Ground Reality

Tax exemptions: Feeding fat cats in the name of aam aadmi

2012-05-28T15:56:00.003+05:30

Sometimes I feel that just like celebrities and politicians, who move around with a force of bodyguards, Corporate bigwigs have deployed an army of economists and economic writers who at any given opportunity spring up on their feet to defend all the wrongs that the rich and the powerful indulge in. Well, I am not talking about unlawful activities, but what happens when you point a finger at the perks and freebies that the rich industrialists are provided by the government? The economic writers scream and try to drown the facts.

It has happened a number of times with me. Every time I raise the issue of 'revenue foregone' that in reality is the total amount of tax exemptions that the rich industries/business have been showered with all these years, the rebuttal is angry. Many a times, the TV anchor cuts me short, and shift the question to another panelist who will simply talk of something else. Other times, they express ignorance as if what I am saying is never heard of, and probably was figment of my imagination.

Only a few days back, when petrol prices was increased, I had on a TV show raised the question of feeding the big cats while taxing the poor and aam aadmi (common man). Qouting Noam Chomsky, I had said that governments all over the world, and India is no exception, follow the policy of "Tough Love": Tough for the aam aadmi, and love for the rich. At a time when the government provide tax exemptions to the tune of Rs 5.29 lakh crore to India Inc. I see no justification in making the poor pay for the rising petrol prices. Since 2004, if you add the 'revenue foregone' (provided in every Budget document), the total tax relief, including income tax for CEOs and senior executives, exceeds Rs 26 lakh crore !!

I am glad Arnab Goswami of Times Now had posed this question to economic writer Swaminathan S Anklesaria Aiyar. In his column in Times of India this Sunday (May 27, 2012), Swaminathan Aiyar has provided his answer. Tax exemptions: it's not just the fact cats who benefit (available at http://bit.ly/Kc04pQ), Aiyar says: "The notion that tax exemptions are aimed only at fat cats is false." He goes on to quote a study by Rajiv Kumar and SK Ghosh of FICCI (Federation of Indian Chambers of Commerce and Industry), which incidentally is a lobby organisation of the fat cats.

Arguing that tax cuts will stimulate demand, Aiyar says: "This is why taxes were cut in 2008-09 -- to generate a big stimulus for an economy hit by the Great Recession. At the time, the left Supported a strong stimulus to help the aam aadmi. Yet today, some tax cuts are being called 'revenue foregone' and decried as corporate loot."

I don't understand. All these tax benefits, with the basic idea of spurring growth, were expected to provide stimulus to the industry. In 2012, we find that the manufacturing sector is down to minus 3.5 per cent, industrial growth is stagnating, and exports are decreasing. Where has this stimulus gone? Kumar and Ghosh, says the article, calculate that another Rs 174,418 crore of the 'revenue foregone' comprises import duty concessions for inputs into export production. Exempting such inputs in standard global practice. It would be stupid to tax and maim exports. Well, if this is true, the exports should have increased. I am sure you will agree. But then why is it that exports in 2011-12 have halved compared to 2010-11?

Look at the other main argument. Rs 198,291 crore comprises tax breaks/duty for mass consumption goods like medicine, toothpowder, candles and kerosene. These are aimed directly at the aam aadmi. Revenue foregone also includes massive tax breaks for crude and petroleum products (an estimated Rs 58,190 crore) in 2012-13). So, in a sense, Arnab's wish has come true: the middle class is getting a big oil tax break ! Now this is interesting. Medicine prices in India have been steadily rising, and that is why the government is trying to bring price control on certain medicines whose consumption is higher. As far as tooth powder and candles, I don't know if there was ever a problem with its prices. Coming to massive tax breaks for crude and petroleum products, I am not sure when was this FICCI study done (probably before the recent price hike). In any case, the government has been subsidising diesel, LPG and Kerosene and the oil companies are not left to bear the loss. So where is the benefit to the aam aadmi?

If you are wondering why the fat cats are becoming obese, it is because of the tax exemptions that are being routinely provided. Let me make it very clear that the economic stimulus package, which included tax concessions to the tune of Rs 3 lakh crore plus, began after 2009-10, and still continues despite everyone agreeing that these should have been withdrawn in 2011.

And now let us understand as to what would be the gain for the country if these tax concessions to the fat cats were withdrawn:

1. Withdrawing tax exemptions under the category of 'revenue foregone' will wipe out the fiscal deficit that everyone croons about. The national economy will be back on its feet. Rs 5.29 lakh crore almost equals the fiscal deficit of 5.2 per cent or so.

2. With the government treasury fully packed, it will be easy to provide petrol, diesel, LPG and kerosene to the aam aadmi at affordable prices. And once the oil prices remain within reach, there will be no rise in bus and train fares, which hurt the lower strata of the society.

3. Inflation will also get moderated. Fuel prices hike plays a significant role in raising prices (besides providing the right kind of market sentiment).

4. It will make the industry/big business more cost effective. With no tax exemptions available (basically to strengthen their bottom line), they will be forced to tighten belt, and compete efficiently. #

A hungry nation exports food. It can happen only in a democracy.

2012-05-26T22:07:00.001+05:30

At a time when the total food stocks are likely to swell to a record 75 million tonnes by June 1, out of which nearly 25 million tonnes of the stocks will be piled up in the open for lack of storage space, the demand for allowing exports is already growing. Ministry of Commerce has already started an exercise to know how much quantity of wheat can be allowed for exports.

It is a strange paradox of plenty. While on the one hand India is overladen with mounting food stocks, on the other nearly 320 million people go to bed hungry. The number of hungry and malnourished in India almost equals the entire population of America. When it comes to malnutrition, several studies have pointed out that nearly 50 per cent of children are malnourished. India fares worst than even sub-Saharan Africa. According to the 2011 Global Hunger Index India ranks 67 among 81 countries, sliding below Rwanda.

With the per capita availability of foodgrains – including cereals and pulses – sliding to 441 grams per day in 2010, from a high of 480 grams in 1991 when the economic reforms began, it is quite evident that the extent of hunger is growing. Although an impression is being given that as incomes are seeing a rising trend, more people have shifted from cereals to nutritious foods like eggs, meat and fruits. This is however not correct. According to a 2010 report of the National Sample Survey Organisation (NSSO), the consumption of cereals as well as nutritious foods like fruits, milk and eggs too is falling in urban and rural areas.

Continuously rising food inflation over the past several years has certainly widened the gap between the haves and have nots. Experts agree that for a large section of the population, buying two square meals a day is now becoming more difficult. In other words, hunger is becoming more acute. More and more people are going to bed hungry. I therefore don’t understand the logic of exporting food at a time when millions are living in hunger.

The mounting food surplus is essentially because the poor and needy are unable to buy foodgrains even at below the poverty line prices. Ironically, while the poor live in hunger, India is contemplating exports. In 2011-12, with India’s rice exports touching 7 million tonnes, it has emerged as the biggest exporter of rice in the world. Opening up the export of wheat (it is banned at present) India will certainly join the ranks of the major food exporters, and in the process earn some foreign exchange. But the bigger question remains as to who will feed the hungry living within the country?

There can be nothing more criminal for any hungry nation to export its staple food. It is the primary responsibility of the government, as enshrined in the Directive Principles, to ensure that every citizen is well-fed. Unfortunately what is not being realised is the declining fall in per capita availability of foodgrains matches the availability at the time of Bengal famine in 1943. Isn’t it sad that even after 70 years of Bengal famine, we still live in the shadow of hunger and starvation? How can any sensible nation therefore justify food exports?

Food management essentially means distributing the available foodgrains among the poor and hungry. Export of staple foods therefore must be immediately stopped, and all out efforts have to be made to take the foodgrains to the doors of the hungry millions. This is the primary responsibility of every government. #

Depreciating Rupee: Fault lies with our own policies.

2012-05-24T18:45:00.001+05:30

Indian rupee is at a historic low. Every day the downslide of the rupee makes for headline news. Coming at a time when the Euro has crashed to a nearly two-year low against the dollar, and when the exit of Greece from the Eurozone looks imminent, the continuous sinking of the rupee has baffled me. I can understand when I read that rupee is sliding against the US dollar, but how come the rupee is also sliding against the sinking Euro?

Providing some justification, Chief Economic Advisor Kaushik Basu points out that currencies of several emerging economies -- South Africa, Brazil and Mexico -- are also on the downslide. This only shows how true my concerns have been over the faulty economic pathway being followed by the BRIC countries. Like the erstwhile Asian Tigers, who blindly aped the World Bank/IMF prescription, BRIC too is repeating the same mistakes. I wouldn't be surprised if sooner than later BRIC economies too collapse.

Nevertheless, Kaushik Basu told a private channel: "The current exchange rate problems that you are seeing .. the very sharp depreciation that is taking place .. i don't think it really has anything to do with our policy or policy mistakes being made over here, which is causing that." Of course, you don't expect the Chief Economic Advisor to admit that it is because of his faulty policies that the country is deep in economic crisis. So when the government suddenly gave a crude shock on May 24 -- raising the petrol prices by the steepest Rs 7.50 per litre increase in one go -- it became clear that all is not well. Congress spokespersons can justify the increase linking it to global prices, but the fact remains that crude oil prices are decreasing over the past few months. Even with the rupee depreciation, there is no reason why the consumers should be made to cough out extra for every litre of petrol.

Hindi daily Dainik Bhaskar has come out with an interesting front-page analysis. It says that the crude oil price in May 2011 was US $ 114 per barrel. The rupee-dollar exchange rate at that time was Rs 46, and therefore the import bill was Rs 5,244 per barrel. A year later, in May 2012, the crude oil price is $ 91.47/barrel, and even though the exchange rate is Rs 56, the import bill does not exceed Rs 5098/barrel. So why have the petrol prices been increased? I don't think any economist or a spokesperson for the government will like to respond to this. In simple terms, the rise in petrol prices is the austerity measure that Finance Minister Pranab Mukherjee talked about the other day.

Returning back to the issue of the rupee sliding with every passing day, I read an interesting article by senior economic journalist Paranjoy Guha Thakurta. Writing in the Deccan Chronicle (And the rupee wept on, May 22, 2012), Paranjoy tries to explain the complex reasons behind the rupee depreciation. "In fact, the principle reason why the value of the Indian currency has come down sharply in relation to the US dollar is the huge 56 per cent hike in the country's trade deficit (the difference between the value of imports and exports) in 2011-12 over the previous year." Although there are other factors also impacting the rupee downslide, including foreign investors shying from putting money in stock exchange, but the widening trade deficit seems to be more reasonable of the causes.

He further goes on to write: "This is because of the fact that while imports have risen by nearly a third , the rate of growth of exports in 2011-12 has halved from the 41 per cent growth achieved in previous fiscal year (2010-11)." I can understand that the rising import bill is primarily because of oil imports. As Paranjoy says: "Imports are not coming down because one-third of India's total imports currently comprises crude oil and 80 per cent of the country's requirements of crude oil are imported." And since the markets for Indian exports has shrunk abroad, especially in the west, Indian exports are down.

Now, come to think of it. Although Kaushik Basu does not hold the UPA policies to be responsible for the widening trade deficit, I don't understand the reason why India has steadily and systematically opened up the trade barriers by reducing and phasing out import tariffs to encourage imports. Crude oil has to be imported because we don't produce enough, but why should we be importing edible oil for instance. India is the 2nd biggest importer of edible oil, expected to import 9 million tonnes this year. You will be surprised to know that in 2009-10, India had imported 9.24 million tonnes of edible oil valued at Rs 38,000-crores (source: Financial Express, http://www.financialexpress.com/news/vegetable-oil-imports-touch-new-high-at-9.2-million-tonne/712217/). In the past 5 years, edible oil imports have almost doubled.

The outgo of Rs 38,000-crore in terms of dollars (it would be much more in 2011-12) could have been easily avoided if the government had followed the right policies. Why I am saying this is because it was in 1993-94 India had turned almost self-sufficient in oilseed production following the launching of Oilseeds Technology Mission by Rajiv Gandhi. It was then that the Commerce Ministry started reducing import tariffs, and have actually brought the import duties to almost zero. The imports picked up in the process, and the oilseed farmers were forced to move to other crops in the wake of cheaper imports. It was therefore a double whammy. Farmers suffered, and imports (and import bill) grew manifold.

Similarly, I find that despite the 2009 global economic meltdown, India has not drawn any lessons. While all industrialised countries are pushing for export markets, India is merrily opening up its economy to unwanted imports. First under WTO, and now under the Free Trade Agreements (the two most recent and damaging bilateral trade treaties are the Indo-Asean and Indo-EU FTA still to be completed), that India is bowing to pressure to open up for imports. Well, if you are encouraging imports in areas where the country has enough production capacity don't blame the global economic crisis for the depreciation of the rupee. It is our own doing, and we must accept responsibility. It is high time India makes an immediate correction in its trade policies to ensure that it does not become a dumping ground.

