 lakh farmers’ did not get any advantage of the loan waiver, and similarly a large number of undeserving farmers walked away with the exemption to repay.

But there is a much bigger farm credit scam which still remains to be exposed. 
The loan waiver exposure comes at a time when questions are being asked about who benefits from the significant increases in farm credit being provided for in every budget. In 2012-13, a budgetary provision of Rs 5,75,000-crore for farm credit was made. A year earlier, in 2011-12, Rs 4,75,000-crore was provided. According to Reserve Bank of India, between 2000 and 2010, farm loans increased by 755 per cent. Certainly this is a mammoth growth, and it provides all the reasons to cheer.
This year, Finance Minister P Chidambaram further enhanced the budgetary allocation for farm credit to Rs 700,000-crores. This is certainly a quantum jump. It gives an impression as if such large availability of farm credit is serving the small and marginal farmers very well, and that all is well on the farm front. But somehow the growth in the disbursement of farm loans does not match with the real performance on the ground. With over 2.90 lakh farmers committing suicide in the past 15 years, and with another 42 per cent farmers wanting to quit agriculture if given a choice, the continuing agrarian crisis on the farm front does not justify the intake of massive farm credit year after year. 
The outlay is not matching the outcome. If institutional credit is not reaching farmers, where is it going?
Time and again we have heard that agricultural credit plays an important role in improving farm production, productivity and mitigating farmer’s distress. Such exuberance in loan disbursal comes at a time when in a recent study on "Farm Credit" , the industry association ASSOCHAM analysing the disbursement of credit over the last decade, has listed misdirection in farm loans, increase in proportion of indirect credit by banks, misuse of interest rate subvention for diverting credit to other sectors, imbalances in quantity of credit in relation to size of the farm and crops they raise, and virtual exclusion of small and marginal farmers from institutional credit as some of the major problems besetting this sector.
As I mentioned in an earlier blog post, a damming news report in a Hindi daily brought out the startling reality. According to the report, a confidential document available with the Ministry of Finance categorically states that despite the increase in farm credit by over 2.5 times in past five years, less than 6 per cent of the total institutional credit is made available to small and marginal farmers. Ironically, the Prime Minister, Finance Minister, Agriculture Minister and the ruling party along with its army of economists and planners never get tired of telling the nation of the remarkable strides taken in reaching credit to small and marginal farmers.
In other words, less than Rs 50,000-cr of the Rs 7 lakh crore provided for farm credit will actually benefit small farmers. Remaining amount of Rs 6.5 lakh crore at 4 per cent interest will be misappropriated by agribusiness companies, warehousing corporations and state electricity boards. Why can’t Finance Minister therefore segregate the farm credit to tell us how much of it actually goes to farmers, and how much in the name of farmers to other allied activities?
In 2007, of the total credit of Rs 2,29,400-crores advanced by banks, small farmers share was a mere 3.77 per cent. In other words, 96.23 per cent of the farm credit disbursed in 2007 was actually cornered by big farmers or agribusiness companies. In 2011-12, while total farm credit had swelled to Rs 5,09,000-crore (against a target of 4,75,000-crore) small and marginal farmers got only 5.71 per cent. It is therefore obvious that despite knowing where the fault is the government had deliberately supported agribusiness companies (an increase in indirect credit by banks by enlarging the definition of agriculture) in the name of small and marginal farmers.
It is primarily for this reason that small farmers have been left high and dry. They are left with no choice but to depend on the money lenders who charge exorbitant interests. No wonder, the serial death dance on the farms in the form of suicides show no signs of ending. It has a lot to do with the non-availability of institutional credit.

