The Hindu Business Line : Farm policy

THE United Progressive Alliance (UPA), as the National Common Minimum Programme states categorically, stands for economic reforms with a human face, whatever it means. Economic reforms aim at allocation of resources as a function of supply and demand irrespective of the barriers of communities, regions and nations.

This is the most natural method of division of labour and allocation of resources.

The world knows that any deliberate and sustained intervention to frustrate the market forces results in (i) black-marketing, smuggling, and breakdown of law and order, and (ii) distortion of terms of trade in favour of a politically preferred class or sector.

The market is a mechanism where every citizen can exercise his influence. It is self-correcting. An over-abundant export surplus will be corrected by the foreign exchange market as is an unnatural import surplus.

The market is human. Maybe it is a political compulsion. Maybe the sixty-odd parliamentarians of the Left have put the UPA in a quandary and are forcing it to put economic reforms in reverse gear. It is more likely that the UPA leadership finds the old Garibi Hatao a politically more advantageous slogan and is only willing to adopt Nehruvian pragmatism while continuing to do the obvious and the inevitable.

Even in the heyday of economic reforms, hardly a breeze of liberalisation had blown across the farm sector. Reforms benefited mainly the corporate sector and the modern economy.

Till date, the only farm sector reforms that have seen the light of the day are those forced by the Uruguay regime of the World Trade Organisation (WTO).

The Left has seriously protested against the Intellectual Property Rights regime of the WTO. It also criticised the unwillingness of the United States, the European Union and Japan to slash agricultural subsidies.

The Left has never recognised the fact that Indian farmers have suffered from a cruel regime of negative subsidies that operated through bans on export of agricultural commodities, dumping of farm produce from abroad and a plethora of restrictions on movement, storage, processing, trade and distribution of domestic farm produce.

The Left has generally preferred to keep silent on this anti-farmer regime. At the local level, it opposes any ban on export of onions but at the national-level it remains silent.

The Left may not have influenced the UPA to put reforms in agriculture in reverse gear. But that is what has actually happened.

Since the early days of Independence, Delhi has been dominated by a scarcity syndrome. It thought with a peculiar socialist perversity: If the nation is short of foreign exchange then impose restrictions on expenditure thereof and make all earnings of foreign exchange strictly accountable.

The regime of exchange restrictions continued for decades. It is only with the advent of liberalisation that India started accumulating foreign exchange though it has now reached undreamt of proportions.

Free India inherited food scarcity from the Second World War years under British rule. Restrictions on agricultural trade, the Public Distribution System and the Food Corporation of India (FCI) have turned into a state within the state and a corrosive vested interest.

Soon after Independence, the pragmatic Rafi Ahmed Kidwai tried to get rid of food controls and rationing. Though a close associate of Nehru, Kidwai could not face the massive opposition to his plan. The FCI came out triumphant. The reversal from the Kidwai plan gathered momentum so rapidly that Indira Gandhi actually contemplated total nationalisation of the foodgrains trade.

If the retail prices of any agricultural commodity show a slightly upward trend, there is a knee-jerk reaction from the FCI lobby. Any sundry report of cases of malnutrition or starvation is enough for it to tighten its reins. The FCI is in full force again.

The Minister for Agriculture made a statement on the floor of the Rajya Sabha with flourish and bravado that the Government would not export a grain of food as long as there is even one case of malnutrition. The UPA Government and its Agriculture Minister appear set on continuing with the scarcity syndrome.

Restrictions and bans on exports do not increase domestic availability. Quite the contrary. The slump in prices discourages farmers and makes them shift away from the commodity whose export is banned. Similarly, import of food does not improve its domestic availability. If it were so, the PL480 imports should have resolved the food problem long back. It took a revolution in technology and economic policies to make India self-sufficient in foodgrains.

The Minister for Agriculture continued tilting at windmills by opening up the floodgates of import of oilseeds on the plea that the edible oil crisis was as serious as the petroleum crisis. So carried away was the Ministry that in allowing the imports of oilseeds it did not make a reservation for genetically modified (GM) oilseeds.

The Ministry of Environment and Forests took seven years to clear GM cotton for use by Indian farmers. Now GM oilseeds are going to enter the country without any inspection or control.

It is only some time after the announcement of oilseeds imports, including the GM variety, that the Ministry realised that the only GM oilseed it could import was soybean. Yet it persisted with its policies.

The Indian solvent extraction industry survives because de-oiled soya cake from India is in great demand abroad because of its high protein content and the complete absence of any trace of gene modification. By one flourish of pen, the the death warrant for both — the soya farmers and the solvent extraction industry — appears to have been signed.

Farmers do not see any rhyme or reason in this twist in agricultural policies. Ban on exports of foodgrains and imports of edible oilseeds did neither the farmers nor the UPA government any good.

(The author, a Rajya Sabha member, is Founder of the Shetkari Sanghatana. He can be contacted at sharadj@pn2.vsnl.net.in)

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