Eurozone Crisis: Why doesn't EU scrap the CAP subsidies?

2012-05-17T10:02:00.000+05:30

When I look at the fallout of the Greek Tragedy on the global economy, including India, and at the same time try to make a sense of the economic crisis by sitting in front of the Business TV channels, I must admit I am left baffled. At a time when Sensex has gone below 16,000, and the Indian rupee has slid 22%, hitting a new low, and Finance Minister Pranab Mukherjee mulls austerity measures, what intrigues me is to find the land prices soaring, consumer spending increasing manifold, sales of cars and automobiles increasing amidst reports of 84% Delhiites planning a beach holiday this summer, there is something that I cannot understand.

First let us take a look at the fears emanating from the prospect of Greece quitting the Eurozone. Greece President Karlos Papoulias has already termed it as 'fear that could develop into panic'. In the last 24 hours (May 16), roughly Euro 700 million has been withdrawn from the banks. This has created a scare. I can understand how the stock markets will play this up, but I wonder why no one is talking of doing away with the wasteful expenditure that European Union indulges in year after year. Well, I am talking of the annual budget of EU, of which nearly 50 per cent or Euro 60 billion goes for what is called Common Agriculture Policy (CAP). Much of the remaining 50% budget also goes as subsidies for building infrastructure. Even at times of the 2008-09 economic crisis, and the emerging chaos, no one has ever mentioned the damage done by CAP. As if this is not enough, the proposal is to further enhance the spending under CAP in 2014-20 to Euro 400 billion.

If withdrawal of Euro 700 million from Greece banks can cause panic, I have failed to understand why the European heads cannot stop subsidising its agribusiness companies (my estimates show that more than 90% of the total spending under CAP goes to MNCs and top agribusiness companies). So in a way the state coffers are being emptied for the rich corporates and the austerity measures that are being spelled out would hit the middle class and the poor. It is here that I find the French President Francois Hollande's poll promise of 75% tax on the income of the rich makes terrible economic sense.

Now look at India. The same virus afflicts the Indian policy makers. Yesterday I sat watch the NDTV Profit channel, one of India's leading business channels. At a time when everyone is talking of tightening the belt, the channel had a programme on where to make the investments in real estate in Bangalore. The anchor talked of three real estate options -- each above a package of Rs 1-crore -- where you could invest. Similarly, when you surf the channels, you find programmes which talk of hot commodities where investments could be made, the increasing investments in gold despite its price going through the roof, and so on. Whether it is gold or real estate, the prices have not come down despite the slump that is feared. Why?

Economic disparity that has been created over the years by neoliberal economics is actually the bane of the present crisis. The rich have become richer and the poor have been driven against the wall. Not only the bank executives, lavish pension and perks are being given to Presidents, Prime Ministers and parliamentarians (former French President Sarkozy is to receive lavish post-retirement perks, and the salary/perks of Indian parliamentarians have gone up manifold), As unemployment soars, mainline economists and policy makers suggest strong austerity measures, which in simple words means withdrawing social security nets.

I think the time is ripe for a radical overhaul of the economic structures. Politicians know what needs to be done, but it is the business leaders and the economists who will not let them use the axe.

Film Stars endorsing social causes: Is it a dangerous trend?

2012-05-09T10:51:00.001+05:30

Bangladeshi author Taslima Nasreen is angry. This time her anger is about film stars who put their 'pretty faces' to social causes. Even before Aamir Khan launched his weekly show SatyamevJayate (on Star Plus and DD National channels simultaneously), film stars had ventured into areas about which they knew little or cared little. But since it became fashionable, and TV channels wanted them to endorse a particular cause (more for the sake of their viewership) film stars were willing to oblige. After all, film stars look for an excuse to be in public glare.

Taslima Nasreen is disappointed, says a Page3 report in HT City. "Feminists have been talking about female foeticide and its dangerous effects for decades. Ppl have learned about it today from Star Plus (sic)," she tweeted. I agree. It is not only disappointing, but disgusting. It reflects a lot on today's educated and learned society. If you need the pretty face (or pretty legs) of a celebrity to educate you about the social ills plaguing your own family (after all, female foeticide is predominantly prevalent in every other well-to-do family), does it not mean that we are in the midst of an era where helplessness and despair reigns supreme. Where the only way to wake us up from deep slumber is when a celebrity tells us to. Otherwise, we remain indifferent and ignorant. All is well, until Priyanka Chopra or Katrina Kaif or the likes tells us.

A few promos I saw of a forthcoming show on environment on a popular TV channel I noticed the anchors beaming when film stars ShahRukh Khan, Katrina Kaif and Priyanka Chopra appear on the stage. I wonder where were those social activists who had slogged and struggled, putting their own lives and families at stake, and go unsung in the fight to protect environment. Bringing one or two of them on to the stage amidst a loud applause does not do justice to the cause. In a way it is a dangerous trend. The film stars (cricketers still have lot of money to make from IPL matches, and so have no time to spare) are taking the space that richly and genuinely belongs to social activists. Social activism is being marginalised in the process. This has serious repercussions.

It all began when some TV channels came up with a fanciful idea of taking film stars (and ex-cricketers) to the border areas to do a bit of dancing for the jawans. After a few shows, and a few film stars, the viewers interest weaned, and so did that of TV channels. In fact, I have always wondered why film stars have not jostled with jawans for several years now? Because no TV channel offered them the free ride. In other words, film stars had no interest in soldiers manning the frontline, it was simply because the TV channels wanted them to do so. I haven't yet seen a film star who has expressed concern about the spate of farmer suicides and has dared to walk the talk by actually visiting and spending some time with the farm families in distress.

I wouldn't be however surprised to see a number of pretty faces jumping onto the stage and even shedding a tear or two for the farmers who were left with no option but to drink pesticide or hang themselves from the nearest tree. The TV audience will applause, the newspapers will discuss the issue for a coupe of days, and life will be back to normal after a few days. Asking the film stars to shake a leg before the cameras may be a good visual, but will do little if nothing to stop farmer suicides. By doing so we will only be trivialising an issue of utmost importance. Unless of course the film Star is like Aamir Khan, who not only does a meticulous job in presenting an issue but goes all the way to take it to its logical end. I admire him for taking out time to go to meet the Rajasthan chief minister on the criminal issue of female foeticide. But then he is an honourable exception.

I must admit that some years back I too was fascinated and bitten by the idea of bringing in film stars to espouse the cause of farmer suicides. With numerous committees, reports, studies and quite a significant amount of money being pumped in, suicides haven't stopped. My idea therefore was to rake up the real issues through the voice of the celebrities. To make the nation (and policy makers) sit back and realise where the fault lies, and what corrective measures were needed. I am glad I couldn't raise the money needed to bring the celebrities together for the show. Let me assure you, film stars don't come for free. I would have been therefore equally guilty of sounding a hollow trumpet, and wasting public money which could have perhaps been put to better use. The same money could have provided, for instance, financially support for education and marriage of thousands of girls whose father had committed suicide.

There is a growing feeling that in a Star-obsessed India, people do listen to celebrities. This is the general impression that the media conveys. I don't buy this. I have seen many recognised and well-known faces among social activists in this country who didn't have to piggy bag on celebrities. They have made their name and place purely on the basis of their work, their commitment and honesty to the purpose. My suggestion to TV channels would be to bring these (and other little known but hardworking) faces into public domain. Let us showcase their work, their life and sacrifice, and turn them into heroes. The nation needs a new crop of real heroes, beyond celluloid. And let me assure you your TRP rating (viewership) will not fall, but will actually increase provided you know how to present the show. Aamir Khan has shown that. Content should reign supreme, and not the noise decibel. People want to know the real truth, want to lend support for the social causes, and media can surely help galvanize the country towards a better future.

'When Paris sneezes, Europe catches cold."

2012-05-08T12:28:00.000+05:30

No sooner results of French elections were announced, the markets went volatile. The new President, Francois Hollande, who loves calling himself 'Mr Normal', has already caused enough panic. With France losing its AAA credit rating, and also promising a socialist turn, the mood is certainly down. The reason is obvious. While the French see the emergence of the socialist Francois Hollande as a bacon of hope, the financial markets are upset. And once the financial markets are upset, you can be sure the mainline media and mainline economists will stand depressed.

Writes The Times of India in its balanced editorial, captioned French Evolution (May 8, 2012): "Hollande paints a roseate vision of the French economy -- promising thousands of new public sector jobs, lowering the retirement age, boosting social services -- but is yet to explain exactly how it will all happen. France's fiscal deficit is huge, causing Standard and Poor's to have downgraded its credit rating. Hollande promises closing this deficit by taxing the super-rich, a plan that may just lead to a flight of the panicked capital." Giving workers to right to retire (and earn pension) at the age of 60, if they had begun to work at 18, investing in French schools, and creating 1,50,000 new jobs besides pulling the French troops out of Afghanistan before the year end are some of the promises he has made.

Well, I am not an expert in foreign affairs nor am I am a keen follower of European politics. But over the last few years, the economic collapse of 2009 followed by the Eurozone crisis, has made me sit back and understand what is going wrong. I always thought Germany's misplaced emphasis on budget-tightening measures, better called austerity measures, were planned and promoted by the financial markets. The idea was to bring more money into the hands of rich, turn them into super-rich, and then believe some of it will trickle down to the poor. This is what Noam Chomsky had once termed as 'tough love' -- tough for you and me, and love for the rich.

I am not sure whether mainline economists and the mainline media will let Hollande wear his surgical gloves, and undertake some radical reforms that turns French economy for the benefit of its majority population. After all, US President Obama's rant of "a change you can believe in" remained a hollow promise. Corporate America didn't let me him perform the surgery he needed to. In the process, America has been left bleeding. It therefore relies more on 'quantitative easing' -- printing of currency notes, and bullying developing economies and other developing countries to open up for American products. It will not last long. We all know.

French President Hollande doesn't have to follow the stock markets to know what he is doing is right or wrong. The moment he disconnects with the financial markets, I can see a bright future for France. And as an Austrian statesman, Klemens Wenzel von Metternich, once said: "When Paris sneezes, Europe catches cold," I can only hope the cold Europe catches spreads like a virus across the globe. All that Hollande needs to focus on is how to convert his poll promises into action. Forget about fiscal reforms and rebuilding French competitiveness, as economists will go on suggesting, focus more on social turnaround. France needs to create mass employment, and spread the benefits of economic growth equitably among the masses. It needs a radical overhaul of the macro-economic policies that have brought the world to a brink. Hollande can surely lead the world out of dark woods. He has the mandate to do so. He cannot waste this opportunity.

Policy paralysis: Is it an economic term for exploitation?

2012-05-01T12:32:00.000+05:30

"India no longer Mittal's priority" screamed a headline in The Economic Times (April 30, 2012). Having seen the Steel tycoon occupy the dias with Prime Minister Manmohan Singh at the inauguration of the Bathinda refinery in Punjab a few days back, I was obviously curious to know the reason. I read the news report more carefully. The sub-head itself made it quite clear: Policy paralysis forces steel tycoon to go slow. Further, I read: "My success lies in giving returns to shareholders. If decisions are slow (referring to India), we will go slow on investments."

So that's the truth. Mittal is not here to partake in India's growth, but to ensure better returns to his shareholders.

A day later, on May 1, the Indian Express had another interesting report. Captioned: "No direct benefit to state from Rs 21,500-crore Bathinda refinery (http://bit.ly/IDq4Zt)," it set me thinking. Now you will ask me what has this news report to do with policy paralysis? Well, to understand what does the term 'policy paralysis', which is so often used, actually mean, I am using this illustration. I have often heard the term policy paralysis from almost all the mainline economists and policy makers, and also from the TV panelists. And that makes me wonder why is that when the Bathinda refinery got its approval, and that must be several years ago, Laxmi Niwas Mittal never complained of policy paralysis. Why?

After Mittal came on board in 2007 (it is a HPCL -- Mittal Energy Limited (HMEL) joint venture -- he demanded more fiscal concessions. And he got it. Let us see the freebies the then Punjab government had doled out for the project. Before Mittal came on board, it acquired 2000 acres of land in Phulkhari, Kanakwal, Ramsra and Raman villages in Bathinda district. According to the report, the cash-starved State gave Rs 1250-crore in interest free loan spread over 5 years and on top of it gave a tax holiday for 15-years. Why this largess, no one tells us. Still worse, what is shocking is that all these concessions do not bring any benefit to the State, all benefits accrue only to the stakeholders of LN Mittal. Wah ! this certainly is some economic growth !!

Is this what in reality the word policy paralysis actually connotes? If the State doles out fiscal concessions, the business environment is perfect. But when the State is unable to shower concessions, and open up the State exchequer for the private companies, policy paralysis sets in.

You will also see that the debate on policy paralysis is accompanied by beating of the drums by the propaganda machinery. One such Oped article that drew my attention was in the same edition of the Economic Times that had Mittal on the front page. The article The Regulatory Chakravyuh by Pradeep S Mehta called for the urgent need to do away with cumbersome rules that hurt business growth. Well, the underlying message is clear. Business must be allowed to exploit ruthlessly. All bottlenecks that come in way of such unregulated exploitation must be cleared.