IN A free wheeling talk with GOI Monitor, food and trade policy expert Devinder Sharma favours income support for farmers, attacks FDI and indicates that there is a smear campaign going on against the civil societyTell us about the farmers' commission which the Karnataka government has decided to set up based on your recommendations.
Average monthly income of a farmer is just Rs 2,400 Pic:Sahaja SamrudhaTo understand that, let's first talk about all the efforts that have gone into pulling farmers out of poverty. During green revolution, a common parlance gained ground that more you sow, more you produce and hence more your earn. The message found acceptance among farmers who invested a lot of money buying pesticides, fetilizers, seeds and the machinery. However, even after over 40 years of green revolution, the farmers are practically on the poverty line. The NSSO survey of 2003-04 tells us that the average income of a farming family of five members is Rs 2,115. There were only three states above this limit: Jammu and Kashmir, Punjab and Tamil Nadu. That was the first and last time the farm income was measured. I guess the government was too embarrassed with the results to repeat the exercise.At today's price, the income calculated must be around Rs 2,400. But look at the contrast. The lady who comes to my house for cleaning gets a monthly payment of Rs 2,000 for two hours of daily work. Under the 6th Pay Commission, a peon in government service gets a minimum monthly salary of Rs 15,000. But a farmer plus his family who work much longer hours in their fields get just Rs 2,400 a month. The minimum support price (MSP), which was termed a classic way out, is only helping 30 per cent of the farming community because 70 per cent farmers don't have surplus to take to the mandis.  But even if they hardly have anything to sell, they at least produce food. Let's say tomorrow they stop producing, the country would be forced to import that much quantity of food. In other words, they are producing economic wealth for which they should be adequately compensated.If you look at agriculture globally, on one hand there are highly subsistence farming in developing countries like India and on the other there is highly subsidised farming in rich countries like US, Japan etc. The only way to bail out subsistence farmers is to provide them with direct income support as is being done in the rich and industrialised countries. Former Karnataka Chief Minister B S Yeddyurappa took notice of these suggestions of mine and discussed the issue in detail. Now present Chief Minister Jagdish Shetter has announced the policy. The good thing is somebody has taken this initiative and now I am sure there will be a dynamo effect with farmers' unions mounting political pressure in other states too. In my understanding it will be a game changer which will be highly beneficial for the farmers. Also, this will lead to reverse migration thus reducing pressure on our cities.What are the things the proposed commission needs to look into?The farmers' commission has to sort out several things. The direct income defined should be location specific as agriculture cost varies according to areas and factors like size of land, soil quality, productivity et al. Also, the money should not be given for farmers to sit idle.All these factors have to be woven into before the direct income support is announced. This way when the consumer demands cheaper food, it won't impact the farmers. They will be insulated from the market demand.You have been opposing FDI which is being widely promoted as something which will bail out farmers by removing middlemen.This hope that with FDI in retail, middlemen will go and farmers' income will rise is just a mirage. Another concept now being promoted is commodity trading which is claimed to help farmers realise the price. However, if these two mechanisms were working, the farmers in US, which is the home for Walmart and commodity trading, would not have been paid Rs 12.50 lakh crore subsidy between 1995-2009. Let's take the example of cotton which is a major crop.  It's the income support, not walmart or commodity trading, that makes cotton farmers of US economically viable. A 2005 analysis tells us that the total production of cotton was worth 3.9 billion dollars but the farmers were paid support of 4.7 billion dollars. On top of it, textile industry was paid 187 million dollars to buy that subsidised cotton. So, the US farmers became “efficient farmers”. On the other hand, farmers in West Africa and India's Vidarbha region were priced out and became “inefficient farmers” not because of productivity but lack of subsidy. When Brazil took the US to World Trade Organization's dispute panel, US lost the case but instead of cutting down its domestic subsidies, it started providing 147 million dollars support to Brazillian farmers.We are hearing divergent voices on the draft food security bill. What was the traditional system India had to deal with food insecurity?The proposed food security law is just a political gimmick for the elections. It is an extension of the highly-inefficient public distribution system we already have. More of the same is not the answer. Instead we have to look out newer ways to check pilferage and also feed the hungry.In 1996, when I was researching for my book 'The famine trap' I got to know about a cluster of villages in Kalahandi, Odisha, which had never seen hunger in last 20 years. Now Kalahandi, as we all know, is called the hunger and starvation belt of India but within this desert what I found was an oasis. The villagers were following a traditional system of 'sharing and caring', remnants of which can be found in several states of the country. In Bihar, it is called 'Gola' system. The villagers form a consolidated fund and buy grain from the farmers to be stored at one place.. Anyone in need of food can approach the committee and take the quantity of grain needed with the condition that he will return the amount plus a rate of interest during the next harvest when he would most likely get some manual labour work in the fields. The Kalahandi villages had this system running for last 18-19 years and they had a surplus of 200 quintal grains. There was no hunger and the neighbouring 20-25 villages had also picked up the concept. At the time of cyclone, these villages were not dependent on government rehabilitation. When M S Swaminanthan got to know about this, he also visited the villagers and the government took note. It adopted the idea but gave the supervisory powers to block development officers (BDOs) and the scheme flopped. That clearly shows how government can mess up a good programme.Today we have 6.4 lakh villages out of which over 5 lakh villages produce food, rest being cash crop areas. However, we still have people going to bed hungry in these villages. India accounts for one third of world's hungry. This problem can be solved if we ensure that our villages become self reliant in food security through local production, local procurement and local distribution just like the Gola system. It will also reduce pressure on PDS which can then cater to more vulnerable areas hence requiring less expenditure and lesser corruption. However, our leaders don't want that to happen because if people learn to be self reliant, they won't require the government doles. And we all know, doles come handy for elections. This policy started at the time of Britishers who wanted everything in their hands so that people are always dependent on them.Whenever we talk about India's policies, it is said they are dictated by international organisations like WTO and World Bank dominated by developed countries. Why have we not been able to strengthen our position over the years?When World Bank gives you loan, it comes with 150 conditions which you or I won't get to see but the government has to address them. These conditions have led to the policies which the country is following now or since whenever we started taking loans. Besides World Bank, we also have WTO, IMF, groups like G20 and other international financial institutes. They are all part of the same design. If you go through past G20 declarations, you will see that what was prescribed there is what India is doing. At WTO, India is one of the countries taking a tough stand against the dominant powers because civil society back home is pushing for that. Otherwise India would have been sold out by now.The civil society has most often been accused of taking extreme positions on policy matters. Do you agree that just like any other field, everything is not white with activism too?The idea of civil society being always critical and always taking extreme position is a clever strategy to present an image to the public that civil society is not their supporter or fighting for their cause. But I can tell you by and large those standing against the system are doing it genuinely. They have odds stacked again them.  Now, when it comes to opposing policies of the government or the corporates, we do it only after a thorough research.Take the example of agriculture. Punjab government has signed an MoU with Monsanto for setting up centres of excellence in the state. If we stand against this, we are labelled as “anti-farmers.” But tell me, if after 45 years of green revolution, Punjab's farmers are committing suicides, 19 people die of cancer daily, soil has been devastated beyond measures and water table has plummeted to dangerous levels, how can we term it development? Government and companies have vested interests which is why they will keep on promoting the same. Who should be paying a penalty for all the damage that has been done? An engineer is punished when a bridge build by him falls down, a doctor is punished for medical negligence, why can't we ascribe responsibility on agricultural scientists, corporates and economists because of whom people are dying. How can they get away for using bodies as stepping stones for growth?There are definitely black sheep in civil society too like there are in every sector but we have to understand that civil society is not a homogeneous clout. There are several corporates which form foundations and they are also part of the civil society. But most of the time they are just doing a lip service. It's not easy to stick your neck out and those are braving it must be appreciated.Source: http://www.goimonitor.com/story/income-support-not-msp-can-help-farming-woes
Date: Feb 3, 2013. 

