Predatory Growth

(source unknown)

Over the last two decades or so, the two most populous, large countries in the world, China and India, have been growing at rates considerably higher than the world average. In recent years the growth rate of national product of China has been about three times, and that of India approximately two times that of the world average. This has led to a clever defence of globalisation by a former chief economist of IMF (Fisher, 2003). Although China and India feature as only two among some 150 countries for which data are available, he reminded us that together they account for the majority of the poor in the world. This means that, even if the rich and the poor countries of the world are not converging in terms of per capita income, the well above the average world rate of growth rate of these two large countries implies that the current phase of globalisation is reducing global inequality and poverty at a rate as never before.
Statistical half truths can be more misleading at times than untruths. And this might be one of them, in so far as the experiences of ordinary Indians contradict such statistical artefact. Since citizens in India can express reasonably freely their views at least at the time of elections, their electoral verdicts on the regime of high growth should be indicative. They have invariably been negative. Not only did the ‘Shining India’ image crash badly in the last general election, even the present prime minister, widely presented as the ‘guru’ of India’s economic liberalisation in the media, could never personally win an election in his life. As a result, come election time, and all parties talk not of economic reform, liberalisation and globalisation, but of greater welfare measures to be initiated by the state. Gone election times, and the reform agenda is back. Something clearly needs to be deciphered from such predictable swings in political pronouncement.
Politicians know that ordinary people are not persuaded by statistical mirages and numbers, but by their daily experiences. They do not accept high growth on its face value as unambiguously beneficial. If the distribution of income turns viciously against them, if the opportunities for reasonable employment and livelihood do not expand with high growth, the purpose of higher growth would be widely questioned in a democracy. This is indeed what is happening, and it might even appear to some as paradoxical. The festive mood generated by high growth is marinated in popular dissent and despair, turning often into repressed anger. Like a malignant malaise, a sense of political unease is spreading insidiously along with the near double digit growth. And, no major political party, irrespective of their right or left label, is escaping it because they all subscribe to an ideology of growth at any cost.
What exactly is the nature of this paradoxical growth that increases output and popular anger at the same time? India has long been accustomed to extensive poverty coexisting with growth, with or without its ‘socialist pattern’. It continues to have anywhere between one-third and one-fourth of its population living in sub-human, absolute poverty. The number of people condemned to absolute poverty declined very slowly in India over the last two decades, leaving some 303 million people still in utter misery. In contrast China did better with the number of absolutely poor declining from 53 per cent to 8 percent, i.e. a reduction of some 45 percentage points, quite an achievement compared to India’s 17 percentage points. However, while China grew faster, inequality or relative poverty also grew faster in China than in India. Some claim that the increasing gap between the richer and the poorer sections in the Chinese society during the recent period has been one of the worst in recorded economic history, perhaps with the exception of some former socialist countries immediately after the collapse of the Soviet Union. The share in national income of the poorest 20 per cent of the population in contemporary China is 5.9 percent, compared to 8.2 per cent in India. This implies that the lowest 20 per cent income group in China and in India receives about 30 and 40 percent of the per capita average income of their respective countries. However, since China has over two times the average per capita income of India in terms of both purchasing power parity, and dollar income, the poorest 20 percent in India are better off in relative terms, but worse off in absolute terms. The Gini coefficient, lying between 0 and 1, measures inequality, and increases in value with the degree of inequality. In China, it had a value close to 0.50 in 2006, one of the highest in the world. Inequality has grown also in India, but less sharply. Between1993-94 and 2004-5, the coefficient rose from 0.25 to 0.27 in urban, and 0.31 to 0.35 in rural areas. Every dimension of inequality, among the regions, among the professions and sectors, and in particular between urban rural areas has also grown rapidly in both counties, even faster in China than in India. In short, China has done better than India in reducing absolute poverty, but worse in allowing the gap to grow rapidly between the rich and the poor during the recent period of high growth.
A central fact stands out. Despite vast differences in the political systems of the two countries, the common factor has been increasing inequality accompanying higher growth. What is not usually realized is that the growth in output and in inequality are not two isolated phenomena. One frequently comes across the platitude that high growth will soon be trickling down to the poor, or that redistributive action by the state through fiscal measures could decrease inequality while keeping up the growth rate. These statements are comfortable but unworkable, because they miss the main characteristic of the growth process underway. This pattern of growth is propelled by a powerful reinforcing mechanism, which the economist Gunner Myrdal had once described as ‘cumulative causation’. The mechanism by which growing inequality drives growth, and growth fuels further inequality has its origin in two different factors, both related to some extent to globalisation.
First, in contrast to earlier times when less than 4 per cent growth on an average was associated with 2 percent growth in employment, India is experiencing a growth rate of some 7-8 per cent in recent years, but the growth in regular employment has hardly exceeded 1 percent. This means most of the growth, some 5-6 percent of the GDP, is the result not of employment expansion, but of higher output per worker. This high growth of output has its source in the growth of labour productivity. According to official statistics, between 1991 and 2004 employment fell in the organised public sector, and the organised private sector hardly compensated for it. In the corporate sector, and in some organized industries productivity growth comes from mechanization and longer hours of work. Edward Luce of the Financial Times (London) reported that the Jamshedpur steel plant of the Tatas employed 85,000 workers in 1991 to produce 1 million tons of steel worth 0.8 million U.S. dollars. In 2005, the production rose to 5 million tons, worth about 5 million U.S. dollars, while employment fell to 44,000. In short output increased approximately by a factor of five, employment dropped by a factor of half, implying an increase in labour productivity by a factor of ten. Similarly, Tata Motors in Pune reduced the number of workers from 35 to 21 thousand but increased the production of vehicles from 129,000 to 311,500 between 1999 and 2004, implying labour productivity increase by a factor of four. Stephen Roach, chief economist of Morgan Stanley reports a similar case of the Bajaj motorcycle factory in Pune. In the mid-1990s the factory employed 24,000 workers to produce 1 million two-wheelers. Aided by Japanese robotics and Indian information technology, in 2004, 10,500 workers turned out 2.4 million units, i.e. more than double the output with less than half the labour force, an increase in labour productivity by a factor of nearly 6. (Data collected by Aseem Srivastava, ‘Why this growth can never trickle down’, One could multiply such examples, but this is broadly the name of the game everywhere in the private corporate sector.
The manifold increase in labour productivity, without a corresponding increase in wages and salaries becomes an enormous source of profit, and also a source of international price competitiveness in a globalizing world. Nevertheless, this is not the entire story, perhaps not even the most important part of the story. The whole organized sector to which the corporate sector belongs, accounts for less than one-tenth of the labour force. Simply by the arithmetic of weighted average, a 5-6 per cent annual growth in labour productivity in the entire economy is possible only if the unorganized sector accounting for the remaining 90 per cent of the labour force also contributes to the growth in labour productivity. Direct information is not available on this count, but several micro studies and surveys show the broad pattern. Growth of labour productivity in the unorganized sector, which includes most of agriculture, comes from lengthening the hours of work to a significant extent, as this sector has no labour laws worth the name, or social security to protect workers. Sub-contracting to the unorganized sector along with casualisation of labour on a large scale become convenient devices to ensure longer hours of work without higher pay. Self-employed workers, totaling 260 million, expanded fastest during the high growth regime, providing an invisible source of labour productivity growth. Ruthless self-exploitation by many of these workers in a desperate attempt to survive by doing long hours of work with very little extra earning adds both to productivity growth, often augmenting corporate profit, and to human misery.
However inequality is increasing for another reason. Its ideology often described as neo-liberalism, is easily visible at one level; but the underlying deeper reason is seldom discussed. The increasing openness of the Indian economy to international finance and capital flows, rather than to trade in goods and services, has had the consequence of paralysing many pro-poor public policies. Despite the fact that we continue to import more than we export (unlike China), India’s comfortable foreign reserves position, crossing 230 billion U.S dollars in 2008, is mostly the result of accumulated portfolio investments and short term capital inflows from various financial institutions. To keep the show going in this way, the fiscal and the monetary policies of the government need to comply with the interests of the financial markets. That is the reason why successive Indian governments have willingly accepted the Financial Responsibility and Budget Management Act (2003) restricting deficit spending. Similarly, the idea has gained support that the government should raise resources through privatisation and so-called public-private partnership, but not through raising fiscal deficit, or not imposing a significant turnover tax on transactions of securities. These measures rattle the ‘sentiment’ of the financial markets, so governments remain wary of them. The hidden agenda, vigorously pursued by governments of all colours has been to keep the large private players in the financial markets in a happy mood. Since the private banks and financial institutions usually take their lead from the IMF and the World Bank, this bestows on these multilateral agencies considerable power over the formulation of government policies. However, the burden of such policies is borne largely by the poor of this country. This has had a crippling effect on policies for expanding public expenditure for the poor in the social sector. Inequality and distress grow as the state rolls back public expenditure in social services like basic health, education, and public distribution and neglects the poor, while the ‘discipline’ imposed by the financial markets serves the rich and the corporations. This process of high growth traps roughly one in three citizens of India in extreme poverty with no possibility of escape through either regular employment growth or relief through state expenditure on social services. The high growth scene of India appears to them like a wasteland leading to the Hell described by the great Italian poet Dante. On the gate of his imagined Hell is written, “This is the land you enter after abandoning all hopes”.