If you don't let business exploit, you will be accused of policy paralysis.

Where are farm hands when you need them?

2012-03-23T21:29:00.001+05:30

Recently, Rural Development minister Jairam Ramesh, rubbished the need for freezing the flagship rural job scheme MNREGA during peak agricultural season. Dismissing the possibility, Ramesh had said: “The matter has been examined by the Mihir Shah committee and rejected.” Knowing that Mihir Shah’s entry into Planning Commission was entirely based on his blind support for MNREGA, I am not the least surprised. What baffles me is the ease with which Jairam Ramesh, one of the more sensible of the Cabinet ministers, rejects the need when the farming community is faced with a terrible shortage of labour at the time of harvest.

Jairam Ramesh was reacting to Agriculture Minister Sharad Pawar’s simple and long standing demand for freezing MNREGA activities in the three peak months of harvesting and sowing. This also found a mention in the Economic Survey 2012 thereby inviting Ramesh’s ire. The Survey had rightly stated: “While the overall performance of MNREGA has been good, there is scope for improvements like focused planning, shifting to permanent asset and infrastructure building activities .. avoiding peak seasons in agriculture.”

Considering that MNREGA provides for 100 days assured employment, and there are 365 days in a year, I don’t see why the Planning Commission, the Ministry for Rural Development, and as well as the National Advisory Council, should have any objections to the legitimate demand of the Agriculture ministry. After all, if rural employment guarantee programme is hampering agricultural operations, the first and foremost need is to redraw the contours of the programme in a manner that agriculture is least affected. Even if it needs an amendment in the MNREGA Act, it must be done. At no cost can the employment guarantee programme be allowed to play havoc with farming operations.

In any case, MNREGA is supposed to provide assured employment during the lean months and I see no logic in continuing with its activities at a time when agricultural operations are at its peak. This is a time when rural labour in gainfully employed. I see no reason why the Ministry of Rural Development should wean away farm workers at a time when they get assured employment. The basic objective of the rural employment scheme is to supplement job creating rather than to displace workers from agriculture and employ them instead in some mundane activities like digging ponds.

MNREGA has completed five years. And it is in these five years that the crisis in agriculture has also worsened. In lot many ways I find the terrible agrarian crisis directly proportionate to the absence of farm labour in the rural areas. With labour moving to non-farm activities, and with reports of massive corruption that prevails in the way the rural employment guarantee scheme is being operated, it is a known fact that workers now get paid for not doing anything. They get reduced wages but often do not have to work, just sign. Travelling across the country I find workers sitting idle when farm operations are at its peak.

Acute paucity of farm workers is also among the reasons why more and more farmers are quitting agriculture. Let us not forget that over 60 per cent of those who seek guaranteed employment are marginal farmers owning small tracts of land. Sharad Pawar is therefore absolutely right when he demands freezing the employment guarantee scheme at the peak periods of farm operations. Not paying heed to the crying need will ultimately kill agriculture.

Now if you are wondering as to who gains by keeping rural workers away from agriculture, it is the agribusiness industry. Shortage of farm labour has already led to the creation of a National Mission on Farm Mechanisation. More mechanisation is being suggested as the way to overcome the crisis in farm labour. In the absence of manual weeding, it is time to promote herbicides as the solution. It is therefore a windfall for farm implement manufacturers as well as suppliers of pesticides, including herbicides. The more the sale of chemical inputs and farm machines, the more will be the addition to GDP. No wonder, the Planning Commission is not in favour of letting farm workers remain on the farm.

Source: Tehelka, Mar 31, 2012
http://www.tehelka.com/story_main52.asp?filename=Op310312proscons.asp#

Nothing Special about Special Economic Zones (SEZs)

2012-01-26T13:28:00.000+05:30

Some years back I delivered a memorial lecture at Rohtak in Haryana. The Haryana chief minister Bhupinder Singh Hooda was in the chair. Knowing how flawed his economic thinking of acquiring large tracts of farmland for the sake of industry in the name of Special Economic Zones (SEZs) was, I dwelled upon the dangers and the disastrous fallout waiting to happen as far as livelihood security of the masses and country’s food security was concerned.

Hooda was obviously irked, and visibly angry. Cutting me short, he got up and intervened saying how right his policy was for the farmers, and for the state’s ultimate economic progress. I asked him where and when was a public discourse held to know whether SEZ was a good investment, and he retaliated by challenging me to an open discussion anytime later in Chandigarh, which of course never happened.

Several years later, I stand bemused to find Hooda take a complete u-turn: “It is true that SEZs have not succeeded, not only in the state but in the entire country. There was economic slowdown in the entire world, so SEZs could not succeed,” he said recently. Although he acknowledges the fault, what he says in its defence is also not correct. And this is true for the entire policy making process, which still refuses to accept the fundamental flaws in the SEZ policy. As IMF chief economist and an advisor to the prime minister, Raghuram Rajan, had stated way back in 2007: “India’s SEZ policy was a tax give-away and was likely to shift Indian production to SEZs rather than create new economic activity.” He was quoted in the Wall Street Journal as saying “these zones would be viable only if they focused on providing superior infrastructure, business-friendly regulations and exemptions from labour laws rather than offering often misdirected subsidies, guarantees, and tax sops that a stretched budget can ill-afford”.

By October 2011, ministry of commerce had approved 583 SEZs. As per news reports, one-third of these – approximately 202 -- have been already withdrawn. A majority of those who are still struck are known to be looking for better escape options. For instance, the realty giant DLF with its joint venture partner Hubtown, has recently sold its IT SEZ in Pune to a private equity firm Blackstone for Rs 810-crore. In Haryana, Reliance Haryana SEZ Limited (RHSL), a Mukesh Ambani’s Reliance Ventures Ltd and Haryana State Industrial and Infrastructure Development Corporation (HSIDC), is the latest one to drop out. It had earlier shelved its Jhajjar SEZ and converted it into a model economic township to be implemented by a new company.

Reliance was seeking further extension for its Gurgaon SEZ, but has been finally asked to return 1,383 acres that it got from the state government. In Andhra Pradesh, 109 SEZs were approved, only 36 are operational. The Andhra Pradesh Industrial Infrastructure Corporation has scrapped the MoUs with the major defaulters and taken back the land assigned, including from Unitech and Caparo. In Haryana, only 3 of the 46 approved SEZ are in operation.

SEZ were promoted as a engine house of economic liberalisation. These were primarily set up to prop-up the slowing economy. These were supposed to drive exports, and, in turn employment and growth. All kinds of sops – tax waivers and giveaways – including precious land provided at a throwaway price, were given to energise manufacturing and exports. To blame the economic slowdown therefore for the failure of SEZs to take-off is to find an easy escape route for the fundamentally flawed policy. Even before the global economic meltdown of 2009-10, SEZs had failed to live up to the expectations and at the same time failed to demonstrate any significant upswing in export growth. In reality, it provided a massive windfall for realty developers. SEZ were perceived as real estate ventures and therefore an opportunity for land grab where developers could use 65 per cent of the acquired land to build hotels, restaurant and apartments.

Why blame Hooda alone, prime minister Manmohan Singh too was mesmerised by the SEZ potential. At an award ceremony in Mumbai in 2007, he had said: “Special Economic Zone (SEZ) is an idea whose time has come.” Supported by all political parties, including the Left Front, he actually launched a nationwide campaign to forcibly acquire and make available land on a platter to the industry, displacing lakhs of farmers. What began with SEZ subsequently continued in the name of industrial development. Farmers resisted, and pitched land battles were waged across the country, the likes of which have not been witnessed in living memory. The resulting social unrest across the rural spectrum was considered to be a small price the country must pay for achieving long-term development. As companies lined up for SEZs, most state governments went aggressively into property dealing.

As expected, not many states have realised the social and economic benefits that were originally promised. Except for the IT sector, which has very cleverly used SEZ to seek further extend the tax exemption period, the enthusiasm from other sectors was clearly missing. In essence, SEZ was a misplaced idea whose time had lapsed much before it caught the imagination of policy makers in India.

US expresses displeasure over delay in FDI in Indian retail while US/EU love for Big retail is over.

2012-01-15T13:22:00.000+05:30

US is visibly upset. According to a news report, US Trade Representative Ronald Kirk has postponed his visit to India presumably to 'convey US displeasure on India going slow in giving market access to the American companies, in areas like retail, banking and insurance'. Another US Senator and co-chair of the Senate India Caucus Mark K Warner has also expressed his displeasure. "I am seriously concerned about delay in implementation of FDI in multi-brand retail," he told the CII Partnership Summit 2012 [US Senator upset over delay in FDI in Indian retail http://www.moneycontrol.com/news/current-affairs/us-senator-upset-over-delayfdiindian-retail_650019.html]

Notice the tone of displeasure that Mar R Warner conveys. He seems to be talking like a school Headmaster complaining about some students who fail to live up to the prescribed discipline.

But you shouldn't be surprised. That is what the US treats Indian government as.

A few days later, P K Chaudhary, Secretary, Department of Industrial Policy and Promotion (DIPP) reportedly told a group of farmer representatives that he was not seeking a plebiscite on the issue whether India should allow FDI in retail but trying to find out safeguards that needed to thrown in. In other words, the decision to allow FDI in retail has already been taken. This is quite evident from the press release that some of the farmers' organisation issued after meeting the DIPP Secretary. While they opposed the entry of Retail FDI, the DIPP Secretary gave an impression as if there was general support for the opening of the retail market. Well, didn't I say earlier: how can the DIPP (on behalf of Govt of India) dare to annoy the Headmaster?

This comes in the wake of another interesting report that Prime Minister Manmohan Singh and his colleague, Finance Minister Pranab Mukherjee, would not like to read. Nor would the mainline media, which is more or less sold to the idea since a lot of business interests are involved. Coming to the media, it is interesting that the same arguments that are being floated for opening up for Retail FDI are debunked when it comes to bringing in 100 per cent FDI in print media. Let me give you just one example. FDI in retail is expected to create jobs within the country. But when it comes to FDI in print media, the Information and Broadcasting Minister Ambika Soni told Parliament on Dec 20, 2011: "With the liberalisation process, 26% FDI has been allowed in foreign news and that category of newspapers. But it has been our considered policy and there is no unanimity in the country on increasing the FD quotient. It is also an endeavour on the part of the government to encourage the newspaper industry which is indigenous, which is Indian, so that our people do not lose their source of employment."

Well, you must have observed the double-talk. FDI in retail is being allowed for the same reason that you do not want FDI in print media to be allowed. The DIPP analysis therefore is nothing but bunkum, and should be discarded. It is an utterly flawed and faulty analysis, and needs to be questioned.

Returning back to the new emerging global trend in supermarket expansion, the Financial Times in an editorial End of space race [Jan 13, 2012] -- a paper that PM Manmohan Singh treats as Bible -- says: "Twenty years ago, hypermarkets drew shoppers like monuments draw tourists. People travelled for miles to browse these vast cathedrals of consumerism, which sold everything from fresh fish to televisions at everyday low prices. In 20 years’ time, the decision by Britain’s biggest food retailer, Tesco, to halt hypermarket expansion and shift its non-food sales increasingly online may come to be seen as a turning point for the industry. Consumers no longer want everything under one vaulting roof. They want to shop locally, take less time about it and avoid the temptation of buying what they do not need".

Considering that supermarkets are now stopping expansion, and going for 'small is beautiful' approach, I don't understand the logic why should India be opening huge malls for multi-brand retail? Wal-Mart has also shifted to smaller stores, called Wal-Mart Express. Why should we be made to go through the grind, and learn our lessons 20 years later? By the time, the damage would have been done.

But will our PM like to read the writing on the wall? Your guess is as good as mine. He awaits instructions from his Headmaster !

Here is the FT editorial:

End of space race

Twenty years ago, hypermarkets drew shoppers like monuments draw tourists. People travelled for miles to browse these vast cathedrals of consumerism, which sold everything from fresh fish to televisions at everyday low prices.

In 20 years’ time, the decision by Britain’s biggest food retailer, Tesco, to halt hypermarket expansion and shift its non-food sales increasingly online may come to be seen as a turning point for the industry. Consumers no longer want everything under one vaulting roof. They want to shop locally, take less time about it and avoid the temptation of buying what they do not need.

This trend is apparent well beyond the UK. In France, the birthplace of the European hypermarket, consumers are shunning the big boxes out of town in favour of discounters and convenience stores. Even in the US, the mighty Walmart is beginning to open smaller stores to tap the convenience boom. People are busier, the population is ageing and they have less to spend on big weekly shops as well as on the petrol to get them to out of town outlets.