IN A free wheeling talk with GOI Monitor, food and trade policy expert Devinder Sharma favours income support for farmers, attacks FDI and indicates that there is a smear campaign going on against the civil societyTell us about the farmers' commission which the Karnataka government has decided to set up based on your recommendations.
Average monthly income of a farmer is just Rs 2,400 Pic:Sahaja SamrudhaTo understand that, let's first talk about all the efforts that have gone into pulling farmers out of poverty. During green revolution, a common parlance gained ground that more you sow, more you produce and hence more your earn. The message found acceptance among farmers who invested a lot of money buying pesticides, fetilizers, seeds and the machinery. However, even after over 40 years of green revolution, the farmers are practically on the poverty line. The NSSO survey of 2003-04 tells us that the average income of a farming family of five members is Rs 2,115. There were only three states above this limit: Jammu and Kashmir, Punjab and Tamil Nadu. That was the first and last time the farm income was measured. I guess the government was too embarrassed with the results to repeat the exercise.At today's price, the income calculated must be around Rs 2,400. But look at the contrast. The lady who comes to my house for cleaning gets a monthly payment of Rs 2,000 for two hours of daily work. Under the 6th Pay Commission, a peon in government service gets a minimum monthly salary of Rs 15,000. But a farmer plus his family who work much longer hours in their fields get just Rs 2,400 a month. The minimum support price (MSP), which was termed a classic way out, is only helping 30 per cent of the farming community because 70 per cent farmers don't have surplus to take to the mandis.  But even if they hardly have anything to sell, they at least produce food. Let's say tomorrow they stop producing, the country would be forced to import that much quantity of food. In other words, they are producing economic wealth for which they should be adequately compensated.If you look at agriculture globally, on one hand there are highly subsistence farming in developing countries like India and on the other there is highly subsidised farming in rich countries like US, Japan etc. The only way to bail out subsistence farmers is to provide them with direct income support as is being done in the rich and industrialised countries. Former Karnataka Chief Minister B S Yeddyurappa took notice of these suggestions of mine and discussed the issue in detail. Now present Chief Minister Jagdish Shetter has announced the policy. The good thing is somebody has taken this initiative and now I am sure there will be a dynamo effect with farmers' unions mounting political pressure in other states too. In my understanding it will be a game changer which will be highly beneficial for the farmers. Also, this will lead to reverse migration thus reducing pressure on our cities.What are the things the proposed commission needs to look into?The farmers' commission has to sort out several things. The direct income defined should be location specific as agriculture cost varies according to areas and factors like size of land, soil quality, productivity et al. Also, the money should not be given for farmers to sit idle.All these factors have to be woven into before the direct income support is announced. This way when the consumer demands cheaper food, it won't impact the farmers. They will be insulated from the market demand.You have been opposing FDI which is being widely promoted as something which will bail out farmers by removing middlemen.This hope that with FDI in retail, middlemen will go and farmers' income will rise is just a mirage. Another concept now being promoted is commodity trading which is claimed to help farmers realise the price. However, if these two mechanisms were working, the farmers in US, which is the home for Walmart and commodity trading, would not have been paid Rs 12.50 lakh crore subsidy between 1995-2009. Let's take the example of cotton which is a major crop.  It's the income support, not walmart or commodity trading, that makes cotton farmers of US economically viable. A 2005 analysis tells us that the total production of cotton was worth 3.9 billion dollars but the farmers were paid support of 4.7 billion dollars. On top of it, textile industry was paid 187 million dollars to buy that subsidised cotton. So, the US farmers became “efficient farmers”. On the other hand, farmers in West Africa and India's Vidarbha region were priced out and became “inefficient farmers” not because of productivity but lack of subsidy. When Brazil took the US to World Trade Organization's dispute panel, US lost the case but instead of cutting down its domestic subsidies, it started providing 147 million dollars support to Brazillian farmers.We are hearing divergent voices on the draft food security bill. What was the traditional system India had to deal with food insecurity?The proposed food security law is just a political gimmick for the elections. It is an extension of the highly-inefficient public distribution system we already have. More of the same is not the answer. Instead we have to look out newer ways