Extremely slow growth in employment and feeble public action exacerbates inequality, as a disproportionately large share of the increasing output and income from growth goes to the richer section of the population, not more than say the top 20 per cent of the income receivers in India. At the extreme ends of income distribution the picture that emerges in one of striking contrasts. According to the Forbes Magazine list for 2007, the number of Indian billionaires rose from 9 in 2004 to 40 in 2007, much richer counties like Japan had only 24, France had 14 and Italy 14. Even China, despite its sharply increasing inequality, had only 17 billionaires. The combined wealth of Indian billionaires increased from US dollars 106 billion to 170 billion in the single year, 2006-07. This 60 per cent increase in wealth would not have been possible, except through transfer on land from the state and central governments to the private corporations in the name of ‘public purpose’, for mining, industrialisation and special economic zones (SEZ). Estimates based on corporate profits suggest that, since 2000-01 to date, each additional per cent growth of GDP has led on an average to some 2.5 per cent growth in corporate profits. India’s high growth has certainly benefited the corporations more than anyone else.
After several years of high growth along these lines, India of the twenty first century has the distinction of being only second to the United States in terms of the combined total wealth of its corporate billionaires coexisting with the largest number of homeless, ill-fed, illiterates in the world. Not surprisingly, for ordinary Indians at the receiving end, this growth process is devoid of all hope for escape. Nearly half of Indian children under 6 years suffer from under-weight and malnutrition, nearly 80 per cent from anaemia, while some 40 per cent of Indian adults suffer from chronic energy deficit. Destitution, chronic hunger and poverty kill and cripple silently thousands picking on systematically the more vulnerable. The problem is more acute in rural India, among small children, pregnant females, Dalits and Adivasis, especially in the poorer states, while market oriented policies and reforms continue to widen the gap between the rich and the poor, as well as among regions.
The growth dynamics in operation is being fed continuously by growing inequality. With their income rapidly growing, the richer group of Indians demand a set of goods, which lie outside the reach of the rest in the society (think of air conditioned malls, luxury hotels, restaurants and apartments, private cars, world class cities where the poor would be made invisible). The market for these good expands rapidly. For instance, we are told that more than 3 in 4 Indians do not have a daily income of 2 U.S dollars. They can hardly be a part of this growing market. However, the logic of the market now takes over, as the market is dictated by purchasing power. Its logic is to produce those goods for which there is enough demand backed by money, so that high prices can be charged and handsome profits can be made. As the income of the privileged grows rapidly, the market for the luxury goods they demand grows even faster through the operation of the ‘income elasticities of demand’. These elasticities roughly measure the per cent growth in the demand for particular goods due to one per cent growth in income (at unchanged prices). Typically, goods consumed by the rich have income elasticities greater than unity, implying that the demand for a whole range of luxury goods consumed by the rich expands even faster than the growth in their income. Thus, the pattern of production is dictated by this process of growth through raising both the income of the rich faster than that of the rest of the society, and also because the income elasticities operate to increase even faster than income the demand for luxuries.
The production structure resulting from this market driven high growth is heavily biased against the poor. While demand expands rapidly for various up-market goods, demand for the basic necessities of life hardly expands. Not only there is little growth in the purchasing power of the poor, but the reduction in welfare expenditures by the state stunts the growth in demand for necessities. The rapid shift in the output composition in favour of services might be indicative of this process at the macro level. But specific examples abound. We have state-of-the-art corporate run expensive hospitals, nursing homes and spas for the rich, but not enough money to control malaria and T.B. which require inexpensive treatment. So they continue to kill the largest numbers. Lack of sanitation and clean drinking water transmit deadly diseases especially to small children which could be prevented at little cost, while bottled water of various brands multiplies for those who can afford it. Private schools for rich kids often have monthly fees that are higher than the annual income of an average unskilled Indian worker, while the poor often have to be satisfied with schools without teachers, or class rooms.
Over time an increasingly irreversible production structure in favour of the rich begins to consolidates itself. Because the investments embodied in the specific capital goods created to produce luxuries cannot easily be converted to producing basic necessities (the luxury hotel or spa cannot be converted easily to a primary health centre in a village etc). And yet, it is the logic of the market to direct investments towards the most productive and profitable sectors for ‘the efficient allocation of resources’. The price mechanism sends signals to guide this allocation, but the prices that rule are largely a consequence of the growing unequal distribution of income in the society. The market becomes a bad master when the distribution of income is bad.
There are insidious consequences of such a composition of output biased in favour of the rich that our liberalised market system produces. It is highly energy, water and other non-reproducible resources intensive, and often does unacceptable violence to the environment. We only have to think of the energy and material content of air-conditioned malls, luxury hotels and apartments, air travels, or private cars as means of transport. These are no doubt symbols of ‘world class’ cities in a poor country, by diverting resources from the countryside where most live. It creates a black hole of urbanization with a giant appetite for primary non-reproducible resources. Many are forced to migrate to cities as fertile land is diverted to non-agricultural use, water and electricity are taken away from farms in critical agricultural seasons to supply cities, and developmental projects displace thousands. Hydroelectric power from the big dams is transmitted mostly to corporate industries, and a few posh urban localities, while the nearby villages are left in darkness. Peasants even close to the cities do not get electricity or water to irrigate their land as urban India increasingly gobbles up these resources. Take the pattern of water use. According to the Comptroller and Auditor General report released to the public on 30 March 2007, Gujarat increased the allocation of Narmada waters to industry fivefold during 2006, eating into the share of drought-affected villages. Despite many promises made to villagers, water allocation stagnated at 0.86 MAF (million acres feet), and even this is being cut. Water companies and soft-drink giants like Coca-Cola sink deeper to take out pure ground water as free raw material for their products. Peasants in surrounding areas pay, because they cannot match the technology or capital cost. Iron ore is mined out in Jharkhand, Chattisgarh and Orissa leaving tribals without home or livelihood. Common lands which traditionally provided supplementary income to the poor in villages are encroached upon systematically by the local rich and the corporations with active connivance of the government. The manifest crisis engulfing Indian agriculture with more than a hundred thousand suicides by farmers over the last decade according to official statistics is a pointer to this process of pampering the rich who use their growing economic power to dominate increasingly the multitude of poor.
The composition of output demanded by the rich is hardly producible by village artisans or the small producers. They find no place either as producers or as consumers; instead, economic activities catering to the rich have to be handed over to large corporations who can now enter in a big way into the scene. The combination of accelerating growth and rising inequality begins to work in unison. The corporations are needed to produce goods for the rich, and in the process they make their high profits and provide well-paid employment for the rich in a poor country who provide a part of the growing market. It becomes a process of destructive creation of corporate wealth, with a new coalition cutting across traditional Right and Left political division formed in the course of this road to high growth. The signboard of this road is ‘progress through industrialisation’. The middle class opinion-makers and media-persons unite, and occasionally offer palliatives of ‘fair compensation’ to the dispossessed. Yet, they are at a loss as to how to create alternative dignified livelihood caused by large scale displacement and destruction in the name of industrialisation. Talks of compensation tends to be one sided, as they focus usually on ownership and, at best use rights to land. However, the multitude of the poor who eke out a living without any ownership or use right to landed property, like agricultural labourers, fishermen, or cart-drivers in rural areas, or illegal squatters and small hawkers in cities, seldom figure in this discussion about compensation. And yet, they are usually the poorest of the poor, outnumbering by far, perhaps in the ratio of 3 to 1, those who have some title to landed property. Ignoring them altogether, the state acquires with single minded devotion land, water and resources for the private corporations for mining, industrialisation or Special Economic Zones in the name of public interest. With some tribal land that can be acquired according to the PESA (1996) act only through the consent of the community (Gram Sabha), consent is frequently manufactured at gun point by the law and order machinery of the state, if the money power of the corporations to bribe and intimidate prove insufficient. The vocal supporters of industrialisation never stop to ask why the very poor who are least able, should bear the burden of ‘economic progress’ of the rich.
It amounts to a process of internal colonisation of the poor, mostly dalits and adivasis and of other marginalised groups, through forcible dispossession and subjugation. It has set in motion a social process not altogether unknown between the imperialist ‘master race’ and the colonised ‘natives’. As the privileged thin layer of the society distances itself from the poor, the speed at which the secession takes place comes to be celebrated as a measure of the rapid growth of the country. Thus, India is said to be poised to become a global power in the twenty-first century, with the largest number of homeless, undernourished, illiterate children coexisting with the billionaires created by this rapid growth. An unbridled market whose rules are fixed by the corporations aided by state power shapes this process. The ideology of progress through dispossession of the poor, preached relentlessly by the united power of the rich, the middle class and the corporations colonises directly the poor, and indirectly it has begun to colonise our minds. The result is a sort of uniform industrialisation of the mind, a standardisation of thoughts which sees no other alternative. And yet, there is a fatal flaw. No matter how powerful this united campaign by the rich corporations, the media, and the politicians is, even their combined power remains defenceless against the actual life experiences of the poor. If this process of growth continues for long, it would produce its own demons. No society, not even our malfunctioning democratic system, can withstand beyond a point the increasing inequality that nurtures this high growth. The rising dissent of the poor must either be suppressed with increasing state violence flouting every norm of democracy, and violence will be met with counter-violence to engulf the whole society. Or, an alternative path to development that depends on deepening our democracy with popular participation has to be found. Neither the rulers nor the ruled can escape for long this challenge thrown up by the recent high growth of India.
References for sources of data and other information.
India Development Report, edited by R. Radhakrishna, Oxford University Press, 2008.
Alternative Economic Survey, India 2006-2007, by Alternative Survey Group, New Delhi, Dannish Books, 2007.
Government of India, Economic Survey, 2006-2007, New Delhi, Ministry of Finance, 2007.
‘Revisiting employment and growth’ by C. Rangarajan, Padma Kaul and Seema, Money and Finance, September, 2007.
‘Service-led growth’ by Mihir Rakshit, Money and Finance, February, 2007.
Inclusive Growth in India, by S. Mahendra Dev, New Delhi, Oxford University Press, 2008.
Green Left Weekly issue no.710, May, 2007.
Information from Forbes quoted in ‘Globalisation: the Indian experience’ by Anil Kumar Jain and Parul Gupta, Mainstream, Delhi, February 8-14, 2008.