Tesco was bold in being the first of Britain’s big four to openly declare the end of a hyper-expansion drive that will see 26m new square feet added in the next few years. Though it has been apparent for some time that the hypermarket model of combining high margin non-food items with the weekly grocery shop was becoming less attractive, each retailer was afraid to change tack for fear of calling the trend wrong and losing market share. Tesco’s decision should help to mitigate what had become a damaging and costly race for space in a market where volumes have fallen for the first time in 30 years.

It is less obvious that Tesco’s move signals a revolution in online retailing, however. Consumers are still reluctant to buy their food on the web, as the woes of Ocado, Britain’s only true online food retailer, show. Overall, online food sales account for just 4 per cent of the industry after 15 years.

The real revolution will be to accelerate the shift in bringing sophisticated food retailing back to the high street. This is good news for Britain’s many dying town centres. A more vibrant high street is good for community building and for the environment. Shoppers will be less inclined to take their cars to out of town centres if what they need is within easy reach. But this poses a challenge for local councils. Retailers complain that they struggle to find good sites. Property developers are reluctant to take on town-centre projects because of rules that require additional investments, such as new roads or libraries, to secure planning permission. Such constraints must be lifted. Otherwise, the high street risks becoming a monument to a missed opportunity.

'The Foundation for New Agriculture' taking roots

2012-01-14T11:24:00.001+05:30

We ushered in the new year with an energised start that saw a gathering of 14 veteran natural farmers up at Patanjali Yog Peeth in Haridwar to discuss the potential of agriculture with a new dimension. Agriculture that is safe, sustainable, user friendly and affordable by marginal farmers.

I am truly delighted to share the highlights of this 4 day meet (1st - 5th Jan) with you.

The 'One small step towards chemical free agriculture' as Devinder coins it, is his brain child.( article below). For a long time now, it has been Devinder's mission to equip marginal farmers and release them from their debts by linking like-minded green guardians on a common platform, help provide alternative safe farming practices. Hence, revolutionize the safe food movement, a dream now slowly manifesting not just for him but for all of us.

By educating and winning the trust of most spiritual leaders on food and trade issues, Devinder's concerns finds a voice to awaken and alert a vast devotee following. His perseverance is bound to bear fruition. His consistent proactive advice and interactions with Swami Ramdev, the yoga guru whose unceasing zeal since 2002 has been to educate the masses daily on apackage of seven simple breathing exercises whose message to all, more so to young India, is to take charge of the mind, body and soul. In fact while at the deliberations, we were invited by Swami Ramdevji to partake in his yog session amidst 40,000 devotees. Most admirable, especially when you get to witness first hand a 100 Surya Namaskaars in record time of 4 mins! Whilst each one of were dazed, overwhelmed at his energy levels, it also unraveled how unfit we all were! Swamiji does not just advocate good health through yog but to indulge in safe foods and avail the benefits of Ayurveda to make it an integral part of one's life rather than to be at the mercy of hospitals.

To this effect, Swami Ramdevji wished to explore how safe sustainable agricultural practices could be brought into the forefront of National food security that starts at the grass roots. Hence, 14 best practitioners in this field were identified from across the country and then invited for a 4 day deliberation at Haridwar. We had the privilege of Swami Ramdevji's energised presence throughout these 4 days from 9am- 8.30pm!

I have yet to know of any spiritual leader who takes such deep interest and quality time out to understand the best practices presented by each one of our veteran farmers. My joy knew no bounds as i had the privilege and opportunity to present and share my farm learnings with Swami Ramdevji, Devinder and our humble agriculture gurus. This was aired live on Aastha channel. The genuine interest, the probing dilemmas, the crisis faced by our farmers, the solutions were dissected and tackled in earnest by Swami Ramdevji. Most inspiring to see his intensity during our presentations, the grave questions asked, jotting relevant points in his small black note pad, then summed it all up with much ease.

It did not just stop there. The most important issue that arose was how this would translate on the ground. Then came an action plan to execute three safe sustainable farm models in Hardiwar to start with, as seeing is believing! Prompt decisions were instantly taken by Swami Ramdevji and Acharya Balkrishanji to allocate land in Hardiwar for the 3 farm models. Suresh Desai a founding member of an Organic Farmers' Club with over 400 members in Belgaum District of Karnataka will design a model, Subhash Sharma- whose 32 acre farm in Yavatmal is flourishing, and has become a model for hundreds of other farmers will design the second one. And me and team Annadana the third one...on the traditional vegetable and cereal for the purpose of seed production, multiplication and conservation. Concurrently Team Annadana will also design a seed bank, one that is replicable.

Further, to strengthen our models, the back up ammunition of time tested knowledge and expertise arising from our team of Krishi Vigyaans or Krishi Rishi as Swami Ramdevji fondly calls us are Natbar Sarangiji who maintains 365 indigenous rice germplasm collection, Raghuvanjiji on 100's of varieties of indigenous wheat, Dr Surendar Dalal expertise has no bounds on insect and pest management, Dr Narayan Reddy on his wisdom of integrated farm practices, Rajbir Singh from All India Pingalwara Amritsar sharing his successful experience, Amarjit Singh Sharma from Faridkot who continues with vigor in producing and marketing safe crops in the most infested toxic bowl of Punjab, Shoor vir Singh from Uttar Pradesh whose knowledge on 95 varieties of weeds and their uses is just incredible, Ahir Mayan Hamir from Kutch with his expertise on groundnuts and castor and the young new age farmer Poorvi Vyas, with her research and development background so handy to document and aid each one us willingly and cheerfully.

Work has already commenced in the selected fields with best practices in soil fertility management being implemented. A team of reliable, enterprising points of contact co-ordinated by Vinod Kumar Birkhani, Uttarakhand Open University, school of agriculture and Sanjay Khare, a dedicated sevak from Patanjali Peet Yog are monitoring this whilst we have come back to our respective destinations carrying forward the energy to our teams.

There is a buzz, an excitement, a challenge to plan and showcase low cost sustainable farm models and we hope to see this through in 2012.

An overwhelming response of interest and support continues to flow when Devinder Sharma's wrote about this on his facebook. Those interested to lend support may connect him on hunger55@gmail.com

(From My right to Safe Food campaign newsletter) Jan 14, 2012

Shame and shammer: PM on malnutrition

2012-01-14T09:31:00.000+05:30

Ten years back, in April 2001, the then Prime Minister Atal Bihari Vajpayee, said in his inaugural address at a national consultation on “Towards a Hunger Free India” in New Delhi: “Democracy and hunger cannot go together. A hungry stomach questions and censures the system’s failure to meet what is a basic biological need of every human being. There can be no place for hunger and poverty in a modern world in which science and technology have created conditions for abundance and equitable development.” And yet, all his government did was merely rename and ‘strengthen’ the public distribution system and to “use food stocks in an imaginative and purposeful way” to stabilise prices and boost exports.

Hunger proliferated, and malnutrition grew.

When I see Prime Minister Manmohan Singh express shock and disgust, terming malnutrition a ‘national shame’ I am not the bit surprised. Seeing the timing of the report before the coming State Assembly elections in five States, the entire exercise seems to be aimed at the electoral prospects. Releasing a report on Hunger and Malnutrition (HUNGaMA) in New Delhi recently, he said: "the problem of malnutrition is a matter of national shame. Despite impressive growth in our GDP, the level of under-nutrition in the country is unacceptably high." The bigger shame of course is that it took the Prime Minister 7 years in office to feel concerned at the extent of ‘malnutrition’ that prevails among children below 6-years age.

A year back, the international child rights organisation Save the Children had come up with a damming report, which probably missed the Prime Minister’s attention. After all, we can’t blame his office for keeping the Prime Minister in the dark about the failure of the high-growth trajectory in making any significant reduction in poverty, hunger and malnutrition. Nor did he find anything unusual when the Planning Commission raised the percentage of ‘below poverty line’ population on the recommendation of Suresh Tendulkar committee report. This happen despite

India

’s GDP continuously remaining on a high. This is because the entire policy planning, as we know, continues to revolve around opening up for more foreign direct investment, acquiring agricultural land for the industry and providing all kinds of sops and tax-concessions to the industry in the name of ‘policy paralysis’.

The Prime Minister probably had also missed reading the report of National Family Health Survey III 2005-06 which showed that half of all children in India were under-nourished.

Shocking indictment

Another damming report “A fair Chance of Life” released in September 2010 did not hit the front pages of prominent newspapers simply because it wasn’t backed by any group of parliamentarians. Nevertheless, it was a shocking indictment of the economic paradigm that actually perpetuates hunger and malnutrition by widening economic disparities. The report said: “Of the 26 million children born every year, approximately 1.83 million died before their fifth birthday”. Half of these children actually die within a month of being born.

Half of the 1.83 million children, who die before their fifth birthday in India, actually die within a month of being born. This is a clear pointer the dismal state of health of the mothers. After all, a newly born malnourished child owes much to the impoverished mother’s health, which in turn points to the inability and inefficiency of the public distribution system to reach food to the poor and the needy. Hunger and malnutrition are closely correlated. Feeding the population is the first requisite to building up a healthy population. Supplementary nutrition programme like the Integrated Child Development Scheme (ICDS) can only be effective if first people are adequately fed.

The Prime Minister is right when he said: “We have believed that a mother’s education level, economic status of the family, provisions of sanitation, status of women and breast-feeding affect children’s nutrition”. Each survey validates these linkages but where is the nationwide programme to fight malnutrition on a war footing? The ICDS programme, aided by a faltering anganwadi system, is crying for attention. For 37-years now, ICDS has failed miserably to reach anywhere near its objective of ensuring child health and nutrition. It failure can be gauged from the fact that the ICDS programme operates in the 100 districts in which the HUNGaMA survey was done. The deteriorating health of the ICDS programme has to be first addressed before it can be expected to take care of expecting mothers and the children.

Still more importantly is to first understand the crucial ink between growing hunger and malnutrition and the economic policies being perpetuated. Hunger is the result of faulty economic policies which widens the gulf between the haves and have-nots; is the outcome of policies that take away community control over natural resources like water, forests and farmlands; and is also the fallout of neoliberal policies that removes social security nets and allows corporate takeover of agriculture. The more the government destroys the very foundations of agriculture forcing farmers to abandon farming and migrate into the urban cities in search of menial jobs, the more is likely to the growth in hunger and malnutrition. Instead of extending what is visibly a mere lip-sympathy to the poor and malnourished, the Prime Minister needs to recast his economic policies making it pro-people and pro-environment.

Source: Deccan Herald, Jan 14, 2012.
http://www.deccanherald.com/content/219133/shame-shammer.html

You may also like to read Dinesh Sharma's report in Mail Today
'National shame' on PM Manmohan Singh as kids go hungry
http://bit.ly/yuWxOc

Only lip-sympathy for the malnourished

2012-01-12T17:03:00.001+05:30

Although Prime Minister Manmohan Singh termed malnutrition a national shame, it appears as if only the legislators and the parliamentarians are the ones who are affected. A day after the Prime Minister released a survey report that stated 42 per cent children below the age of 6 yrs are malnourished; the Andhra Pradesh Assembly gave a hefty hike in salaries and allowances, and provided swanky SUVs to its legislators. The salary of AP minister will increase from Rs 70,000 to Rs 2 lakh, and the monthly allowance for MLAs will rise from Rs 36,000 to Rs 90,000. Telengana MLAs are being provided with swanky Toyota SUVs.

This is coming at a time when the Integrated Child Development Scheme (ICDS) is struggling with a terrible paucity of funds. Minister for Child Development Krishna Tirath has sought an increase of Rs 2 lakh crore for the next five years to augment the nationwide programme that helps provide supplementary nutrition to children and their mothers.

While the poor and malnourished are languishing, Delhi MLAs were showered a few months back with hefty pay hikes and additional allowances. An MLA, who used to get Rs 42,000 per month, now gets anything between Rs 90,000 and Rs 1 lakh. Ministers are getting a higher salary of Rs 1.2 to 1.3 lakh per month. On an average, the hike in basic salary resulted in a 100 per cent increase with a slew of additional perks like travel allowance, constituency allowance and allowance for attending the session were also appreciably enhanced.

Prior to Delhi, nine States including Punjab, Haryana, Uttar Pradesh and Karnataka had raised the salaries and perks of their legislators. Ironically, the State government too have time and again expressed their inability to provide its own share of resources to augment the supplementary health programmes. While the State’s have all the money for showering freebies for legislators, they have no money, for example, for the anganwadi workers. The anganwadi workers get a maximum of Rs 1800 per month, and are expected to counsel and motivate the expecting mothers. The anganwadi helpers are paid still less. In other words, the anganwadi workers and the helpers are themselves surviving ‘below the poverty line’.

And now take a look at how the country is trying to fight malnutrition with meagre resources. According to the ICDS website, for supplementary nutrition the financial norms were revised recently. The cost of supplementary nutrition (per day per beneficiary) for different category of beneficiaries vide the Ministry’s letter No. F.No. 4-2/2008-CD.II dated 07.11.2008, are: Children (6-72 months): Rs 4 (up from Rs 2); Severely malnourished children (6-72 months): Rs 6 (up from Rs 2.70) and Pregnant women and nursing mothers: Rs 5 (up from Rs 2.30). No wonder, the Ministry has sought a four-fold hike in the budget of ICDS. All earlier efforts of the Ministry, and also by various Plan panels, acknowledging that the allocation for the priority sector programme was abysmally low had met with the standard answer: no additional funds are available.