to check pilferage and also feed the hungry.In 1996, when I was researching for my book 'The famine trap' I got to know about a cluster of villages in Kalahandi, Odisha, which had never seen hunger in last 20 years. Now Kalahandi, as we all know, is called the hunger and starvation belt of India but within this desert what I found was an oasis. The villagers were following a traditional system of 'sharing and caring', remnants of which can be found in several states of the country. In Bihar, it is called 'Gola' system. The villagers form a consolidated fund and buy grain from the farmers to be stored at one place.. Anyone in need of food can approach the committee and take the quantity of grain needed with the condition that he will return the amount plus a rate of interest during the next harvest when he would most likely get some manual labour work in the fields. The Kalahandi villages had this system running for last 18-19 years and they had a surplus of 200 quintal grains. There was no hunger and the neighbouring 20-25 villages had also picked up the concept. At the time of cyclone, these villages were not dependent on government rehabilitation. When M S Swaminanthan got to know about this, he also visited the villagers and the government took note. It adopted the idea but gave the supervisory powers to block development officers (BDOs) and the scheme flopped. That clearly shows how government can mess up a good programme.Today we have 6.4 lakh villages out of which over 5 lakh villages produce food, rest being cash crop areas. However, we still have people going to bed hungry in these villages. India accounts for one third of world's hungry. This problem can be solved if we ensure that our villages become self reliant in food security through local production, local procurement and local distribution just like the Gola system. It will also reduce pressure on PDS which can then cater to more vulnerable areas hence requiring less expenditure and lesser corruption. However, our leaders don't want that to happen because if people learn to be self reliant, they won't require the government doles. And we all know, doles come handy for elections. This policy started at the time of Britishers who wanted everything in their hands so that people are always dependent on them.Whenever we talk about India's policies, it is said they are dictated by international organisations like WTO and World Bank dominated by developed countries. Why have we not been able to strengthen our position over the years?When World Bank gives you loan, it comes with 150 conditions which you or I won't get to see but the government has to address them. These conditions have led to the policies which the country is following now or since whenever we started taking loans. Besides World Bank, we also have WTO, IMF, groups like G20 and other international financial institutes. They are all part of the same design. If you go through past G20 declarations, you will see that what was prescribed there is what India is doing. At WTO, India is one of the countries taking a tough stand against the dominant powers because civil society back home is pushing for that. Otherwise India would have been sold out by now.The civil society has most often been accused of taking extreme positions on policy matters. Do you agree that just like any other field, everything is not white with activism too?The idea of civil society being always critical and always taking extreme position is a clever strategy to present an image to the public that civil society is not their supporter or fighting for their cause. But I can tell you by and large those standing against the system are doing it genuinely. They have odds stacked again them.  Now, when it comes to opposing policies of the government or the corporates, we do it only after a thorough research.Take the example of agriculture. Punjab government has signed an MoU with Monsanto for setting up centres of excellence in the state. If we stand against this, we are labelled as “anti-farmers.” But tell me, if after 45 years of green revolution, Punjab's farmers are committing suicides, 19 people die of cancer daily, soil has been devastated beyond measures and water table has plummeted to dangerous levels, how can we term it development? Government and companies have vested interests which is why they will keep on promoting the same. Who should be paying a penalty for all the damage that has been done? An engineer is punished when a bridge build by him falls down, a doctor is punished for medical negligence, why can't we ascribe responsibility on agricultural scientists, corporates and economists because of whom people are dying. How can they get away for using bodies as stepping stones for growth?There are definitely black sheep in civil society too like there are in every sector but we have to understand that civil society is not a homogeneous clout. There are several corporates which form foundations and they are also part of the civil society. But most of the time they are just doing a lip service. It's not easy to stick your neck out and those are braving it must be appreciated.Source: http://www.goimonitor.com/story/income-support-not-msp-can-help-farming-woes
Date: Feb 3, 2013. 