India wants removal of non-tariff barrier in agriculture



GENEVA: India has joined the chorus in criticising the EU’s non-tariff barriers (NTBs) and SPS issues, and market access in agriculture at the WTO Trade Policy Review of the EC.
According to the WTO Secretariat report the EC’s agriculture policies were a matter of concern with its protection by a complex tariff structure, high tariffs, tariff quotas of which some were not filled, and high levels of domestic support and export subsidies.
In its intervention India informed the WTO of its steady, significant intensification of strategic partners dialogue and of a proposed agreement on trade and investment between India and the EU. The negotiations of which could commence shortly and “open vast opportunities for businesses on both sides.”
The EC is one of the largest sources of FDI from India. It is not only India’s largest trading partner, it accounts for almost a quarter of India’s exports and imports. In 2005 India-Europe trade was around 40 billion euros, EU’s exports to India grew by 23.8%, and EU imports from India by 16.2% as compared to 2004.
India stated that it has submitted written questions to the EC for clarification on some of its trade policies, however mentioned that Indian agriculture exporters continue to suffer on account of NTBs and SPS issues.
It pointed out that in market access several instances had been brought to the Indian government’s notice by Indian exporters of meat and meat products, marine products, milk products, egg products, Basmati, mushrooms, refrigerators, lack of intra EU harmonisation of standards, which impede exports from India to the EC.
India stated that it seeks dismantling of these non-tariff barriers to enable it increase access to the European markets for Indian exporters. India also focused on the EC restrictive policy on Services which it urged to take urgent stops to address.
India stated that despite its advantage of young population, complemented by a vast network of academic infrastructure and educated, English-speaking talent, India’s opportunities with the EC in trade services sector are hindered by issues relating to Mode 4, the imposition of unclear ENTs, domestic regulations, territorial requirement to set up business, residence requirements, and discriminatory tax treatment.

Agriculture remains wanting…

2007-03-29 08:58:15 – The Standing Committee on Agriculture) 2006-07) is an unhappy committee. One does not have to look far for the reasons for this unhappiness

New Delhi, 29th March, 2007.
The Standing Committee on Agriculture) 2006-07) is an unhappy committee. One does not have to look far for the reasons for this unhappiness – lowering of per hectare growth of produce,, farmers’ rampant suicides, shortage of urea, inadequate water for irrigation, shortage of power for running irrigation pumps and last but certainly not the least,

old unimproved seeds that do nothing to increase productivity of grains.
The 23rd report of the Standing Committee on Agriculture, chaired by Prof. Ram Gopal Yadav has noted that despite their repeated recommendations in various reports to substantially increase budgetary allocations of the agriculture sector to give required impetus to agricultural development, the allocations in respect of this vital sector continues to be unsatisfactory and much below the requirement.
The Committee has been informed by the representatives of the Department of Agriculture and Cooperation that to build and sustain momentum of the agriculture sector it is necessary that both state and central plan outlays are augmented to achieve the required percentage of anticipated growth in the agriculture sector. Keeping that in view, they had proposed a plan outlay of Rs. 5917 crores for 2006-07 but only Rs. 4840 crores had been approved. The Committee noted that plan allocation of Rs. 3920 crores for 2005-06 at revised estimate stage was 6.3% less as compared to budget estimate of Rs. 4209.32 crores of the same year.
The Committee report, tabled in Parliament during the dying days of the first half of the budget session, noted that they are not at all impressed by the rosy picture portrayed by Member Secretary, Planning Commission during evidence where he profoundly declared that Plan allocation in favour of all the three departments of Agriculture put together (Department of Agriculture and Cooperation, Department of Agricultural Research and Education and Department of Animal Husbandry, Dairying and Fisheries) has been doubled within a single plan period from Rs. 3242 crores in 2002-03 to Rs. 6900 crores.
The Committee observed that in view of the inflation and value of money in real terms, the overall allocations are not actually being made from agriculture to carry out activities under its various programmes, although it has been termed as a priority sector. This can also be gauged from the fact that percentage share of agriculture in central plan outlay of Government of India has come down from 2.84 % in 2005-06 to 2.73% in 2006-07, of which share of Department of Agriculture and Cooperation accounts for 1.98% in 2005-06 and 1-89% in 2006-07.
The report said the Committee were of the firm opinion that to meet the challenges faced by agriculture sector, the government has to reprioritize the role of Department of Agriculture and Cooperation to achieve the targeted 4% growth rate envisaged for the agricultural and allied sector and to help the farmers to compete in the WTO regime.
The Committee strongly recommended that the Department should be provides Rs. 5917 crores by Planning Commission and Ministry of Finance at the revised estimates stage, as proposed by them at the budgetary estimates stage, since many of their new initiatives and other programmes are suffering owing to lack of requisite funding. The Committee further recommended that no financial cuts should be imposed on the department at revised estimates stage for smooth implementation of the schemes, as financial cuts imposed now may lead to further addition of miseries to Indian farmers and people engaged in the agricultural sector, in the absence of timely help. The need is to achieve the targeted 4% growth rate in agriculture and allied sectors.

India is colonising itself

By Arundhati Roy & Shoma Chaudhuri

26 March, 2007

There is an atmosphere of growing violence across the country. How do you read the signs? Do you think it will grow more in the days to come? What are its causes? In what context should all this be read?

You don’t have to be a genius to read the signs. We have a growing middle class, being reared on a diet of radical consumerism and aggressive greed. Unlike industrializing western countries which had colonies from which to plunder resources and generate slave labour to feed this process, we have to colonize ourselves, our own nether parts. We’ve begun to eat our own limbs. The greed that is being generated (and marketed as a value interchangeable with nationalism) can only be sated by grabbing land, water and resources from the vulnerable. What we’re witnessing is the most successful secessionist struggle ever waged in Independent India. The secession of the middle and upper classes from the rest of the country. It’s a vertical secession, not a lateral one. They’re fighting for the right to merge with the world’s elite somewhere up there in the stratosphere. They’ve managed to commandeer the resources , the coal, the minerals, the bauxite, the water and electricity. Now they want the land to make more cars, more bombs, more mines – super toys for the new super citizens of the new superpower. So it’s outright war, and people on both sides are choosing their weapons. The government and the corporations reach for Structural Adjustment, the World Bank, the ADB, FDI, friendly court orders, friendly policy makers, help from the ‘friendly’ corporate media and a police force that will ram all this down peoples’ throats. Those who want to resist this process have, until now, reached for dharnas, hunger-strikes, satyagraha, the courts, and what they thought was friendly media. But now, more and more are reaching for guns. Will the violence grow? If the ‘growth rate’ and the sensex are going to be the only barometres the government uses to measure progress and the well-being of people, then of course it will. How do I read the signs? It isn’t hard to read sky-writing. What it says up there, in big letters is this: The shit has hit the fan, folks.

You once remarked that though you may not resort to violence yourself, you think it has become immoral to condemn it, given the circumstances in the country. Can you elaborate on this view?

I’d be a liability as a guerilla! I doubt I used the word ‘immoral’-morality is an elusive business, as changeable as the weather. What I feel is this: Non-violent movements have, for decades knocked on the door of every democratic institution in this country and have been spurned and humiliated. Look at the Bhopal Gas victims, the Narmada Bachao Andolan. The NBA for example, had a lot going for it, high profile leadership, media coverage, more resources than any other mass movement. What went wrong? People are bound to want to re-think strategy. When Sonia Gandhi begins to promote Satyagraha at the World Economic Forum in Davos it’s time for us to sit up and think. For example, is mass civil disobedience possible within the structure of a democratic nation-state? Is it possible in the age of disinformation and corporate-controlled mass media? Are hunger-strikes umblically linked to celebrity politics? Would anybody care if the people of Nangla Machhi or Bhatti mines went on a hunger-strike? Sharmila Irom has been on a hunger strike for six years. That should be a salutary lesson to many of us. I’ve always felt that it’s ironic that hunger-strikes are used as a political weapon in a land where most people go hungry anyway. We are in a different time and place now. Up against a different, more complex adversary. We’ve entered the era of NGOs – or should I say the era of palthu shers – in which mass action can be a treacherous business. We have demonstrations which are funded, we have sponsored dharnas and social forums which posture militantly but never follow up on what they preach. We have all kinds of ‘virtual’ resistance. Meetings against SEZs sponsored by the biggest promoters of SEZs. Awards and grants for environmental activism and community action given by corporations responsible for devastating whole ecosystems. Vedanta, a company mining bauxite in the forests of Orissa wants to start a university. The Tatas have two charitable trusts that directly and indirectly, fund activists and mass movements across the country. Could that be why Singur has drawn so much less flak than Nandigram, and why they have not targeted, boycotted, gheraoed? Of course the Tatas and Birlas funded Gandhi too – maybe he was our first NGO. But now we have NGOs who make a lot of noise, write a lot of reports,but who the sarkar is more than comfortable with. How do we make sense of all this? The place is crawling with professional diffusers of real political action. ‘Virtual resistance’ has become something of a liability.