Only a miracle can remove malnutrition in the allocated Rs 4 for a child and Rs 6 for a pregnant mother. The 2005-06 National Family Health Survey III had showed that half of all children in Indiawere under-nourished.

In September 2010, when an international child rights organisation Save the Children had come up with a damning report, the Indian Parliament had passed a bill that raised the basic salary of parliamentarians by three times, from Rs 16,000 to Rs 50,000 and at the same time raising their daily allowances and pension. Ironically, the Save the Children report “A fair Chance of Life” had stated: “Of the 26 million children born every year, approximately 1.83 million died before their fifth birthday”. Half of these children actually die within a month of being born. Parliament did not even take notice of the severity of the prevailing health crisis.

Therefore when I see Prime Minister Manmohan Singh express shock and disgust, terming malnutrition a ‘national shame’ I am not the bit surprised. Seeing the timing of the report before the coming State Assembly elections in five States, the entire exercise seems to be aimed at the electoral prospects. Releasing a report on Hunger and Malnutrition (HUNGaMA) in New Delhirecently, he said: "the problem of malnutrition is a matter of national shame. Despite impressive growth in our GDP, the level of under-nutrition in the country is unacceptably high." This happen despite India’s GDP continuously remaining on a high.

While the entire policy planning, as we know, continues to revolve around opening up for more foreign direct investment, acquiring agricultural land for the industry and providing all kinds of sops and tax-concessions to the industry in the name of ‘policy paralysis’, the hungry and malnourished continue to live on hope. For a country which has the dubious distinction of having the largest population of hungry – an estimated 320 million – and ranks below Sub-Saharan Africa in malnutrition, there is little money when it comes to addressing malnutrition. Hunger and malnutrition are closely correlated. Feeding the population is the first requisite to building up a healthy population. Supplementary nutrition programme like the Integrated Child Development Scheme (ICDS) and anganwadis can only be effective when adequate resources are made available. But where is the money?

One small step towards chemical-free agriculture

2012-01-08T15:28:00.001+05:30

For quite sometime now there has been a silent resurgence in sustainable farming practices across the country. After the environmental destruction wrought by the chemical-based external input driven agriculture for almost four decades now, I find a large percentage of farmers trying whatever they can to salvage the situation. While on the one hand I can count a sizable number of progressive farmers in different parts of the country who discarded chemical-based farming system (and some of them were even awarded and honoured for achieving record yields) and opted for more sustainable farming practices, there is quite a significant proportion of the farming community which has moved away from the Green Revolution approach to farming.

Call it organic agriculture or natural farming or holistic farming or whatever variation you can think of, the fact remains that Low External Input-based Sustainable Agriculture (LEISA) is now being increasingly adopted. Innovative farmers are trying all kinds of permutations and combinations, and I am really amazed at the extent of wisdom our farmers carry. I am not going to list here the innovations being applied, but all I can say is that the mainline agricultural research system would certainly be the gainer if they were to move out of the 'lab-to-land' approach and follow the reverse mode of 'land-to-lab'.

For quite sometime I had wondered if I could ever bring some of these innovative leaders together on a platform and chart out a strategy to put this all together and spread it across the country in a mission mode. I am aware of the reluctance on the part of the agriculture universities as well as the policy makers to extend a helping hand. At the same time, I was also aware of the limitations that the civil society has. Although several groups/individuals are spearheading the silent movement in their own way, but given the monumental constraints that prevail, it isn't moving ahead at a pace I would have expected.

At my own level I had discussed the possibility of forming a consortium with like-minded groups/farmer organisations to spread sustainable farming practices far and wide and to even the remote corners but somehow it didn't work out. It was then that I met the Yoga Guru Swami Ramdev who is better known for the monumental role he has played in promoting healthy living through yoga. Healthy living is directly related to healthy food, which in turn is directly proportionate to cultivation of healthy crops. Over the period, we discussed the possibility of laying out sustainable farming models, where soil, water and food is not poisoned, and then preparing an outreach programme through regular training and learning exercises.

The New Year provided an opportunity. 14 well-known practitioners in sustainable farming methods assembled at Haridwar (at the foothills of the Himalayas) for deliberations which continued non-stop for 4 days. We would sit from 9 in the morning and the discussions would go on till 8.30 in the evening. Such was the intensity of deliberations and the commitment to the cause that even after dinner the participants would once again assemble for an informal round of discussions. Well, to cut the long story short, it has now been decided to layout three models of chemical-free farming, each catering to the requirement of farmers who farm in one acre, two acres and five acres. Once the farming system comes up in Haridwar, we would throw it open to farmers to adopt and improve upon depending upon their local conditions and requirements. This would simultaneously be followed with preparations for a nationwide training programme, which too would depend upon the need and the requirement of different regions.

The plots were selected, earmarked and soil preparations began the day the deliberations ended. Soil samples have been drawn, and we are now getting ready for the next step. Meanwhile, a week-by-week action plan has been laid out, and the package of practices to be immediately followed is also being worked out, and improved with each passing day. Soon after Swami Ramdev made public the initiative on Aastha TV channel, I have been deluged with requests and support from hundreds of people from across the country. Let us hope that this small initiative galvanises the country to move away from 'business as usual' in agriculture, and ends up promoting healthy farming. I am looking for the day when agriculture does not lead to suicides, does not push farmers into distress, and above all does not usurp the natural resources. The Haridwar initiative is a small step, and I am aware we have a long journey ahead. #

India's shameful paradox of plenty

2011-12-23T22:22:00.000+05:30

It's a paradox of plenty. At a time when

India

ranks 67th among 81 countries in the 2011 Global Hunger Index prepared by the International Food Policy Research Institute, mountains of grain continue to rot in godowns while more recently, irate farmers spilled tonnes of potatoes on the streets in Punjab. A few months ago, it was tomato farmers in Jharkhand, and then it was the turn of onion growers in Rajasthan. And if you think this is a recent phenomenon, you are mistaken. I have seen this happening for nearly 25 years now across the country at regular intervals.

Disgusting, isn’t it? Well, the visuals of food rotting speak volumes of the criminal apathy, neglect and callousness with which we, as a nation, have failed to address the shameful scourge of hunger. For a country that has the dubious distinction of having the largest population of hungry in the world — close to 320 million — and with 42 percent of children officially clubbed as malnourished, the spectacle of massive quantities of food being allowed to go waste is an unpardonable crime. What is still worse is that hunger proliferates in a country that claims to be the world’s largest democracy.

For nearly five years, procurement has hovered at 50-60 million tonnes. Someone had worked it out that if we keep a bag of grain over another, and stack 60 million tonnes in a vertical row, we could actually walk to the moon and back. With so much of surplus grain, and with unmanageable quantities of fruits and vegetables rotting by the roadside, there is no justification for growing hunger. At the same time, it is baffling to find staple food being exported while the population of the hungry and malnourished continues to multiply. No wonder, hunger continues to keep pace with economic growth.

Over the years, farming has become a big gamble. It is not only the worrisome vagaries of weather that more often than not plays havoc, farmers are also faced with a strange phenomenon — produce and perish. Take the case of Suryabhagwan, a farmer in the East Godavari district of Andhra Pradesh. This year, he voluntarily announced that he would rather work as a ‘coolie’ than undertake paddy cultivation. Already under heavy debt and knowing that another season of paddy cultivation will only add to his indebtedness, his call for a ‘crop holiday’ soon reverberated. Within weeks, the idea spread like wildfire, with the result that now more than 1 lakh hectares in the two irrigated districts of East and West Godavari lie barren.

AP is a paddy growing area. While production has been steadily on an upswing over the years, adequate market infrastructure for procurement has not been created. The result is that despite a very high production capacity, there is little space for storage. This is not only true of AP or for that matter Punjab and Haryana, the country’s food bowl, but extends to the whole country. The tragedy manifested after the initial years of the Green Revolution, when food became abundantly available. The focus then shifted away from agriculture. With public sector investment drastically falling over the past few decades, agriculture was left at the mercy of the rain gods. Protecting every single grain of food produced to feed the growing population of deprived sections never became a national priority.

While production increased, the accompanying market and storage infrastructure were not created.

India

does not even have the capacity to handle and absorb an excess production of 5 percent, whether it is of wheat, potato or cotton. Whatever the policymakers may say, the neglect of agriculture was deliberate. It is essentially designed to open up agriculture to private investment. Farmers have been the victims of a bigger and hidden design to push them out of agriculture. The more they produce, the more they suffer. Produce and perish, and thereby make way for corporate agriculture.

Source: Tehelka, Dec 31, 2011

http://www.tehelka.com/story_main51.asp?filename=Op311211proscons.asp

Punjab makes an effort to bring environment in political discourse

2011-12-21T22:35:00.000+05:30

The diatribe between the two major political opponents seems unending. In a build up to the impending Punjabelections, there is hardly a day when we don’t get swamped by charges and the counter-charges. While the underlying idea seems to settle political scores, there is hardly anything refreshing in the way charges are being traded.

Claims and counter-claims notwithstanding, I came across an initiative taken by several social, religious and environmental activists and organisations, which comes as a whiff of fresh air in this murky political climate. On December 14, more than two dozen environmentally conscious groups and individuals have formed a Vatavaran ate Samaj Bachao Morcha (Save Environment and Society Morcha). So as to protect health, environment, agriculture and the society from any further deterioration, the Morcha aims at making it mandatory for the political parties to present a time bound programme to improve the state of polluted environment, water, deteriorating health and at the same time take appropriate steps to prevent farming from turning poisonous.

There couldn’t have been a better and timely initiative. Punjab being the seat of Green Revolution, excessive use of chemical fertiliser and pesticides all these years has turned the soil infertile and poisonous, and at the same time leaching of chemicals into the groundwater has contaminated the water source. Political parties however have remained insensitive to the destruction wrought on the environment as a result of which deadly diseases like cancer are proliferating. Indiscriminate use of drugs and intoxicants too has played havoc with human health. A recent UNDP study had shown that as much as 74 per cent of the youth in Punjabhad consumed drugs at one stage or the other. In other words, both the soil as well as the human population has been drugged.

The Morcha’s aim is reach out to all political parties and leaders and apprise them of the growing destruction of the natural environment. It will impress upon these parties to accord environment protection highest priority in their manifestoes and in their respective governance agenda. The task does not end here. Not only the Morcha, it is also the job of every conscious citizen and voter to raise these concerns whenever they get to meet the prospective candidates or raise their voice in political rallies and meetings. Remember, you cannot leave the task of environmental protection, which is so crucial for your future generations, into the hands of a few environmentally-conscious citizens. You too have a role to play.

This is where we need to draw some lessons from Anna Hazare’s campaign for removing corruption. When a few of us had sat down in October last year planning for raising the issue of a strong janlokpal, we did not leave the task to our elected representatives. As founding members of the India Against Corruption campaign, we took upon ourselves the responsibility to fight corruption. We were hardly ten people in the beginning. Since we were determined, we were able to galvanise the nation to stand and fight for ending corruption. Similarly, you too can make an effort and make a difference.

I don't know if there are such initiatives also in the other states which are ready to go for elections. I am talking of environmental protection here. Environmentally-conscious citizens must make an effort to bring together sensitive and caring people from different walks of life, build up a charter of expectations, and then create wider awareness so as to reach the political parties. Unless people exert more pressure, environmental and social problems cannot be addressed effectively.

You can probably start by following the activities of the Vatavaran ate Samaj Bachao Morcha, which is headed by Sant Baba Balbir Singh Seechewal. Some of the well-known personalities of the region form the advisory group, and it includes: Prof Jagmohan Singh, Dr Nirmal Singh Panjabi, Dr Bibi Inderjit Kaur, Balbir Singh Rajewal, Pishaura Singh Sidhupur, and Dr GPI Singh. The core committee comprises among others Umendra Dutt and Singh Sahib Giani Kewal Singh. This is your opportunity to save Punjab.

Potato glut: Looking beyond the markets

2011-12-12T14:55:00.000+05:30

The clock has turned full circle. Some 25 years ago, potato growers in Punjab were forced to plough back the standing potato crop since it was more expensive to pull out the tubers from the soil. To demonstrate their indignation, some farmers had even dumped hundreds of bags of potatoes on the streets. Such was the glut in the market, potato prices had tumbled leaving farmers in an unprecedented distress.

Potato growers in Punjabare not an isolated lot. Farmers in Haryana, western Uttar Pradesh, West Bengal and Gujarat are also faced with an unprecedented glut. Cold storages in the northern region are dumping potato by the roadside or in the nallahs to make way for fresh arrivals. The tragedy is that this year the national production is up by 27 lakh tonnes, which is an increase of 7 per cent over last years's production. In other words, it means that even a 7 per cent increase in production causes an unmanageable glut.