Speaking at the annual Oxford Farming Conference a few weeks back, the rebel environmentalist Mark Lynas, who went over to the all-powerful GM industry, was quoted as saying: "Research published in the proceedings of the National Academy of Sciences suggests the world will require 100% more food to feed the maximum projected population adequately."
It's not the first time this argument has been used, but considering the emphasis Lynas laid on the capabilities of controversial genetic engineering technology to meet the growing demand for food, a flurry of articles and editorials appeared. The underlying argument is the same. The world needs to produce more for the year 2050, and therefore we need GM crops.
Well, what population projections are we talking of? The planet today hosts seven billion people, and all estimates point to population growing to nine billion by 2050. According to the Food and Agriculture Organisation of the United Nations (FAO), more than 870 million people were chronically undernourished in 2012, with almost 250 million of the world's hungry living in India.

These appalling statistics generate an impression of an acute shortfall in food production. At every conference, the same sets of statistics are flashed to justify the commercialisation of GM crops. But how much food is globally available? Is the world really witnessing a shortfall in food production? Or, for that matter, is there a shortage of food in India? These are the questions that have been very conveniently overlooked.

Let us therefore take a look at the performance of global agriculture in the year 2012. Despite the severe drought in the US and Australia, where wheat production is anticipated to fall by 40%, the US Department of Agriculture (USDA) estimates that the world still harvested 2239.4 millionmetric tonnes, enough to feed 13 billion people at one pound per day.

In other words, the food being globally produced today can feed twice the existing population. According to the International Assessment of Agricultural Knowledge, Science and Technology for Development (IAASTD), against the average requirement of about 2,400 calories per capita, what is presently available is 4,600 calories. So where is the crisis on the food production front? The crisis is in food (mis)management, which surprisingly is being ignored.

In the US, Canada and Europe, 40% food is wasted. For example, Americans waste $165 billion worth of food every year, which could very well meet the entire requirement of sub-Saharan Africa. Food wasted in Italy, if saved, can feed the entire population of the hungry in Ethiopia. According to the UK Institution of Mechanical Engineers, almost half the food produced globally is allowed to go waste. Studies show that 50% of fruits and vegetables stocked by supermarkets in US actually rot. If all the food wastage was to be appreciably reduced, hunger and malnutrition can easily become history.

In India too, it is not a crisis in food production. On Jan 1, India had 66 million tonnes of food stocks. As someone has said, if you were to stack all those bags of grain one over the other, you could climb up to the moon and back. That's the quantity of food that has been available almost every year since 2001.

While visuals of food rotting in godowns are fresh in the memory, the government has been merrily exporting the surplus rather than feeding its hungry millions. This fiscal, wheat exports are expected to touch 9.5 million tonnes; rice exports have already crossed nine million tonnes in 2011-12. Instead of propping up food procurement and distribution, the food ministry is actually toying with the idea of withdrawing from procurement operations and using surplus stocks in futures trading, leaving the hungry to be fed by the markets.