There was a time when mass movements looked to the courts for justice. The courts have rained down a series of judgments that are so unjust, so insulting to the poor in the language they use, they take your breath away. A recent Supreme Court judgment allowing the Vasant Kunj Mall to resume construction though it didn’t have the requisite clearances said in so many words, that the question of Corporations indulging in malpractice does not arise! In the era of corporate globalization, corporate land-grab, in the era of Enron and Monsanto, Halliburton and Bechtel, that’s a loaded thing to say. It exposes the ideological heart of the most powerful institution in this country. The judiciary along with the corporate press, is now seen as the lynchpin of the neo-liberal project.

In a climate like this when people feel that they are being worn down, exhausted by these interminable ‘democratic’ processes, only to be humiliated eventually, what are they supposed to do? Of course it isn’t as though the only options are binary – violence versus non-violence. There are political parties that believe in armed struggle, but only as one part of their overall political strategy. Political workers in these struggles have been dealt with brutally, killed, beaten, imprisoned under false charges. People are fully aware that to take to arms is to call down upon yourself the myriad forms of violence of the Indian State. The minute armed struggle becomes a strategy, your whole world shrinks and the colors fade to black and white. But when people decide to take that step because every other option has ended in despair–should we condemn them? Does anyone believe that if the people of Nandigram had held a Dharna and sung songs the West Bengal Government would have backed down? We are living in times, when to be ineffective is to support the status quo (which no doubt suits some of us). And being effective comes at a terrible price. I find it hard to condemn people who are prepared to pay that price.
You have been traveling a lot on the ground — can you give us a sense of the fissures you are seeing on the ground. What are the trouble spots you have been to? Can you outline a few of the combat lines in these places?

Huge question – what can I say? The military occupation of Kashmir, neo-facism in Gujarat, civil war in Chhattisgarh, MNCs raping Orissa, the submergence of hundreds of villages in the Narmada Valley, people living on the edge of absolute starvation, the devastation of forest land, the Bhopal victims living to see the West Bengal government re-wooing Union Carbide – now calling itself Dow Chemicals – in Nandigram. I haven’t been recently to Andhra Pradesh, Karnataka, Maharshtra, but we know about the almost hundred thousand farmers who have killed themselves. We know about the fake encounters and the terrible repression in Andhra Pradesh. Each of these places is has its own particular history, economy, ecology. None is amenable to easy analysis. And yet there is connecting tissue, there are huge internatio
nal cultural and economic pressures being brought to bear on them. How can I not mention the Hindutva project, spreading its poison sub-cutaneously, waiting to errupt once again. I’d say the biggest indictment of all is that we are still a country, a culture a society which continues to nurture and practice the notion of untouchability. While our economists number-crunch and boast about the growth rate, a million people, human scavengers – earn their living carrying several kilos of other peoples’ shit on their heads every day. And if they didn’t carry shit on their heads they would starve to death. Some fucking superpower this.

How does one view the recent State and police violence in Bengal?

No different from police and State violence anywhere else – including the issue of hypocrisy and doublespeak so perfected by all political parties including the mainstream Left. Are communist bullets different from capitalist ones? Odd things are happening. It snowed in Saudi Arabia. Owls are out in broad daylight. The Chinese Government tabled a bill sanctioning the right to private property. I don’t know if all of this has to do with climate change. The Chinese Communists are turning out to be the biggest capitalists of the 21st century. Why should we expect our own Parliamentary Left to be any different? Nandigram and Singur are clear signals. It makes you wonder – is the last stop of every revolution advanced capitalism? Think about it – the French Revolution, the Russian Revolution, the Chinese Revolution, the Vietnam War, the Anti- Apartheid struggle, the supposedly Gandhian Freedom struggle in India…what’s the last station they all pull in at? Is this the end of imagination?

The Maoist attack in Bijapur — the death of 55 policemen. Are the rebels only a flip face of the State?

How can the rebels be the flip side of the state? Would anybody say that those who fought against Apartheid – however brutal their methods – were the flip side of the state? What about those who fought the French in Algeria? Or those who fought the Nazis? Or those who fought Colonial Regimes? Or those who are fighting the US occupation of Iraq? Are they the flip side of the State? This facile new report-driven ‘human rights’ discourse, this meaningless condemnation game that we all are forced to play, makes politicians of us all and leaches the real politics out of everything. However pristine we would like to be, however hard we polish our halos, the tragedy is that we have run out of pristine choices. There is a civil war in Chattisgarh sponsored, created by the Chattisgarh Government which is publicly pursing the Bush doctrine – if you’re not with us, you are with the terrorists. The lynch pin of this war, apart from the formal security forces, is the Salwa Judum – a government backed militia of ordinary people forced to take up arms, forced to become SPOs (Special Police Officers). The Indian State has tried this in Kashmir, in Manipur, in Nagaland. Tens of thousands have been killed, hundreds of thousands tortured, thousands have disappeared. Any Banana Republic would be proud of this record.. Now the government wants to import these failed strategies into the heartland. Thousands of Adivasis have been forcibly moved off their mineral –rich lands into police camps. Hundreds of villages have been forcibly evacuated. Those lands, rich in iron-ore are being eyed by corporations like the Tatas and Essar. MOUs have been signed, but no one knows what they say. Land Acquisition has begun. This kind of thing happened in countries like Colombia – one of the most devastated countries in the world. While everybody’s eyes are fixed on the spiraling violence between government backed militias and guerilla squads, multinational corporations quietly make off with the mineral wealth. That’s the little piece of theatre being scripted for us in Chattisgarh.

Of course it’s horrible that 55 policemen were killed. But they’re as much the victims of Government policy as anybody else. For the Government and the Corporations they’re just cannon fodder – there’s plenty more where they came from. Crocodile tears will be shed, prim TV anchors will hector us for a while and then more supplies of fodder will be arranged. For the Maoist guerillas the police and SPOs they killed were the armed personnel of the Indian State, the main, perpetrators of repression, torture, custodial killings, false encounters. The ones whose professional duties involve burning villages and raping women. They’re not innocent civilians – if such a thing exists – by any stretch of imagination.

I have no doubt that the Maoists can be agents of terror and coercion too. I have no doubt they have committed unspeakable atrocities. I have no doubt they cannot lay claim to undisputed support from local people – but who can? Still, no guerrilla army can survive without local support. That’s a logistical impossibility. And the support for Maoists is growing, not diminishing. That says something. People have no choice but to align themselves on the side of whoever they think is less worse.

But to equate a resistance movement fighting against enormous injustice, with the Government which enforces that injustice is absurd. The government has slammed the door in the face of every attempt at non-violent resistance. When people take to arms, there is going to be all kinds of violence – revolutionary, lumpen and outright criminal. The government is responsible for the monstrous situations it creates.

The term Naxals and Maoists and outsiders is being used very loosely these days. Can you declutter it.

‘Outsiders’ is a generic accusation used in the early stages of repression by governments who have begun to believe their own publicity and can’t imagine that people have risen up against them. That’s the stage the CPI (M) is at now in Bengal, though some would say repression in Bengal is not new, it has only moved into higher gear.. In any case what’s an outsider? Who decides the borders? Are they village boundaries? Tehsil? Block? District? State? Is narrow regional and ethnic politics the new communist mantra? About Naxals and Maoists – well… India is about to become a police state in which everybody who disagrees with what’s going on risks being called a terrorist. Islamic terrorists have to be Islamic – so that’s not good enough to cover most of us. They need a bigger catchment area. So leaving the definition loose, undefined, is effective strategy, because the time is not far off when we’ll all be called Maoists or Naxalites, terrorists or terrorist sympathisers and shut down, by people who don’t really know – or care -who Maoists or Naxalites are. In villages of course that has begun – thousands of people are being held in jails across the country, loosely charged with being terrorists trying to overthrow the state. Who are the real Naxalites and Maoists? I’m not an authority on the subject, but here’s a very rudimentary potted history.