The fate of potato growers is not much different from what is being felt by basmati and cotton farmers in Punjaband Haryana. In anticipation of a better price this year, based on the price realised last year, there has been a marked shift in acreage under rice to cotton, and basmati. While acreage under cotton had gone up by 19 per cent, the area under basmati increased by 15 per cent. Price of both the commodities has crashed as a result. Farmers are known to be withholding the produce waiting for the market rates to improve. This brings me to the central question. How long will farmers remain at the mercy of the markets?

Faced with a similar situation, and with no potential buyers for even last year’s harvest of paddy, farmers in East Godawari and West Godawari districts in Andhra Pradesh had gone on a crop holiday. Uncertainty of the markets has forced 90 farmers to take their own lives in the past one and a half months in Andhra Pradesh. Over-production of cotton and resulting low market prices has seen over a dozen suicides in the suicide-prone region of Vidharbha in Maharashtrain the past fortnight. Every now and then we hear reports of tomato farmers, onion growers and even mustard farmers dumping their crop by roadside somewhere or the other.

Returning back to potato in Punjab, in the past few days, newspapers are again full of reports of the massive potato glut that is forcing farmers to dump the harvested crop on roads. Saddled with 2.5 lakh tonnes of unsold harvest from the previous season, and in anticipation of a bumper crop this fortnight, the market has slumped. Against Rs 800 per quintal last year, farmers are able to realise merely Rs 100-150 this year. Such steep fall in prices has brought gloom in the potato belt.

Twenty-five years, and nothing seems to have changed for farmers. I still recall the then Chief Minister Darbara Singh providing Rs 5-crore for setting up cold storages. Over the years, with steady investment the number of cold storages has increased to 500 plus. If cold storages alone could have addressed the problem, potato growers would have been a happy lot all these years. On the contrary, farmers are reluctant to lift the stored potatoes from the cold storages because of the highly uneconomical prices prevailing in the market.

Nearly 20 lakh quintals of potatoes are lying in cold storages.

Following the newspapers over the years, I find quite a large number of editorials suggesting the way out from an unmanageable glut. Invariably, all editorials make three suggestions: provide additional cold storage space; encourage public/private investment for processing potatoes into chips and French fries; and finally some setting up plants for manufacturing vodka. I don’t blame the editorial writers alone, agricultural economists too haven’t looked beyond. They would obfuscate the issue by throwing in economic vocabulary that practically means little new.

Let us analyse these suggestions. Cold storages have been set up not only in Punjab but across the potato belt in northern India. Setting up more cold storages would certainly not help the farmers realise a better price at a time of glut. I have seen farmers being served legal notices by the owners of cold storages to lift the stored potatoes. A number of times I find farmers prefer to let the stored harvest lie in the stores than to sell it knowing well that it is not worth it.

Increase processing facilities for making chips and French fries is a suggestion that finds many takers. Not many realise that the market for potato chips is already over-saturated and many popular brands have vowed out. Market for French fries is also limited because many big retail chains actually have been importing frozen potato fries, whose import is allowed as per the WTO norms. Setting up a few vodka plants however seems to a suggestion made more out of jest than any seriousness. In any case, a vodka manufacturing plant would not require any big quantity that can make a significant difference to the production.

When the going gets tough, irate farmers invariably fall back upon the government for help. Potato farmers for instance have time and again met the Punjab Chief Minister Prakash Singh Badal and have been asking for government’s help in selling 20 lakh tonnes of potatoes lying in cold storage. Cotton farmers on the other hand are demanding a higher procurement price. Surprisingly, no one has demanded big retail companies like Reliance Fresh and Bharti to purchase the surplus potato. Probably farmers are aware that big retail is only a fair weather friend. The question therefore is there any way to ensure that farmers remain insulated from the vagaries of the markets?

I have three suggestions to make. First and foremost, there is an urgent need to strengthen market intelligence. It is time to prepare a crop map for the country. It has to be based on the nation’s requirements as to how much of a particular crop is what the country needs. Department of Agriculture, State marketing agencies and the Growers Association must collaborate to go into mapping the production potential and monitor the area sown under the crops based on the production potential and what can be handled. An alarm needs to be sounded when the area sown exceeds the permissible limit thereby ensuring farmers do not bring any more area under the same crop. This must be accompanied by a vigorous campaign to educate farmers not to go in for monocultures. Multiple cropping must be encouraged so that farmers are able to reduce dependence on one crop, and thereby reduce risk.

And finally, each state must set up a State Farmers’ Income Commission, which works out the monthly assured income package a farmer must receive based on production and irrespective of whether he is able to find a market or not.

Foreign capital based economy does not translate into more welfare for the people

2011-12-08T14:38:00.001+05:30

Chakravarthi Raghvan drew my attention to a very important issue that most of us find it very difficult to decipher. We therefore tend to accept what is being told to us. I am talking of the relationship (or difference) between GDP (Gross Domestic Product) and GNP (Gross National Product). Many of us use the acronyms inter-changeably or as if they are synonyms. He wrote: "Those moaning and bemoaning failure of the government to push through 100 percent FDI in retail trade, equating more FDI with more growth and 'welfare' (Financial Times has both a news report and comment), might look at the Paul Krugman blog on difference between GDP and GNP in such cases as the Irish example, where Foreign investor based economic growth (GDP) actually did not translate into welfare for ordinary Irish (GNP)."

I was curious to know how is he substantiating his statement. I looked at Paul Krugman's blog and found it very fascinating. Under the caption Irish Pfizer Smiling, he writes: "Ireland, you see, is a country with an extraordinary amount of foreign-owned capital; this means that gross national product, the income of Irish residents, is substantially smaller than gross domestic product, the income generated in the country. We normally focus on GDP, because it’s easier to measure accurately, but in Ireland’s case this can be misleading — because the gap between GDP and GNP has been widening." It means that the more foreign capital flowing into your country does not translate into welfare of the people, as measured by GNP. In other words, what Chief Economic Adviser to Prime Minister, Kaushik Basu, deputy chairman of the Planning Commission Montek Singh Ahluwalia, and a horde of other neoliberal economists are saying in support of FDI in multi-brand retail, as if it is going to be the panacea for all economic ills, is simply incorrect.

Krugman illustrates with a diagram that tells us how the Irish GDP has been steadily going up in 2011, but the GNP is not keeping pace. He says: "The slump has been deeper, and the recovery even less apparent, when you look at GNP -- which is what matters to the Irish -- rather than GDP. What's going on here? As I understand it, the recent rise in Irish exports is largely a matter of capital-intensive multinationals -- especially pharma -- ramping up Irish production. This is good for GDP, but generates very little income for Irish residents, so that GN doesn' gain." Thank you Krugman for explaining it so simply and clearly (for those who would like to look at the blog post, here is the link: http://krugman.blogs.nytimes.com/2011/12/06/irish-pfizer-smiling/).

To know how does GDP compare with GNP, I tried searching on the net. Here is what I found: GDP vs GNP http://www.diffen.com/difference/GDP_vs_GNP I will try to decipher the complex web in one of my future blog posts.

Corporate lobbying gaining strength in India

2011-12-07T21:50:00.001+05:30

Some days back, Dainik Bhaskar published one of my tweets. I wrote: “Wal-Mart has spent Rs 52-crore between 2007 and 2009 on lobbying. Will Wal-Mart tell us how much it spent on the Prime Minister’s office?” A few days later, I noticed the BJP leader Shanta Kumar asking the same question.

Crores of rupees have been spent over the past few years by some of the big multinational corporations to seek an entry into India. What may appear to be economic decisions taken by the government often turn out to be the result of intense lobbying by foreign companies. Besides Wal-Mart Stores, the coffee shop giant Starbucks, which runs a global chain of coffee shops, has been lobbying in Indiaseeking 100 per cent FDI in single brand retail. As per a disclosure statement it made before the American Senate, the company had spent more than Rs 1-crore in the first 6 months of 2011, for “market opening initiatives in India.”

Starbucks efforts have borne fruits. Finally, the govt has approved 100% FDI in single-brand retail.

Wal-Mart Stores, the world’s biggest multi-brand retail chain, had told the US Senate that it had lobbied for “discussions related to India’s Foreign Direct Investment (FDI).” In addition to Rs 52-crore spent between 2007-1009, the company had also incurred Rs 6-crore in the first 3 months of 2010 for the same purpose. In other words, crores of rupees are being spent by foreign companies to influence public policy and the decision making process. Not many of us know that the debate we see on the television or the articles we see in support of the foreign companies are often supported with lobbying money.

At a time when the American and European economies are faced with a recession, at least a dozen Corporate giants are lobbying hard to seek an entry into

India

. These include Wal-Mart, Starbucks, and financial services major Morgan Stanley, New York Life Insurance and Prudential Financial. The financial services companies have already gained with the approval granted to 100 % FDI in single-brand retail. In addition, technology companies Intel, chemical giant Dow Chemical, pharmaceutical major Pfizer, telecom companies AT&T, Alcatel-Lucent are also engaged in intense lobbying.

Lobbying is a legal activity in America. The companies are therefore required to inform the US Senate about such activities by submitting quarterly disclosure reports. In India, where lobbying is so far not legally recognised, but the industry and business houses have formed association and federations which primarily are engaged in lobbying with the government. Federation of Indian Chambers of Commerce & Industry (FICCI), Confederation of Indian Industry (CII) and the Punjab, Haryana, Delhi Chamber of Commerc are basically lobbying groups. You would have noticed that the CII and FICCI have also been actively supporting the entry of Big box retail into

India

Internationally, lobbying is a major activity. According to Wikipedia, currently around 15,000 Brussels-based lobbyists (consultants, lawyers, associations, corporations, NGOs etc.) seek to influence the European Union’s legislative process. Some 2,600 special interest groups have a permanent office in Brussels. In America, lobbyists target the US Senate, US House of Representative and the State legislatures. There were some 17,000 lobbyists registered in Washington DCalone in 2007. This clearly tells us how corporate lobbying is writing the economic policies of the American and European governments. The economic decisions are in reality not based on what the people require, but how much the business houses can invest in influencing policy decisions.

It is therefore important for us to also know how much money has been spent by companies on influencing the Prime Minister’s office and also on parliamentarians. After all, it is our future that is at stake. #

The Slap that failed to shake the nation

2011-12-03T13:25:00.001+05:30

The day Food and Agriculture Minister Sharad Pawar received ‘the slap’ I and Sharad Joshi were speaking at a national conference of farmers in Haridwar. A little after lunch, Swami Ramdev walked in to take his seat on the dais and expressed his apologies for being late. He said he was late because he had got busy responding to media questioning on the thappad.

The moment he gave out the news of the ‘the slap’ there was a round of applause. I think the clapping and cheering that followed was louder than the applause any one of us had received during and after our presentations. Meanwhile, the stream of messages on my mobile seemed never ending. My twitter too was flooded with congratulatory messages. I am aware that howsoever we may strongly condemn the incident, which was the politically correct thing to do, the fact remains that there was a sense of jubilation all around.

For a country reeling under an unprecedented price rise, corruption and economic policies that benefit only 1 per cent of the population, ‘the slap’ was an expression of the simmering anger and increasing frustration. While the more daring have picked up the gun (in the Maoist-affected areas) against the inequalities being continuously perpetuated with impunity, the liberal and the educated in the urban centres too are getting restless. I agree with Shobha De when she says ‘this is not about Sharad Pawar. He just happened to be the man at the receiving end of the most recent slap’.

It certainly could have happened to anyone, including the Prime Minister.

Blame for being politically incorrect, but the self-righteousness and ‘we know what we are doing’ kind of approach that ruling party politician exhibit day in and day out smacks of arrogance. The tu-tu-main-mainthat follows daily on the TV shows have turned into the biggest soap operas where the spokesperson of all political parties simply try to outwit the other to establish his/her shirt is cleaner than the other’s. Not realising that every prime time TV show actually helps build up the disgust and anger against the political class.

Not only the politicians, even the economists and the specialists who are regulars on the TV shows behave like the committed voters like the people political parties bring in to listen to leaders at political rallies. They know what is expected of them, and they deliver it faithfully. I am sure if they were to be ferried to a Congress rally, they would shout Congress Zindabad. The next time, if the BJP is in power, you can expect them to shift gears and not shy from raising BJP Zindabad slogans. Similarly, in the studio they know what is expected from them, and deliver it faithfully to get their fifteen seconds of fame. It is very rare to see an expert on a TV show who speaks from conviction and is basing his analysis on ground realities.

Nevertheless, returning back to food inflation, for several years now Prime Minister Manmohan Singh, Finance Minister Pranab Mukherjee and Food & Agriculture Minister Sharad Pawar have been setting fresh deadlines for bringing down inflation. Chief Economic Advisor to the Prime Minister Dr Kaushik Basu too has been making statements which have little relevance to the realities and which clearly show that his finger is not on the right nerve. Certainly people are fed up and except for the media no one takes these deadlines seriously. They know that the leaders are hiding their inability to stem the rot in the system and are refraining from a crackdown against the stockist, black marketers and speculators.