Meanwhile, GM crops are being promoted as the answer to growing food needs. In reality, there is no GM crop in the world that actually increases crop productivity. In fact, the yields of GM corn and GM soybean, if USDA is to be believed, are actually less than the non-GM varieties.

Nor has the promise of a drastic reduction in the usage of harmful pesticides proved to be correct. Charles Benbrook of the Washington State University has conclusively shown that between 1996 and 2011, the overall pesticides use in US has risen by a whopping 144 million kg. In addition, as much as 14.5 million acres is afflicted with 'super-weeds' — weeds that are very difficult to control. And such has been the contamination that 23 weeds now fall in the category of 'super-weeds'.

Regarding safety, a few months back the revelations by Giles-Eric Seralini, a molecular biologist at the University of Caen in France, shocked the world when for the first time he demonstrated long-term studies involving rats fed for two years with Monsanto's Roundup-Ready GM maize. The rats had developed huge kidney and mammary gland tumours, had problems with their body organs and showed increased mortalities.

Against the usual practice of such studies involving feeding rats with GM foods for 90 days, Seralini had for the first time ever experimented with rats for two years, which corresponds to the entire human lifespan. As expected, the shocking results, peer-reviewed and published in a respected scientific journal, have already created quite a furore internationally.

I therefore don't understand the need to take a huge risk with human health and environment when there is food available in abundance. The greater challenge is to curb wastage, provide adequate access and ensure judicious distribution of food.

The writer is a food and agriculture analyst.

Source: The Times of India, New Delhi; Feb 28, 2013.
http://bit.ly/13Y5Zo7

I have got tired of reading the same faulty prescription. The economic way forward being suggested by all and sundry is a failed model. And yet, every other day you see the same analysis, the same arguments, and the same approach being suggested ad nauseatingly. What has happened to this country? Where has our collective wisdom disappeared? Must we be cowed down by the blackmail being continuously unleashed by the rating agencies as well as the international financial institutions?

This is in reality what is meant by populism.

The populist perception is not often pragmatic. I agree. And this is exactly what I am worried about. The populist perception today is that with the fiscal deficit likely to grow, at a time when current account deficit is already galloping, the Finance Minister must ensure that the investment climate remains favourable. Stepping up expenditures is something the government can ill afford at the moment. So the axe must fall on welfare schemes.

Diesel prices have already been freed, and GAAR deferred. Taxing the rich is not the right way, and therefore the only solution these economists and economic writers have is to shower more tax concessions and freebies to India Inc.

If this was workable, and would help kick start the economy, I wonder why the same formula is not working in Europe. All the years of austerity drive, following the economic recession of 2008-09, hasn't seen the European economy showing any signs of emerging out of woods. Greece, Spain, Ireland, Italy, France, Germany and you name it. All European countries are grappling in the dark having blindly followed the IMF prescription. While public outrage has spilled to the streets, unemployment and poverty is growing. With many living in their cars, the crisis has put cash starved Greeks on their bikes. Unemployment in Greece has grown to 25 per cent. Greece is not an exception.

The reality is that the countries that imposed harsh austerity measures are deeper into crisis. In Greece, Spain and Portugal -- where austerity provides a test case -- unemployment is soaring.

International Monetary Fund (IMF) has finally admitted that it had underestimated the damage from its austerity drive. IMF chief economist Olivier Blanchard has in a paper admitted that it didn't fully understand how austerity will not be able to rejuvenate economic growth. As a caveat, and as a face saving, IMF says that austerity works well if fiscal multiplier are small, but for large economies it actually ends up increasing debt-to-GDP ratio.

Should India therefore follow the European decline?

Regardless of what is happening globally, the rich want to extract the last pound of flesh. You shouldn't therefore be surprised at the populist discourse. As the Budget day nears, the decibel pitch increases. It will reach its crescendo on the day Mr P Chidambaram will stand up to present Budget 2013. As expected, the stock markets will first register a fall (this is a blackmail tactic they have perfected) before the Budget is presented, and as the Finance Minister showers freebies on business and industry, it will rise.

But should we succumb to populism? Just because the entire public policy space is occupied by austerity hawks -- in India, they use the phrase: Spending cuts -- does not mean that we have to keep quiet and accept the faulty economic regime. It does not mean that the populist view -- Rob Peter, to pay Paul -- should be accepted just because everyone is saying so.