The Communist Party of India the CPI was formed in 1925. The CPI (M) Communist Party Marxist- split from the CPI in 1964 and formed a separate party. Both of course were parliamentary political parties. In 1967 the CPI (M) along with a splinter group of the Congress, came to power in West Bengal. At the time there was massive unrest among starving peasantry in the countryside. Local leaders of the CPI(M) – Kanu Sanyal and Charu Mazumdar led a peasant uprising in the district of Naxalbari which is where the term Naxalites comes from. In 1969 the government fell and the Congress came back to power under Siddharta Shankar Ray. The naxalite uprising was mercilessly crushed – Mahashweta Devi has written powerfully about this time. In 1969 the CPI (ML) – Marxist Leninist split from the CPI (M). A few years later around 1971, the CPI (ML) devolved into several parties: the CPI -ML (Liberation) largely centred in Bihar, CPI –ML (New Democracy) functioning for the most part out of Andhra Pradesh and Bihar, the CPI-ML (Class Struggle) mainly in Bengal. These parties have been gen
erically baptized ‘Naxalites.’ They see themselves as Marxist Leninist, not strictly speaking Maoist. They believe in elections, mass action and, when, absolutely pushed to the wall or attacked- armed struggle. The MCC – the Maoist Communist Centre at the time mostly operating in Bihar was formed in 1968. The PW Peoples War, operational for the most part in Andhra Pradesh was formed in 1980. Recently, in 2004 the MCC and the PW merged to form the CPI (Maoist) They believe in outright armed struggle and the overthrowing of the state. They don’t participate in elections. This is the party that is fighting the guerilla war in Bihar, Andhra Pradesh, Chattisgarh and Jharkhand.

The Indian state and media largely view the Maoists as “internal security” threat. Is this the way to look at them?

I’m sure the Maoists would be flattered to be viewed in this way.
The Maoists want to bring down the State. Given the autocratic ideology they take their inspiration from, what alternative would they set up? Wouldn’t their regime be an exploitative autocratic violent one as well? Isn’t their action already exploitative of ordinary people? Do they really have the support of ordinary people?

I think it’s important for us to acknowledge that both Mao and Stalin are dubious heroes with murderous pasts. Tens of millions of people were killed under their regimes. Apart from what happened in China and the Soviet Union, Pol Pot, with the support of the Chinese communist party (while the West looked away discreetly) wiped out two million people in Cambodia and brought millions of people to the brink of extinction from disease and starvation. Can we pretend that China’s cultural revolution didn’t happen? Or that that millions of people in the Soviet Union and Eastern Europe were not victims of labour camps, torture chambers, the network of spies and informers, the secret police. The history of these regimes is just as dark as the history of Western Imperialism, except for the fact that they had a shorter life-span. We cannot condemn the occupation of Iraq, Palestine and Kashmir while we remain silent about Tibet and Chechnya. I would imagine that for the Maoists, the Naxalites as well as the mainstream Left, being honest about the past is important to strengthen peoples’ faith in the future. One hopes the past will not be repeated, but denying that it ever happened doesn’t help inspire confidence….Nevertheless, in this part of the world, the Maoists in Nepal have waged a brave and successful struggle against the monarchy in Nepal. Right now in India the Maoists and the various Marxist Leninist Groups are leading the fight against immense injustice in India. They are fighting not just the State, but feudal landlords and their armed militias. They are the only people who are making a dent. And I admire that. It may well be that when they come to power they will as you say, be brutal, unjust and autocratic, even worse than the present government. Maybe, but I’m not prepared to assume that in advance. If they are, we’ll have to fight them too. And most likely someone like myself will be the first person they’ll string up from the nearest tree – but right now, it is important to acknowledge that they are bearing the brunt of being at the forefront of resistance. Many of us are in a position where we have are beginning to align ourselves on the side of those who we know have no place for us in their religious or ideological imagination. It’s true that everybody changes radically when they come to power – look at Mandela’s ANC. Corrupt, capitalist, bowing to the IMF, driving the poor out of their homes – honouring Suharto the killer of hundreds of thousands of Indonesian communists with South Africa’s highest civilian award. Who would have thought it could happen? But does this mean South Africans should have backed away from the struggle against apartheid? Or that they should regret it now? Does it mean Algeria should have remained a French Colony, that Kashmiris, Iraqis and Palestinians should accept military occupation? That people whose dignity is being assaulted should give up the fight because they can’t find saints to lead them into battle?

Is there a communication breakdown in our society?


Banks set up financial counselling centres to help distressed farmers



SATARA: Several Indian banks are on course to set up financial counselling centres to help distressed farmers, particularly in states such as Maharashtra and Andhra Pradesh, that have witnessed a spate of suicides. RBI is sensitising banks to have such centres, said Usha Thorat, deputy governor, Reserve Bank of India.
The move follows the government’s decision to set up a Financial Inclusion Fund with Nabard for meeting the cost of developmental and promotional interventions. It also plans to set up a Financial Inclusion Technology Fund to meet the costs of technology adoption. Each fund will have an overall corpus of Rs 500 crore, with the initial funding to be contributed by the centre, RBI and Nabard.
Financial counselling centres may, however, not be a commercially viable proposition for banks. One of the options could be for the banking regulator to provide financial support to banks for setting up these centres.
Policy makers reckon that farmers need to diversify their risks instead of depending on just one crop. Finance is only one of the inputs and turn around in the farm sector hinges on a host of other factors including higher investments and an improvement in the yields.
Bank of India and ICICI Bank have launched credit counselling services. However, most banks in India are yet to have a formal financial system for financial counselling or improving financial literacy. Banks in the US, for instance, are expected to contribute towards educating persons from socially and financially disadvantaged groups on matters relating to their financial needs as per the Community Re-Investment Act.
Financial inclusion is delivery of banking services at an affordable cost to vast sections of disadvantaged and low-income groups. An estimated 600 million rural poor in India are either not served or under-served by the formal financial sector. The concept of financial inclusion was articulated by the RBI in 2005-06. Banks were mandated to make available basic banking “no frills” account either with nil or minimum balances and charges that would make such accounts accessible.
“The concept has caught on. But for real empowerment banks also need to ensure the continuity in use of these accounts by rural households. Such households need access to the entire gamut of financial services — including remittance facilities,” said Thorat. She said the RBI has asked all state-level bankers to identify at least one district in each state for financial inclusion.

MP committee slams govt's farmer policy

MP committee slams govt's farmer policyNDTV Correspondent
Wednesday, March 21, 2007 (New Delhi):

Empty promises, persistent government apathy where even the Prime Minister’s Vidarbha relief package does not take off.
This is not an attack by the opposition but a scathing indictment of the government by a Parliamentary Committee.
Farmer anger from Nandigram to Punjab over SEZ. The other face of despair is a suicide graph that stains state after state as a recurring shortage of onions and pulses fuels the price rise.
As agriculture lurches from one crisis to another, a parliamentary report has slammed the entire government saying these are mere symptoms of a deeper malaise.
“The Committee wonders whether the government is waiting for farmers of these states to commit suicides in large numbers before announcing any package.
“Whatever is announced in the budget and in Parliament don’t get into execution because of differences of opinion among ministries. We are not impressed by the rosy picture portrayed by the Planning Commission.”
“Planning Commission is not generous about releasing money,” said Raghuvansh Prasad Singh, Rural Development Minister.
Hard facts
But it’s not just rhetoric hard facts back this attack on the government.
There is prevalence of a draconian law in states like Uttar Pradesh, Bihar, Haryana, Orissa, which equips the police to arrest a loan defaulting farmer.
A Rs 1000 crore shortfall in allocation for agriculture in this year’s budget collapse of the credit system, and government apathy best evidenced in the failure of even the PM’s rehabilitation package for Vidarbha farmers.
“The government tells us it wants inclusive growth of tribals, Dalits or minorities it never mentions farmers,” said Sharad Joshi, Member, Standing committee on Agriculture.
Elections one after another and tall promises about rejuvenating agriculture but this 70 page document prepared by a committee of parliamentarians belonging to different political parties brings out the brutal truth.

Not import liberalisation, but justified protection needed for farm sector


Posted online: Monday, March 19, 2007 at 0000 hours IST

NEW DELHI, MAR 18:  Reduction in tariff protection in South Asian agriculture has been the primary cause of import surge, leading to fall in employment in farm activities, lowering of returns to farmers and increased levels of poverty in rural areas. This is observation made by the South Asian Yearbook of Trade and Development recently released by the Delhi-based Centre for Trade & Development (Centad) and Wiley India Pvt Ltd.

The Yearbook further said that the absence of income and insurance safety nets compounded the problems leading to desperate and irreversible actions by afflicted farmers—an obvious reference to the series of farmers’ suicides.

The observations in the Yearbook is a caution to the Indian government which is deliberately engaged in the process of import liberalisation. The commerce minister, Kamal Nath at the sidelines of the recent World Economic Summit at Davos made an unilateral offer on behalf of the developing countries to be flexible on the issues of designation of special products and application of Special Safeguard Mechanism (SSM).

The agriculture minister, Sharad Pawar has openly favoured a liberalized export-import regime. Last week in the Parliament he announced that private trade, corporate houses and multinational corporation would be allowed to import dutyfree wheat. Government would also import 3 million tonne wheat despite a good production of over 80 million tonne wheat in the country, according to several experts. However, the government has made a conservative estimate of 72 million tonne wheat production, despite the increase in area under wheat crop by over 28 million hectare.

Government’s justification for allowing dutyfree wheat import is to augment its supply and arrest the rising trend in prices. But such action did not result in a solution and the government’s Economic Survey 2006 admitted that wheat imports failed to hold the price line.

Rather the global prices of wheat appreciated when India became a bulk import. Wheat production in previous year was sufficient to meet the domestic needs and so also is the case in the present year. The prime cause for price rise is deliberate hoarding of stocks and market manipulation, which the government is reluctant to control.

