COVER FEATURE

India’s New Hunger: When Soaring Prices Empty Your Plates

In conjunction with global food crisis, the inflation rate in India is blowing the roof off; and so far the “betting on a credible monetary policy” has failed to contain the turbulent price rise, which is touching 8% now. Neoliberal theory will tell you that rising inflation signals a robust, (so called “inclusive”) growth story, and hence can be tamed with a seasoned monetary policy. But the announcement of a host of controls over time, such as successive cuts in CRR, hike in export duties on steel and cement, etc. have all the more caught the Finance Minister in the inflation frenzy. This has further intensified the spiraling of food prices and essential commodities, which endangered the livelihoods of the teeming millions and added another layer of vulnerability to the already fragile state of the Indians farmers.
US President and State Secretary Condoleezza Rice, however, true to their grain, has chosen to explain the whole global food crisis by a ‘prosperity and rising food demand’ theory, therefore placing the whole burden of the price rise squarely on the ‘rising prosperity and increase in demand for food from the middle classes of the two most developing nations of India and China’.
But alas, the recent FAO analysis has blown off such lies describing them as ‘unfounded’. According to FAO, the consumption of cereals by India is estimated to have grown from 2.17 percent from 193.1 million tones to 197.3 million tones in 2007-08, whereas that in China the same has risen from 382.2 million tonnes to 389.01 tonnes. However, over the same period, the consumption of cereals in the US has projected to escalate from 277.6 million tones to 310.4 million tones.
While Bush is trying to blame global hunger on India and China, India’s rulers are trying to pass off the spiraling inflation and reduced food stocks as part of a ‘global’ phenomenon about which Indian Governments have little control. Hunger in India cannot be explained away in these sweeping ‘global’ terms, however. The global food crisis has been called a ‘silent tsunami’ – however let us be sure it’s not a natural tsunami but a man-made one. And the Indian ruling class, which could well have protected the Indian people from this tsunami, instead invited the tsunami to Indian shores and systematically dismantled all the mechanisms that could have protected the Indian poor!
Nonetheless, there is a pattern in this apparent counter blame game. Why after all both Bush and Manmohan who have a common theory for everything is suddenly finding it necessary to ‘blame the other’? The reason is not difficult to see. Both have to stave off the anger of their respective people at home even while serving the needs of the rapacious global capital and corporate giants.
To begin with, let us be sure that some of the oft cited reasons for global food crisis, viz., the increased use of Bio-fuels and the attendant large scale diversion of cereals for ethanol production and millions of hectare of land for Jatropha Plantation or the increased consumption of meat, which need millions of tonnes of feed based on cereals or the impact of climate change on the crops causing severe droughts, floods and untimely rains, alone do not provide credible explanation for the present conjuncture of our domestic crisis. For one, India as of now produces insignificant quantity of bio-fuels and for other, our per capita meat consumption is one of the lowest in the world, if anything it is one-fiftieth of US’ per-capita meat consumption.