Roughly a year back, I remember when I was asked by the media to respond to the UPA government's latest claim that food prices will ease by April. Although food inflation has risen to 17.87 per cent for the week ending Feb 20, 2010, Kaushik Basu was quoted as saying that the food price have come down, and the high inflation is because of the base effect. Analysts said that the April harvest would be crucial, and the pressure on inflation will ease after the new crop flows into the markets.

I made it clear that food inflation will not ebb after April. In fact, I went a step ahead and said that any strong government, if it wasn't faced with the compulsions of coalition politics, would have removed the Food & Agriculture Minister by now. He deliberately makes statements that have helped raise the prices of sugar and made India pay through its nose for wheat imports. The UPA therefore cannot wait any longer. It must get rid of Sharad Pawar, and you will see the prices coming down. I wasn’t wrong. Even Sonia Gandhi had reportedly told a group of visiting farmers and activists that she is helpless when it comes to agriculture.

However, a few days after the thappad incident, I was expecting some visible changes in the way Agriculture Minister has been operating. But nothing seems to have changed. It is business as usual for Sharad Pawar. In the midst of the logjam over FDI in retail, he said: “The critics are overlooking the fact that the policy’s main objective is to enhance the financial ability of the farmers who are responsible for the produce. If the farmers’ produce is directly lifted from the fields, with them receiving higher remuneration for it, why should there be any objections?” he asked. “It has always been my endeavour to address farmers’ interests.”

This is simply untrue. There is no empirical study that details the benefits that have accrued to farmers from big retail. Nor did Sharad Pawar or for that matter his Cabinet colleague Anand Sharma has held any wider public discussions on the subject. Somehow, ministers have increasingly begun to believe that once they have elected they have the right to do anything in the name of ‘inclusive growth’. The problem is that if the people protest outside parliament, the media chastises them saying street protests cause inconvenience. If parliamentarians protest inside, it is the wastage of public money. How and where people express their dissent?

And this brings me to another burning issue that many felt was an ‘unhealthy' and 'undemocratic' trend. I am talking of the spate of editorials on Jarnail Singh's bold initiative a few years back of hurling his shoe at Mr P Chidambaram, the Home Minister. I am aware that it will be politically incorrect to admire the trajectory the shoe took. But notwithstanding what our political leaders (and the so called enlightened media) believe, the fact remains that the nation is finding it a simple way to express their anger. After all there has to be an outlet for a deep-rooted anger and disgust. If democracy provides no avenues for people to voice their concern, people will eventually find other ways to make their voice heard.

If shoe hurling and ‘the slap’ is undemocratic, is committing suicide democratic? In the 2004 general elections (correct me if I am wrong), the then chief minister of Andhra Pradesh Mr Chandrababu Naidu witnessed a piquant situation when a farmer stood up in a political rally being addressed by him and drank pesticide. He died before he could reach the hospital. Imagine, if he had instead thrown his chappal at Mr Naidu. It would have caused commotion in the crowd, and more attention to the cause for which he eventually died.

Not only in Andhra Pradesh, farmers all over the country have tried to send a strong political signal by taking their own lives. Over the years, when all democratic norms failed to draw attention, they took their own lives. By committing suicide they actually delivered what should be seen as a powerful statement. They failed here too. The world's largest democracy did not take notice. Since 1997, the National Crime Records Bureau tells us that over 2.5 lakh farmers have committed suicide.

I always thought that suicide was an undemocratic tool being used by the voiceless to make their voice heard. But what puzzles me is that why none of the political parties are taking it up as if it was a question of life and death (which you will agree, it is). After all, people are taking the extreme fatal step as an expression of their anger. I always wondered why the enlightened media, which can depute some 450 journalists to cover the Lakme Fashion show, or send an army of reporters and cameramen to cover the IPL cricket in South Africa (as if it is a Mahabharata battle), are not even moved to take up the issue of farmers committing suicide.

Come to think of it. Wasn't it undemocratic on the part of the politicians as well as the media (which never tires of telling us that it is the Fouth Estate) to ignore human suffering in the crop fields? Media has no regrets when the farmer took their own lives but it certainly would have been furious and "want these perpetrators to be booted out of society" if they had instead thrown shoes. Imagine if the 2.5 lakh farmers had not died but instead flung their chappals/jutis, wouldn't it have been a more civilised form of angst?

Please do not get me wrong. I am not advocating throwing shoes to be a democratic form of dissent. But at the same time, I want you to think, and think deeply, as to why this democracy finds nothing disturbing when farmers kill themselves in order to draw the attention of powers that be to their plight. Such arrogance and indifference in a people’s democracy can’t go on for long. “The slap’ and the chappalcannot be simply dismissed as the work of a mentally unstable person. It is an expression of growing anger among the masses. Let us not wait for an Arab spring to force the Indian democracy to truly respond and represent the people. It is a question of the forgotten 99 per cent. #

An edited version of this article appeared in Tehelka magazine, Dec 10, 2011.
Slaps, shoes and suicides http://bit.ly/tu7vOH

Allowing Retail FDI in India: lies, lies and damn lies

2011-11-30T16:01:00.001+05:30

At a time when Prime Minister Manmohan Singh is refusing to rollback the decision to open the retail sector to foreign direct investment saying it will benefit our country, the American President Obama thinks otherwise. In a tweet on Saturday (Nov 26), President Obama wrote: “support small businesses in your community by shopping at your favourite local store.”

While President Obama is talking of what is good for America, Manmohan Singh too is adamant on protecting American interests. It is primarily for this reason that Manmohan Singh’s assertion that retail FDI will benefit our country and ‘improve rural infrastructure, reduce wastage of agricultural produce and enable our farmers to get better prices for their crops’ is not borne on facts. In the midst of the rhetorical contests in the TV studios, the real facts have been sacrificed for the sake of political partisanship.

A lot has been said and written about the virtues of allowing FDI in retail into India. Let me make an attempt to answer some of the bigger claims that Commerce Minister Anand Sharma as well as the Prime Minister have repeatedly made. Frankly, their arguments seem to be driven more by political expediency rather than any economic understanding, and that is more worrying. It only shows how economic facts can be twisted, tailored and manipulated to justify the political agenda of the ruling party. There can be nothing more damaging for the future of a country.

First, the biggest argument in favour of multi-brand retail is that it will create 10 million jobs by the year 2010. There is no justification for this claim. In the United States, Wal-Mart dominates big retail. It has a turnover of US $ 400 billion, and employs 2.1 million people. Ironically, the Indian retail sector too has a turnover of US $ 400 billion, but has 12 million shops and employs 44 million people. It is the Indian retail which is a much-bigger employer, and any effort to allow retail FDI will only destroy millions of livelihoods.

Take the case of England. The two big retail giants are Tesco and Sainsbury. Both had committed to create 24,000 jobs between them, in the past two years. A British government enquiry found out that instead of creating any additional job, these two big retail companies had actually thrown out 850 people from existing jobs. The big retail units which failed to create jobs in their own countries cannot be expected to create additional employment in

India

Second, Anand Sharma says that retail FDI will provide 30 per cent more income to farmers. There can be no bigger lie than this. In the US, for instance, if Wal-Mart was able to enhance farm incomes there was no reason why the America government would dole out a massive subsidy of US $ 307 billion under the US Farm Bill 2008, which basically makes a budgetary subsidy provision for the next five years. Most of these subsidies are clubbed in the category of Green Box under the WTO. And as per an UNCTAD-India study, if the Green Box subsidies are withdrawn, American agriculture faces a collapse.

Agriculture in America is therefore sustained with agricultural subsidies. In OECD countries, a group comprising 30 riches countries, the situation is no different. A latest 2010 report states explicitly that farm subsidies rose by 22 per cent in 2009, up from 21 per cent in 2008. In just one year in 2009, these industrialised countries provided a subsidy of Rs 12.60 lakh crore to agriculture. Despite this, every minute one farmer quits agriculture in Europe. This is happening at a time when farmer’s incomes are dwindling. In France alone, farmer’s income has fallen by 39 per cent in 2009.

Third, big retail helps remove the middlemen and therefore provides a better price to farmers. Again, it is a flawed argument and is not borne on any evidence. Studies show that in Americain the first half of 20^th century, for every dollar worth of produce a farmer sold, 70 cents was his income. In 2005, farmer’s income had fallen to 4 per cent. This is despite the presence of Wal-mart and other big retailers in

America

In other words, the middlemen are not squeezed out as is the general understanding but in reality their number actually increases. A new battery of middlemen – quality controller, standardiser, certification agency, processor, packaging consultant etc – now operate under the same retail hub and have been walking away with farmer’s income. Moreover, due to the sheer size and buying power, big retail generally depresses producer prices. In England, Tesco for example paid 4 per cent less to producers. Low supermarket prices in Scotland have forced irate farmers to form a coalition called ‘Fair Deal Food’ to seek better price for their farm produce.

Fourth, retail FDI will source 30 per cent from the small and medium enterprises and therefore will benefit Indian manufacturers. This is an afterthought, especially after a section of the media highlighted the discrepancy. Even though Anand Sharma says 30 per cent products would be sources from within the country, the facts remains that under the WTO agreements, India cannot limit the big retail from outsourcing its products from anywhere in the world. This is against the WTO norms, wherein no member country can apply any investment restriction that is inconsistent with the provisions of Article III or Article XI of GATT 1994.

Using the WTO provisions, multi-brand retail will flood the Indian market with cheaper Chinese manufactured goods thereby wiping out the domestic SME sector. At the same time, the ‘Indian Stamp’ on multi-brand retail that Anand Sharma claims will have at least 60 per cent investment on ‘back end’ systems is also not based on facts. As per the definition of ‘back-end’, anything that is not ‘front-end’ becomes ‘back-end’ and has to be self-certified. Which means even the expenses on the corporate headquarter becomes ‘back-end’ investment. In any case, 51 per cent FDI in cold storages etc is already provided and yet no investment has come. Let us be very clear, big retail is not coming to Indiato provide a network of food storage silos and cold chains.

Fifth, more importantly, in an eye-opening study entitled “Wal-Mart and Poverty”, Pennsylvania StateUniversity in the United Stateshas clearly brought out that those American states that had more Wal-Mart stores in 1987, had higher poverty rates by 1999 than the states where fewer stores were set up. This is something that the government is not talking about but should ring an alarm bell for a country which is reeling in poverty, hunger and squalor.

World produces enough food for the year 2050. The problem is access and distribution.

2011-11-25T22:19:00.001+05:30

With the world population crosses 7 billion, feeding the teeming population is becoming a major concern. At times of diminishing land resources, and in an era of climate change, ensuring food security is the biggest challenge.

All efforts are aimed at increasing food production. Somehow an impression has been created that the world needs to increase crop production manifold if it has to meet the food requirement for the year 2050. The global population would then be 9 billion. What is however deliberately being glossed over is that there is at present no shortage of food. It is not production, but access and distribution that need immediate attention.

At present, the total quantity of food that is produced globally is good enough to meet the daily needs of 11.5 billion people. If every individual were to get his daily food requirement as per the WHO norms, there would be abundant food supplies. In terms of calories, against the average per capita requirement of 2,300, what is available is a little more than 4,500 calories. In other words, the world is already producing more food than what would be required in 2050. So where is the need to panic?

Why then is the world faced with hunger? Simply put, one part of the world is eating more and the other is left to starve. Hunger has grown over the years because of gross food mismanagement. Let me explain. At the 1996 World Food Summit, political leaders had pledged to pull out half the world's hungry (at that time the figure was somewhere around 840 million) by the years 2015. In other words, by 2010, the world should have removed at least 300 million people from the hunger list.

Instead it has added another 85 million to raise the hunger tally to 925 million. In my understanding, this too is a gross understatement. The horrendous face of hunger is being kept deliberately hidden. But nevertheless, let’s again go back to the question we posed earlier: If there is no shortage of food than why the growing pangs of hunger?

Consider this. An average American consumes about 125 kg of meat, including 46 kg of poultry meat. While the Indians are still lagging behind, the Chinese are fast catching up with the American lifestyle. The Chinese consume about 70 kg of meat on average each year, inclusive of 8.7 kg of poultry meat. The Indian average is around 3.5 kg of meat, much of it (2.1 kg) coming from poultry. If you put all this together, the Chinese are the biggest meat eaters, and for obvious reasons - devouring close to 100 million tonnes every year. Americais not far behind, consuming about 35 million tonnes of meat in a year.

When I said earlier that one part of the world is eating more, this is what I meant. Six times more grain is required to provide the proteins that are consumed by the meat-eaters. Changing the dietary habits therefore assumes importance. But still worse, Americans throw away as much as 30 percent of their food, worth $ 48.3 billion. Why only blame the Americans, walk into any marriage ceremony in

India

and you would be aghast to see the quantity of food that goes waste.