Unwarranted import liberalization is no solution, rather it may be counterproductive. The Yearbook suggests adequate protection of food security and livelihoods of small and resource poor farmers through multilateral disciplines of SPs and SSM. Discussions on SPs and SSM is central for the Third World. G-33, group of about 40 developing and least developed countries are meeting in Jakarta in Indonesia to discuss the strategy. G-33 has proposed that 20% of the tariff lines should be protected under SPs, while several civil society organizations have said that all farm produces should be designated as SPs.

In India, the agriculture ministry has identified very few products—about 80 tariff lines—as SPs. The Yearbook, however pleads for developing separate objective criteria for for designating SPs in South Asia which should be broad enough to cover large range of products. “An earlier case study on India has shown that 57% of tariff lines need greater flexibility as SPs. With regard to the SSM, price-triggers are found to be more appropriate than volume triggers.” Thus, let us act before it is too late.

ADB says rural loan may help stem farmer suicides…

March 15, 2007
By Unni Krishnan and Surojit Gupta
NEW DELHI (Reuters) – The Asian Development Bank hopes a $1 billion loan aimed at reforming India’s rural credit structure will help stem farmer suicides in the country, a senior official said on Thursday.
An estimated 5,000 farmers have killed themselves over six years across India’s sprawling western and southern plateau — where the black soil has long borne a rich harvest of cotton — because they could not repay loans taken for their crops.
The spate of suicides in the country’s richest state of Maharashtra has not abated despite efforts by New Delhi to ease the farmers’ financial burden.
“We are hoping in terms of outcome I hope two years from now there will be a reduced number of farmers committing suicides,” Kunio Senga, director general of the South Asia department of the bank told Reuters in an interview.
The programme, carried out in five Indian states, aims to revitalise the cooperative credit structure and reach masses of small farmers, Senga said.
Economic growth of more than 8 percent in the past three years has made millions in the cities richer, but it has bypassed the farming sector that supports more than 60 percent of India’s one billion-plus people.
Most of India’s farming community is poverty-stricken and many farmers borrow from the village moneylender at rates as high as 30-60 percent a month.
Ensuring economic growth was inclusive of poorer members of society has become increasingly important in India and the communist-backed ruling coalition has made it the centrepiece of its economic agenda.
The Congress party-led coalition, which swept to power in May 2004, has been trying to bridge the rural-urban divide and include millions of poor in the country’s largely city-based boom. “We are very much into assistance directly to address inclusiveness of growth. Our $1 billion rural finance programme is one signal that we are very much now into inclusiveness of growth,” Senga said.
He said upgrading of rural infrastructure, particularly to develop the farm sector, was key to sustaining growth and the bank was optimistic about reforms undertaken by the government to reform the sector.
The Union budget for 2007/08 has doled out gifts aimed at giving a major boost to the ailing farm sector which puts food on the tables of 115 million farming families.
Analysts say the government should focus on linking farmers to the markets through private investment in production, post-harvest infrastructure and refrigerated distribution.
“Inclusiveness requires more reforms including agricultural related and I am quite optimistic,” Senga said.

Economic globalisation has become a war against nature and poor…

by Vandana Shiva

RECENTLY, I WAS visiting Bhatinda in Punjab because of an epidemic of farmers’ suicides. Punjab used to be the most prosperous agricultural region in India. Today every farmer is in debt and despair. Vast stretches of land have become waterlogged desert. And, as an old farmer pointed out, even the trees have stopped bearing fruit because heavy use of pesticides has killed the pollinators — the bees and butterflies.

And Punjab is not alone in experiencing this ecological and social disaster. Last year I was in Warangal, Andhra Pradesh, where farmers have also been committing suicide. Farmers who traditionally grew pulses and millets and paddy have been lured by seed companies to buy hybrid cotton seeds referred to as “white gold”, which were supposed to make them millionaires. Instead they became paupers.

Their native seeds have been displaced with new hybrids which cannot be saved and need to be purchased every year at a high cost. Hybrids are also very vulnerable to pest attacks. Spending on pesticides in Warangal has increased 2,000 per cent from $2.5 million in the 1980s to £50 million in 1997. Now farmers are consuming the same pesticides as a way of killing themselves so that they can escape permanently from unpayable debt.

The corporations are now trying to introduce genetically engineered seed, which will further increase costs and ecological risks. That is why farmers like Malla Reddy of the Andhra Pradesh Farmers’ Union had uprooted Monsanto’s genetically engineered Bollgard cotton in

On March 27th, twenty-five-year-old Betavati Ratan took his life because he could not pay back debts for drilling a deep tube well on his two-acre farm. The wells are now dry, as are the wells in Gujarat and Rajasthan where more than 50 million people face a water famine.

The drought is not a “natural disaster”. It is “man-made”. It is the result of mining of scarce ground water in arid regions to grow thirsty cash crops for export instead of water-prudent food crops for local needs.

It is experiences such as these which tell me that we are so wrong to be smug about the new global economy. It is time to stop and think about the impact of globalization on the lives of ordinary people. This is vital if we want to achieve sustainability.

Seattle and the World Trade Organization protests last year have forced everyone to think again. For me it is now time to re-evaluate radically what we are doing. For what we are doing in the name of globalization to the poor is brutal and unforgivable. This is especially evident in India as we witness the unfolding disasters of globalization, especially in food and agriculture.

WHO FEEDS THE WORLD? My answer is very different from that given by most people.

It is women and small farmers working with biodiversity who are the primary food providers in the Third World and, contrary to the dominant assumption, their biodiversity-based small farm systems are more productive than industrial monocultures.

The rich diversity and sustainable systems of food production have been destroyed in the name of increasing food production. However, with the destruction of diversity, rich sources of nutrition disappear. When measured in terms of nutrition per acre, and from the perspective of biodiversity, the so-called “high yields” of industrial agriculture do not imply more production of food and nutrition.

Yield usually refers to production per unit area of a single crop. Output refers to the total production of diverse crops and products. Planting only one crop in the entire field as a monoculture will, of course, increase its individual yield. Planting multiple crops in a mixture will have low yields of individual crops, but will have high total output of food. Yields have been defined in such a way as to make the food production on small farms, by small farmers, disappear.

This hides the production by millions of women farmers in the Third World — farmers like those in my native Himalaya who fought against logging in the Chipko movement, who in their terraced fields grow Jhangora (barnyard millet), Marsha (amaranth), Tur (pigeon pea), Urad (black gram), Gahat (horse gram), soy bean (glycine max), Bhat (glycine soya), Rayans (rice bean), Swanta (cow pea), Koda (finger millet). From the biodiversity perspective, biodiversity-based productivity is higher than monoculture productivity. I call this blindness to the high productivity of diversity a “Monoculture of the Mind”, which creates monocultures in our fields.

The Mayan peasants in the Chiapas are characterized as unproductive because they produce only two tons of corn per acre. However, the overall food output is twenty tons per acre when the diversity of their beans and squashes, their vegetables and fruit trees is taken into account.

In Java, small farmers cultivate 607 species in their home gardens. In sub-saharan Africa, women cultivate as many as 120 different plants in the spaces left alongside the cash crops, and this is the main source of household food security.

A single home garden in Thailand has more than 230 species, and African home gardens have more than sixty species of tree. Rural families in the Congo eat leaves from more than fifty different species of tree.

A study in eastern Nigeria found that home gardens occupying only 2% of a household’s farmland accounted for half the farm’s total output. Similarly, home gardens in Indonesia are estimated to provide more than 20% of household income and 40% of domestic food supplies.

Research done by fao has shown that small biodiverse farms can produce thousands of times more food than large, industrial monocultures.

And diversity is the best strategy for preventing drought and desertification.

What the world needs to feed a growing population sustainably is biodiversity intensification, not chemical intensification or genetic engineering. While women and small peasants feed the world through biodiversity, we are repeatedly told that without genetic engineering and globalization of agriculture the world will starve. In spite of all empirical evidence showing that genetic engineering does not produce more food and in fact often leads to a yield decline, it is constantly promoted as the only alternative available for feeding the hungry.

THAT IS WHY I ASK, who feeds the world?

This deliberate blindness to diversity, the blindness to nature’s production, production by women, production by Third World farmers, allows destruction and appropriation to be projected as creation.

Take the case of the much-flaunted “golden rice” or genetically engineered vitamin A rice as a cure for blindness. It is assumed that without genetic engineering we cannot remove vitamin A deficiency. However, nature gives us abundant and diverse sources of vitamin A. If rice were not polished, rice itself would provide vitamin A. If herbicides were not sprayed on our wheat fields, we would have bathua, amaranth, mustard leaves as delicious and nutritious greens.

Women in Bengal use more than 150 plants as greens. But the myth of creation presents biotechnologists as the creators of vitamin A, negating nature’s diverse gifts and women’s knowledge of how to use this diversity to feed their children and families.

The most efficient means of rendering the destruction of nature, local economies and small autonomous producers is by rendering their production invisible.

Women who produce for their families and communities are treated as “non-productive” and “economically inactive”. The devaluation of women’s work, and of work done in sustainable economies, is the nat
ural outcome of a system constructed by capitalist patriarchy. This is how globalization destroys local economies and the destruction itself is counted as growth.

And women themselves are devalued, because for many women in the rural and indigenous communities their work co-operates with nature’s processes, and is often contradictory to the dominant market-driven “development” and trade policies, and because work that satisfies needs and ensures sustenance is devalued in general. There is less nurturing of life and life support systems.