The present spate of food crisis in India, nonetheless has a strong “global” dimension, not so much in its apparent temporal linkages, but in the obedient application of neo-liberal policies of the global agencies like IMF-World Bank-WTO by our domestic rulers for almost two decades now. Liberalisation and structural adjustment programmes of IMF-WB involving deflationary fiscal policies, cut down on subsidies and underinvestment in agriculture, intertwined with WTO dictated liberalization of trade regimes particularly for agricultural products have led to systematic underdevelopment of agrarian sector, secular downturn in food availability and the ‘integration’ of this weakened agrarian base with the turmoil ridden global market. The recent surge in prices in global food market have merely exploded this pent up crisis structurally built up into our economy. Consequently, several misguided attempts to tame the unruly inflation is falling flat, and this is primarily because instead of finding a solution in the monetary policies and blindly following US experience of controlling inflation, we have to locate the Indian experience against its broad neo-liberal macroeconomic policies, which has wiped out the food security of the country earned over the four decades from 1950 in almost a blink.
“Local” Build-ups via “Global” Diktats
The cardinal ‘mantra’ of the neo-liberal doctrinaires is that domestic food security is not important, farmers should become export-oriented “global players” responding to market advantage, and any food shortage can be taken care of by suitable imports. Flip side of the story that what would happen if there is global decline in food production and/or rise in import costs was kept carefully hidden and always forcefully rejected by the policy makers when pointed out by critics and analysts.
Accordingly, in the last two decades investment in agriculture started falling; there was steady trend of shift in land-use pattern from cereals and staple food to commercial and ‘high value’ crops creating the basis of an impending stagnation and eventual decline in food output. This coupled with other deflationary measures in the economy in general and rural sector in particular, weakening of public procurement of marketable surplus and public distribution system further eroded the purchasing power of  large section of the population and the farmers in particular.
With a PDS already run down, the situation further worsened since 1997 with the introduction of Targeted PDS. Dividing the poor into Above Poverty Lines and Below Poverty Lines using ambiguous, indefensible “Poverty Lines”, TPDS has in fact exposed a vast impoverished population to face the market price of essential commodities. A combination of all these factors resulted in a decline in per capita demand for foodgrain which reached the level we had before WW II.
Next, when the PDS was running down, the shifting patterns in crop production played havoc. In 2001, a large number of Indian farmers were shifting from millet production to cultivation of commercial crops like coffee, pepper, thus responding to the temporary high global prices. Meanwhile, with the removal of the “distorting trade restrictions “ these enthusiastic farmers ultimately saw their profits washing away in the face of a crash in the global food prices, which finally resulted in  the spate of suicides in the next two years.
The Manmohan government’s panacea of diversification based on contract farming is utterly absurd. For an instance, potato yield is 197.6 quintals per hectare in West Bengal, it is just about half in neighboring states of Bihar and Orissa; thereby making it unattractive to small farmers in these states. Likewise, the sad story of tobacco growers where the acreage came down by 80 % in the last five years from 2002 despite 60% more productivity in Andhra Pradesh shows us that how lack of marketing outlet can play havoc with farmers in spite of high productivity. This is simply because the cost of production of tobacco in Gujarat is higher owing to higher labor and irrigation costs and the monopoly ITC declines to pay higher price for Gujarat tobacco, instead procuring tobacco from contract farming in Andhra Pradesh and Karnataka where yields are low as compared to Gujarat. Moreover, the freezing of the minimum support prices have forced the farmers to sell their products to this corporates.
Often the government’s readymade technical way-out to the agrarian crisis in the form of the ‘second green revolution’ is nothing more than chimerical. Acting at the behest of the seeds MNCs and Department of Biotechnology has hastily permitted the large-scale field trials of the controversial GM seeds, against the caution of the Supreme Court. The much-hyped BT cotton seeds by Monsanto have proved havoc too but yet the Seed Bill 2004 has no liability clause, to compensate the farmers, against the corporate that supply spurious seeds that fail.

This is how through a conscious policy geared to pamper the interests of local and global capital and corporates a potentially dangerous crisis was embedded into our agrarian sector. All these have come home to roost today.

Why did the Government Refuse to Act?
In this backdrop of its own creation, came the jolt of global surge in food prices propelled by the interplay of at least four factors all thanks to the designs of global capital to fulfil its insatiable urge for profit: secular decline in food crop production owing to  the systematic neglect of agricultural production in virtually all developing countries under the thumb of IMF-WB, rising oil price and consequent rise in the cost of food crop production which has already been turned capital and chemical intensive, huge shift of corns for bio-fuel production to meet the whims of US and developed countries, and above all the speculative market manipulation by a select set of transnational corporations controlling the entire spectrum of production and distribution.
But our government once again exhibited its calculated class bias by failing to act on policies which can rein in the massive price spiral. Thus there is palpable reluctance to either the expand the marketed surpluses of cereals and pulses, or revitalise procurement and distribution mechanism or rein in the various private traders who have acquired disproportionate power in times of trade liberalisation to corner the market and set off speculative spirals. They are however happy to fall back on import at much higher prices thereby once again implicitly subsidising the users of imported goods over the producers of and consumers of domestic goods in the name of building buffers and staving off price rise. But such steps to augment supply via imports at higher prices have also the potential to trigger additional expectational spiral as the pressure to equalise domestic prices to international prices gain momentum. Further such steps can have at best extremely short term effects that too only in case of selected items but certainly not without the long-term effect of once again destabilising and eroding domestic production base.
The rise in global oil prices also had its cascading effect in our present inflationary spiral. But, once again the government far from neutralising the retail price of oil, which is, through appropriate relaxation of indirect taxes, allowed the global price effect of this virtually universal intermediary input to cascade and fuel the ongoing inflation.

The Way Out

Compulsions of impending polls may force the government to apply some palliatives, but clearly it has no agenda of any serious course correction either in terms of insulating the domestic economy from the corporate-dictated tsunami of global price rise; or ensuring the structural rejuvenation of our famished agriculture; or guaranteeing food and income security for the impoverished millions. The correct policy choice at the current conjuncture must be governed by the resolve to ensure self-sufficiency in food and making agriculture once again a viable option for the millions of farmers for whom it has been turned into a suicidal project. This would require active and sufficient public investment to rebuild both a procurement system remunerative to the direct producers and a public distribution system accessible to the consumers. Public investment must be stepped up for rural infrastructure, irrigation and other inputs to increase productivity and cartelized corporates must not be allowed to call the shots either in dictating the inputs, composition of our agricultural basket, land use pattern or in distribution of the output. Governments have revealed their policy choices; people will have to assert their agenda now!