Food wastage has therefore become our right.

Considering FAO's projections of the number of people succumbing to hunger and malnutrition at around 24,000 a day, I had calculated that by the year 2015, the 20 years time limit that World Food Summit had decided to work on to pull out half the hungry, 172 million people would die of hunger. These people are succumbing to hunger because both at the household and at the national level, we have allowed food to go waste.

In America, for instance, hunger has broken a 14-year record and one in every ten Americans lives in hunger. In Europe, 40 million people are hungry, almost equivalent to the population of

Spain

. In India, nearly 320 million people live in hunger. The International Institute for Food Policy’s Global Hunger Index 2011 ranks India 67^th among 81 countries. While India ranks lower than Rwanda, what is still more shocking is that Punjab – the food bowl – ranks below Sudan and Honduras in ensuring food security.

Is it so difficult to remove hunger? The answer is No.

A simple act of saving and sharing food is the best way to fight hunger. It can begin at the household level, at the community level and of course at the regional and national levels. If every household were to ensure that no food is wasted, and then organise the left over to be delivered to the poor and needy, much of the hunger that we see around can be taken care of. A small initiative in Rewari town in Haryana has galvanised the township into saving and sharing food. If it can happen in Rewari, it can happen in your neighbourhood too. Try it, and you will see you too can make a difference. #

Turmeric can heal but only if you get it pure

2011-11-16T09:19:00.001+05:30

Some years back, I remember listening to Bhagat Singh’s nephew, Dr Jagmohan Singh. He was addressing a public meeting at Bhagat Singh’s native village. I still recall him speaking passionately about the need to use haldi (turmeric) in our daily preparations, and what continued to linger in my mind was his suggestion to procure pure haldi at any cost. “If a family can consume one kilo of pure haldi in a month, believe me most of the family’s health problems would be taken care of.”

I knew that haldibeing sold in the market was contaminated with horse dung and various other impurities. But with more and more packaged and branded haldi coming into the market I thought the problem with contamination had been taken care of. But I now realise I was wrong.

Last week, I travelled to Hoshiarpur in Punjab to visit a small farmer’s cooperative by the name FAPRO (Farm Produce Promotion Society). Comprising 300 members, the main activity of this society which is based in village Ghugial, centres on processing of haldi and honey. I was told that haldi is cultivated in 23 acres, and the farmers are paid 20-25 per cent higher price than the average prevailing market price. The entire crop is grown under natural farming conditions.

Going around the processing plant and talking to the officials and farmers present, what I learnt was certainly eye-opening. I was told that generally the haldi that is sold in the urban areas contains roughly 40 per cent of filler. Normally, the filler is of rice powder made from broken rice grains that do not fetch a high price in the market. The more you go into the countryside, the percentage of rice powder filler increases. In rural areas, it is not unusual to find 60 per cent of rice powder mixed in haldi. No wonder, you must be wondering why haldiis not that effective anymore.

Although rice powder is not damaging to human health, but mixed with haldi it certainly reduces the medicinal efficiency of haldi powder. Now I know why the haldi powder that I have been consuming is not as effective in healing as it is generally known to be. A hot glass of milk with haldiis supposed to be strong antidote for most sorts of trauma and cough. Turmeric has antioxidants which help purify the blood, protect the liver and remove toxins from the body. Regular consumption of haldi, and when combined with a dose of honey, helps ease pain that originates with ageing of bones. When consumed with raw garlic it is effective against bronchitis.

The list of its healing properties is endless. Haldi is know to be of immense medicinal use and that is why some years back there was an effort to draw a patent on its healing properties by an American institute. After public outcry, the government had successfully managed to fight the patent and get it revoked. But what is the use of singing all praises for haldiwhen consumers can’t get pure and good quality haldi in the market. At least two sources of pure haldi I can suggest. The next time you are looking for haldi, you can search for FAPRO haldi in Hoshiarpur, and also from Markfed outlets across Punjab. Another source for pure haldi is Swami Ramdev’s Patanjali Yogapeeth outlets which exist in every town.

Debt-ridden Kingfisher Airlines to get a bailout package; indebted farmers are left to die.

2011-11-12T12:04:00.001+05:30

Kingfisher Airlines chairman Vijay Mallya is in trouble. His airline awaits an emergency rescue. Kingfisher Airline suffered a loss of Rs 1,027 crore in 2010-11 and has a mounting debt of Rs 7,057.08 crores. With banks reluctant to give more cash to Kingfisher Airlines, Vijay Mallya has turned to the government.

Civil Aviation minister Vayalar Ravi has been quick to make a public pitch to bailout the debt-ridden company. "I will meet the Prime Minister on his return to the country," he told the Indian Express. "I will also talk to the Finance Minister so that some assistance from the lead banks is granted. Closing down the flights affects the travelling public".

Ironically, in the past one month more than a hundred farmers have committed suicide in Andhra Pradesh, Vidharba and Kerala. All these farmers took the fatal route to escape the humiliation that comes along with mounting indebtedness. According to the National Crime Records Bureau 15,964 farmers committed suicide in 2010 alone. Put together, more than 250,000 farmers have taken their own lives during the past 15 years. Growing indebtedness had pushed them to the brink.

I haven't seen any urgency on the part of the successive governments or the policy planners and mainline economists to provide a bailout package to the beleaguered farmers. I don't understand why the serial death dance in the countryside does not evoke any reaction while all hell breaks loose when a big company goes bankrupt. Aren't the poor farmers human beings? Why is that they don't need even a word of sympathy whereas all aviation experts/planners and economists are making a strong pitch for bailing out a debt-ridden airline?

Well, George Orwell was dead right. All animals are equal, but some are more equal than others.

This brings me to the fundamental question. Economic reforms have been built on the need to privatise the industry. The economic justification for privatisation is that it ushers in efficiency. The underlying principle is that while efficiency has to be appreciated, the inefficient ones are left behind and need to be dumped. The rules of the game are clearly laid out. In a competitive environment, inefficient firms bow out. Agreed, than why do we want to change the rules of the game? Why do we want to bailout a bankrupt company? Why shouldn't it be allowed to die?

I see a number of experts on the TV channels making a strong plea to bailout the company. These experts of course are all beneficiary of a system that keeps inefficient industries floating with the help of public money. This is what happened when the world witnessed economic collapse in 2009. The inefficient and corrupt banks were rewarded with bailout packages, and the top executives who should have gone to the jail instead received bountiful bonuses. Market economy was made to survive with public money.

More than US $ 20 trillion of public money was pumped in to keep economic liberalisation alive. And this tells us that market reforms or market economy cannot sustain without public money. All it does, and that too very cleverly, is to hoodwink us to believe that capitalism is the sure path to economic growth. In reality, all it does is to allow for 'privatisation of profits, and socialisation of costs'. The rich become richer, and the poor are left to pick up the socio-economic as well as the environmental costs.

Aren't mainline economists therefore liars? They go on singing virtues of a failed and flawed economic model? Why don't they muster courage to accept the underlying principles of economic reforms? Well, the answer is obvious. They too are beneficiaries of the same flawed economic model.

Kingfisher Airline should be allowed to die a natural death. Unless we do so we will never be able to clean the rot in the system. We will go on supporting inefficiency with bailouts. What we need, and need desperately, is to send a strong message that inefficiency can NEVER be appreciated. Otherwise, we will continue to ensure that the big companies never collapse. The bigger the company the bigger would be the tax-payers support in the form of a bailout package.

The government cannot be allowed to run a charitable hospital for the ailing private companies. Let them strictly follow the rules of the game. Only the fittest survives, and the rest need to be dumped in the dustbin.

Food inflation: Groping in the dark

2011-11-11T10:29:00.001+05:30

Although Prime Minister Manmohan Singh considers rising food inflation to be a sign of growing prosperity, the reality is very harsh and painful. Rising food inflation, which continues for the 4^thsuccessive year now, has hit the aam aadmi like never before. Adding fuel to fire is the frequent raise in petrol prices.

Every time food inflation crosses the double-digit barrier, the Prime Minister Manmohan Singh, the Finance Minister Pranab Mukherjee and the deputy chairman of the Planning Commission, Dr Montek Singh Ahluwalia, have been quick to set a deadline some three to six months ahead during which period they promise to bring down the prices. While the failure to stem the price rise is written large, what is more worrying is the complete inability of the government to comprehend the reasons behind it. Economists and policy makers appear clueless and therefore continue to grope in the dark.

For over 4 years now, in every media discussion that I am invited to, I am appalled at the economic ignorance that prevails. They go on harping again and again on what the economic textbooks would prescribe as the plausible reasons behind any runaway inflation. Whether it is any member of Prime Minister’s Economic Advisory Council or the Planning Commission or one of the senior officials of the Reserve Bank of India, the answers you get are all the same: food inflation is because of low production; with rising incomes there is a shift in demand towards nutritious foods thereby increasing the prices of fruits, vegetables and milk products; and because the farmers are being paid a higher procurement price, the consumers have to pay more.

Now let us look at the each of the argument separately. The common refrain that one hears is that food prices are on an upswing because production is unable to match the growing demand. For several months now, you have watched with concern news reports of foodgrains rotting in godowns. While lakhs of tonnes of wheat and paddy are allowed to rot, we are being told that there is a need to increase crop production. Ever since the TV channels began highlighting the grain wastage, except for lip-sympathy, the government has not made any significant allocation for creating additional storage space. In such a depressing scenario, how will more production help? Where will the government store the additional produce? Will it too not go waste?

Every year, as per official figures more than 16 lakh tonnes of foodgrains rot in godowns. The quantity of wheat and rice that becomes sub-standard and unfit for human consumption and which has to be sold for manufacturing alcohol and goes as cattle feed is several times more.

When Prime Minister Manmohan Singh equated inflation with prosperity, he was trying to say that with more income in hand people have shifted to nutritious diets. The demand for fruits, vegetables and milk products has shot up as a result. This too is untrue, and has no scientific basis. Since this is a frequently asked question, I did some computation of the production estimates. The per capita daily availability of fruits and vegetables is 480 grams. The per capita requirement for a balanced diet is roughly 80 grams, against which the actual consumption is much low. Therefore it becomes apparent that there is at least six times more availability of fruits and vegetables in this country than what is required. So where is the shortfall? Why are the prices of fruits and vegetables sky-rocketing when the availability is in abundance?

In any case, the argument that with rising incomes the intake of nutritious food products in the food basket expands is also not based on any empirical evidence. The 2007 National Sample Survey Organisation (NSSO) tells us that cereal consumption has been on a steady decline, with no corresponding increase in the intake of more nutritious eggs, vegetables, fruits and milk. It means hunger has been on a rise and is now more widespread and well-entrenched. The feeling was that with the changing food habits, people have shifted from cereals to nutritious foods like fruits, vegetables and milk. This assumption too does not hold true anymore.

The decline in cereal consumption has more or less followed a steady pattern in the rural and urban areas, of course much faster in the rural areas. Per capita cereal consumption per month in the rural areas across the country has fallen from 13.4 kg in 1993-94 to 11.7 kg in 2006-07. The decline has been sharper between the period 2004 and 2007 when just in three years, cereals consumption fell from 12.1 kg to 11.7 kg. In the urban centres the decline was from 10.6 kg in 1993-94 to 9.6 kg in 2006-07. In a largely vegetarian society, cereals constitute the single important source of nutrition and therefore its importance in the Indian context is well established.

Moreover, if it was true, India’s ranking in the 2010 Global Hunger Index prepared by the International Food Policy Research Institute should have improved. India continues to rank 67^th among 81 countries, faring much lower then Pakistan, Sudanand

Rwanda

. If people had started eating more, I see no reason why India should be ranked so low in the hunger index.

And finally how true is the argument that food prices are going up because farmers have been paid a higher procurement price. Wheat, rice and sugarcane are essentially the three major crops where farmers have received a higher procurement price. Interestingly, wheat and rice are not the crops where food inflation is hurting the poor. In case of sugarcane, after a hike in prices in 2009, sugar prices have stabilised even though the growers are getting a higher price. It is in case of fruits and vegetables, which do not receive any benefit of procurement prices, where the market prices have made a hole in the pocket of average consumers.

Economists need to understand that it is not the farmer who gains from food inflation. He never gets a high price for his produce even when market prices touch the roof. For sake of illustration, let us look at a banana grower. All he earns is between Rs 8-9 per dozen where as the prevailing market price hovers between Rs 50-60. The real problem therefore lies in the mandis. It is the wholesale and retail trade, which in the absence of any tough regulation, is exploiting the consumers by raising the prices by anything between 100 to 300 per cent. In the absence of any crackdown, the trade is having a free run.

The government doesn’t want to check the traders because as the Prime Minister said the other day he wants more and more commodity prices to be deregulated. He wants market to decide the final price of the farm produce. In other words, we are paying through our nose to keep alive market reforms. #