The devaluation and invisibility of sustainable, regenerative production is most glaring in the area of food. While patriarchal division of labour has assigned women the role of feeding their families and communities, patriarchal economics and patriarchal views of science and technology magically make women’s work in providing food disappear. “Feeding the World” becomes disassociated from the women who actually do it and is projected as dependent on global agribusiness and biotechnology corporations.

Industrialization and genetic engineering of food and globalization of trade in agriculture are recipes for creating hunger, not for feeding the poor.

Everywhere, food production is becoming a negative economy, with farmers spending more buying costly inputs for industrial production than the price they receive for their produce. The consequence is rising debts and epidemics of suicides in both rich and poor countries.

ECONOMIC GLOBALIZATION is leading to a concentration of the seed industry, the increased use of pesticides, and, finally, increased debt. Capital-intensive, corporate-controlled agriculture is being spread into regions where peasants are poor but, until now, have been self-sufficient in food. In the regions where industrial agriculture has been introduced through globalization, higher costs are making it virtually impossible for small farmers to survive.

The globalization of non-sustainable industrial agriculture is evaporating the incomes of
Third World farmers through a combination of devaluation of currencies, increase in costs of production and a collapse in commodity prices.

Farmers everywhere are being paid a fraction of what they received for the same commodity a decade ago. In the us, wheat prices dropped from $5.75 to $2.43, soya bean prices dropped from $8.40 to $4.29, and corn prices dropped from $4.43 to $1.72 a bushel. In India, from 1999 to 2000, prices for coffee dropped from Rs.60 to Rs.18 per kg and prices of oilseeds declined by more than 30%.

The Canadian National Farmers’ Union put it like this in a report to the senate this year:

“While the farmers growing cereal grains — wheat, oats, corn — earn negative returns and are pushed close to bankruptcy, the companies that make breakfast cereals reap huge profits. In 1998, cereal companies Kellogg’s, Quaker Oats and General Mills enjoyed return on equity rates of 56%, 165% and 222% respectively. While a bushel of corn sold for less than $4, a bushel of corn flakes sold for $133. In 1998, the cereal companies were 186 to 740 times more profitable than the farms. Maybe farmers are making too little because others are taking too much.”

And a World Bank report has admitted that “behind the polarization of domestic consumer prices and world prices is the presence of large trading companies in international commodity markets.”

While farmers earn less, consumers, especially in poor countries, pay more. In
India, food prices have doubled between 1999 and 2000, and consumption of food grains has dropped by 12% in rural areas, increasing the food deprivation of those already malnourished, pushing up mortality rates. Increased economic growth through global commerce is based on pseudo surpluses. More food is being traded while the poor are consuming less. When growth increases poverty, when real production becomes a negative economy, and speculators are defined as “wealth creators”, something has gone wrong with the concepts and categories of wealth and wealth creation. Pushing the real production by nature and people into a negative economy implies that production of real goods and services is declining, creating deeper poverty for the millions who are not part of the dotcom route to instantaneous wealth creation.

WOMEN — AS I HAVE SAID — are the primary food producers and food processors in the world. However, their work in production and processing has now become invisible.

According to the McKinsey corporation, “American food giants recognize that Indian agro-business has lots of room to grow, especially in food processing. India processes a minuscule 1% of the food it grows compared with 70% for the US, Brazil and
Philippines.” It is not that we Indians eat our food raw. Global consultants fail to see the 99% food processing done by women at household level, or by small cottage industry, because it is not controlled by global agribusiness. 99% of
India’s agroprocessing has been intentionally kept at the household level. Now, under the pressure of globalization, things are changing. Pseudo hygiene laws that shut down the food economy based on small-scale local processing under community control are part of the arsenal of global agribusiness for establishing market monopolies through force and coercion, not competition.

In August 1998, small-scale local processing of edible oil was banned in
India through a “packaging order” which made sale of open oil illegal and required all oil to be packed in plastic or aluminium. This shut down tiny “ghanis” or cold-pressed mills. It destroyed the market for our diverse oilseeds — mustard, linseed, sesame, groundnut and coconut.

The take-over of the edible oil industry has affected 10 million livelihoods. The take-over of “atta” or flour by packaged branded flour will cost 100 million livelihoods. These millions are being pushed into new poverty.

The forced use of packaging will increase the environmental burden of millions of tonnes of plastic and aluminium. The globalization of the food system is destroying the diversity of local food cultures and local food economies. A global monoculture is being forced on people by defining everything that is fresh, local and handmade as a health hazard. Human hands are being defined as the worst contaminants, and work for human hands is being outlawed, to be replaced by machines and chemicals bought from global corporations. These are not recipes for feeding the world, but for stealing livelihoods from the poor to create markets for the powerful. People are being perceived as parasites, to be exterminated for the “health” of the global economy. In the process new health and ecological hazards are being forced on Third World people through dumping genetically engineered foods and other hazardous products.

Recently, because of a wto ruling, India was forced to remove restrictions on all imports. Among the unrestricted imports are carcases and animal waste parts that create a threat to our culture and introduce public health hazards such as mad cow disease.

The US Center for Disease and Prevention (cds) in Atlanta has calculated that nearly 81 million cases of food-borne illnesses occur in the us every year. Deaths from food poisoning have more than quadrupled due to deregulation, rising from 2,000 in 1984 to 9,000 in 1994. Most of these infections are caused by factory-farmed meat. The us slaughters 93 million pigs, 37 million cattle, 2 million calves, 6 million horses, goats and sheep and 8 billion chickens and turkeys each year. Now the giant meat industry of the us wants to dump contaminated meat produced through violent and cruel methods on India.

The waste of the rich is being dumped on the poor. The wealth of the poor is being violently appropriated through new and clever means like patents on biodiversity and indigenous knowledge.

PATENTS AND INTELLECTUAL property rights are supposed to be granted for novel inventions. But patents are being claimed for rice varieties such as the basmati for which theDoon
Valley — where I was born — is famous, or pesticides derived from the neem which our mothers and grandmothers have been using. Rice Tec, a US-based company, has been granted Patent No. 5,663,484 for basmati rice lines and grains.

Basmati, neem, pepper, bitter gourd, turmeric . . . every aspect of the innovation embodied in our indigenous food and medicinal systems is now being pirated and patented. The knowledge of the poor is being converted into the property of global corporations, creating a situation where the poor will have to pay for the seeds and medicines they have evolved and have used to meet their needs for nutrition and health care.

Such false claims to creation are now the global norm, with the Trade Related Intellectual Property Rights Agreement of the wto forcing countries to introduce regimes that allow patenting of life forms and indigenous knowledge.

Instead of recognizing that commercial interests build on nature and on the contribution of other cultures, global law has enshrined the patriarchal myth of creation to create new property rights to life forms just as colonialism used the myth of discovery as the basis of the take-over of the land of others as colonies.

Humans do not create life when they manipulate it. Rice Tec’s claim that it has made “an instant invention of a novel rice line”, or the Roslin Institute’s claim that Ian Wilmut “created” Dolly denies the creativity of nature, the self-organizational capacity of life forms, and the prior innovation of Third World communities.

Patents and intellectual property rights are supposed to prevent piracy. Instead they are becoming the instruments of pirating the common traditional knowledge from the poor of the Third World and making it the exclusive “property” of Western scientists and corporations.

When patents are granted for seeds and plants, as in the case of basmati, theft is defined as creation, and saving and sharing seed is defined as theft of intellectual property. Corporations which have broad patents on crops such as cotton, soya bean and mustard are suing farmers for seed-saving and hiring detective agencies to find out if farmers have saved seed or shared it with neighbours.

The recent announcement that Monsanto is giving away the rice genome for free is misleading: Monsanto has not made a commitment to stop patenting rice varieties or other crops.

Sharing and exchange, the basis of our humanity and our ecological survival, have been redefined as a crime. This makes us all poor.

Nature has given us abundance. Women’s indigenous knowledge of biodiversity, agriculture and nutrition has built on that abundance to create more from less, to create growth through sharing. The poor are pushed into deeper poverty by being made to pay for what were their resources and knowledge. Even the rich are poorer because their profits are based on theft and on the use of coercion and violence. This is not wealth creation but plunder.

Sustainability requires the protection of all species and all people and the recognition that diverse species and diverse people play an essential role in maintaining ecosystems and ecological processes. Pollinators are critical to the fertilization and generation of plants. Biodiversity in fields provides vegetables, fodder, medicine and protection to the soil from water and wind erosion.

As humans travel further down the road to non-sustainability, they become intolerant of other species and blind to their vital role in our survival.

In 1992, when Indian farmers destroyed Cargill’s seed plant in Bellary, Karnataka, as a protest against seed failure, the Cargill Chief Executive stated: “We bring Indian farmers smart technologies which prevent bees from usurping the pollen.” When I was participating in the United Nations Biosafety Negotiations, Monsanto circulated literature to defend its Roundup herbicide-resistant crops on grounds that they prevent “weeds from stealing the sunshine”. But what Monsanto calls weeds are the green fields that provide vitamin A rice and prevent blindness in children and anaemia in women.

A world-view that defines pollination as “theft by bees” and claims that biodiversity “steals” sunshine is a world-view which itself aims at stealing nature’s harvest by replacing open, pollinated varieties with hybrids and sterile seeds, and at destroying biodiverse flora with herbicides such as Monsanto’s Roundup. The threat posed to the Monarch butterfly by genetically engineered bt. crops is just one example of the ecological poverty created by the new biotechnologies. As butterflies and bees disappear, production is undermined. As biodiversity disappears, with it go sources of nutrition and food.

When giant corporations view small peasants and bees as thieves, and through trade rules and new technologies seek the right to exterminate them, humanity has reached a dangerous threshold. The imperative to stamp out the smallest insect, the smallest plant, the smallest peasant comes from a deep fear — the fear of everything that is alive and free. And this deep insecurity and fear is unleashing violence against all people and all species.

The global free-trade economy has become a threat to sustainability. The very survival of the poor and other species is at stake not just as a side effect or as an exception but in a systemic way through a restructuring of our world-view at the most fundamental level. Sustainability, sharing and survival are being economically outlawed in the name of market competitiveness and market efficiency.

We need urgently to bring the planet and people back into the picture. The world can be fed only by feeding all beings that make the world.

In giving food to other beings and species we maintain conditions for our own food security. In feeding the earthworms we feed ourselves. In feeding cows, we feed the soil, and in providing food for the soil, we provide food for humans. This world-view of abundance is based on sharing and on a deep awareness of humans as members of the earth family. This awareness that in impoverishing other beings, we impoverish ourselves and in nourishing other beings, we nourish ourselves is the basis of sustainability.

The sustainability challenge for the new millennium is whether global economic man can move out of the world-view based on fear and scarcity, monocultures and monopolies, appropriation and dispossession and shift to a view based on abundance and sharing, diversity and decentralization, and respect and dignity for all beings.

Sustainability demands that we move out of the economic trap that is leaving no space for other species and most humans. Economic globalization has become a war against nature and the poor. But the rules of globalization are not god-given. They can be changed. We must bring this war to an end.

Since Seattle, a frequently used phrase has been the need for a rule-based system. Globalization is the rule of commerce and it has elevated Wall Street to be the only source of value, and as a result things that should have high worth — nature, culture, the future — are being devalued and destroyed. The rules of globalization are undermining the rules of justice and sustainability, of compassion and sharing. We have to move from market totalitarianism to an earth democracy.

We can survive as a species only if we live by the rules of the biosphere. The biosphere has enough for everyone’s needs if the global economy respects the limits set by sustainability and justice.

As Gandhi reminded us, “The Earth has enough for everyone’s needs, but not for some people’s greed.”

Indian Money and Credit

Subroto Roy

from The Sunday Statesman, August 6 2006,

One rural household may lend another rural household 10 kg or 100 kg
of grain or seed for a short time. When it does, it expects to
receive back a little more than the amount lent ~ even if that
little amount is in services or in plain goodwill among friends or
neighbours. That extra amount is “real interest”, and the percentage
of its value relative to the whole is the “real rate of interest”.
So if 10 kg of grain are lent for two weeks and 11 kg are returned,
an implicit real rate of interest of 10 per cent has been paid over
that short period. The future is always less valuable than the
present in the sense that 10 kg of grain today is worth something
more than the prospect of the same 10 kg of grain tomorrow.
But loans may be made in terms of money rather than real units of
grain, thus the change in the value of money over the period of the
loan becomes relevant. If a loan of Rs 100,000 is made by a bank to
a borrower for one year at a simple interest rate of 13 per cent per
annum, and the value of money then declines at 8 per cent over the
year, the debtor is paying real interest of just about 13 per cent-8
per cent = 5 per cent. The Yale economist Irving Fisher described
how this monetary rate of interest equals the real rate of interest
plus the rate of monetary inflation, while the great Swedish
economist Knut Wicksell predicted inflation if the monetary rate
fell below the real rate, and vice versa.

And there is another consideration too. A new cycle-rickshaw
costs about Rs 5,000. A rickshaw driver who does not own his own
machine has to pay the owner of the rickshaw a fixed rental of about
Rs15 per day. Now a government policy may want to see more cycle-
rickshaw drivers owning their own machines, and allocate bank-credit
accordingly. But some fraction of the drivers are alcoholics and
hence are bad credit-risks, while others are industrious, have
strong family lives and are good credit-risks. If a creditor is
unable to distinguish between who is an alcoholic and who is not,
credit terms will tend towards subsidising the alcoholic and taxing
the industrious. On the other hand, a creditor who knows each debtor
individually will also know their credit-risks, and price individual
loans to them accordingly.

India’s credit markets, both rural and urban, have been segmented
always into “formal” and “informal”, and remain so despite (or
perhaps because of) much government intervention in recent decades.
Banks and the RBI operate in formal financial markets, but the
informal credit market is where the real action is. For example, a
mosaic-machine used in the construction business costs Rs 15,000
brand new and gets to be rented out at the rate of Rs 150 per day.
Someone with access to formal sector bank loans at say 13 per cent
per annum, might borrow the Rs 15,000, buy a machine, rent it out,
break-even within a few months and make a whopping profit
afterwards. Everyone would thus hunger after subsidised formal
sector bank loans, and these would be rationed quickly and then come
to be allocated to people known to bank officials (like their own
friends and relatives).

Rates of return on capital, i.e. real profits, are and always
have been massively high in India, and that is what is to be
expected because capital, both machinery and finance, is relatively
scarce as a factor of production. Rates of return on labour, i.e.
real wages, are on the other hand relatively low in India thanks to
our vast population. For these reasons we have had for three
centuries foreigners coming to India to invest their capital in
enterprise and make a profit, while Indians have emigrated all over
the world from Fiji to Britain to America in search of higher wages.

Now all of this is very elementary reasoning well known to serious
monetary economists, yet it seems to have always escaped India’s
monetary and fiscal decision-makers. For example, just the other
day, the Finance Minister said in Parliament that all rural banks
had been instructed to lend farmers credit at a 7 per cent
(monetary) rate of interest, and failure to do so would lead to
punishment. By the rickshaw example (in fact many cycle-rickshaw
drivers are also marginal farmers), the FM did not wish to, and of
course cannot in practice, distinguish between good and bad credit-
risks among the recipients of such loans. If the value of money is
declining by, say, 8 per cent per annum, a 7 per cent monetary rate
is equivalent to a minus 1 per cent real rate. i.e., the FM would
have done some Humpty Dumpty economics and caused the future
prospect of holding Rs 1,000 tomorrow to be more and not less
valuable than the certainty of holding Rs 1,000 today. It is
inevitable there will be credit-rationing when credit is so
massively subsidised, so the typical borrowing farmer will get some
little fraction of his credit-needs at the official government price
of 7 per cent per annum and then have to get the bulk of his credit-
needs fulfilled in the informal market ~ at a price perhaps of 1 per
cent-5 per cent PER DAY! The FM promising in his Budget to subsidise
farm credit sounds nice on TV but may be wholly futile as a way of
stopping farmers’ suicides.

The same kind of Humpty Dumpty monetary economics has been
religiously pursued by the RBI for decades upon directions from its
owner and master, the Finance Ministry ~ which in turn has always
meekly followed the dictates of India’s unreasonable politicians of
all parties. Formal sector interest rates in India have been for
decades so artificially lowered that even if we use official figures
measuring inflation, this leads to real interest rates being lower
in capital-scarce India than in the capital-rich West! (See graphs).
Negative or near-zero real interest rates in India’s formal
financial sector coexisting with massively high profit rates in
informal credit markets point to continuous processes of low risk
profits being made by arbitrage between the two. That is why the
organised private and public sectors seem so pleased with official
credit policies ~ while every borrower in the informal credit
markets always has suicide not far from his/her mind.

Other than Dr Rangarajan who once mentioned it, we have never had
an RBI Governor who has wished to see the RBI constitutionally
independent of the Government of the day, and hence dedicated to
restoring the integrity of India’s money. Playing with the repo rate
or other short term monetary rates is fun and makes the RBI think it
is doing something as important as the US or UK central banks.
Certainly the upward trend in such short term rates over the last
few months is better than the nonsensical flip-flops previously. But
it is small potatoes compared to the really giant variables which
are all fiscal and not monetary in India. For example, Sonia Gandhi
(as advised by another naturalized Indian, Jean Drèze, disciple of
the Non-Resident Amartya Sen) insisted on a massive “Rural
Employment Guarantee”; Manmohan Singh and Pranab Mukherjee have
insisted on massive foreign weapons’ purchases and government wage
increases; Praful Patel on massive foreign aircraft purchases; Arjun
Sengupta on Scandinavian welfare benefits; Montek Ahluwalia on
nuclear reactor purchases (so South Delhi will be able at least to
run its ACs in 20 years’ time). All this adds endlessly to the stock
of government paper being held as bank-assets, while the currency
remains inconvertible (See e.g. The Statesman 30 October 2005, 6-8
January, 23 April 2006).The RSS/BJP and JNU/Left have been equally
bereft of serious thought.

Tell any suicidal farmer that the Government of India has been
borrowing larger and larger amou
nts every year just to pay interest
on previously incurred debts; it may make him realise there are
famous and powerful people who are even more unwise than himself and
amount to effective suicide-prevention therapy. But do not tell him
that they unlike himself have been playing with public money ~ or
you may have the opposite effect.