in this new indian village, the farmer became the focus of all policy : he was anointed the carpenter's patron, the blacksmith's, the farm worker's and the touring theatrical troupe's. even in a village that was earlier more known for the skills of its weavers, or silver filigree workers, or brass workers or bone-setters or pickle-makers. he was appointed as the 'backbone' of the village..and of the country itself. i will cut short my view about this process of re-creating the indian village here, now that i've introduced the idea (to continue at a later stage, in follow-up posts)...i'll let it fester for a while, untended.
so, then along came reforms in 1991 (some might argue they started much earlier, but it's the policies since 1991 that are much disputed). and the furor over suicides..and the concerted campaign by some to paint liberalisation as the cause. i will attempt to explore, in instalments, whether reforms were really the only cause of distress..or were there other villains. in this post, i'd like to refer to a study conducted on the impact of liberalisation on the lives of small and marginal (with specific reference to the 'resource-poor' among them, as defined by the researcher) farmers in telangana, especially those who migrated from jowar, maize and other cereals to the cultivation of cotton in the nineties.
let me quote a few sections from this abstract from the study that i found interesting -
'from the time india became an independent nation in 1947 its policy regime has been characterized by extensive controls on production, pricing, trade and a managed overvalued exchange rate. In the specific case of agriculture the main thrust of policy since the mid-1960s had been on achieving food self-sufficiency. domestic policy instruments used to attain this goal included input subsidies on fertilizers, power and irrigation, minimum support prices for major crops (such as wheat and rice), and quantitative restrictions on agricultural exports and imports.while the industrial sector was heavily protected under the import substitution regime, agricultural production was in the aggregate actually dis-protected (taxed) by as much as 20 per cent from the 1970s to the mid-1990s.. this is because although expenditures on price supports and input subsidies were large, these were more than offset by the relatively low domestic farm-gate prices that were sustained behind the border measures.'in other words, the indian farmer didn't actually need the subsidies and the support prices..if only the quantitative restrictions had been lifted... if there hadn't been any 'border' restrictions (as the researcher calls them), and the subsidies and price support had been withdrawn.. it's even possible that the indian farmers would not just have been not harmed at all, in the aggregate (to borrow a phrase from the researcher)..but actually have improved his position (as compared with his position after twenty years of subsidies and price support)..and if competition had been allowed in pesticides/fertilizers and other input supplying industries there is every possibility that farmers would have incurred less costs, gradually. maybe. these are my own conclusions.
so why didn't the indian farmer benefit from the gradual lifting of trade restrictions through the nineties and later? let us return to the researcher-
'in 1991, faced with a balance of payments crisis, india embarked on an economic reform programme in line with structural adjustment and stabilization policies initiated by the imf and the world bank. the reforms focussed largely on trade liberalization, encouraging foreign direct investment, reforming capital markets, and deregulating domestic business. [...] it is important to bear in mind that domestic and border policies directly affecting agriculture were not included in these early reform efforts. [...] in 1994, import restrictions on oilseeds, sugar and cotton were liberalized but most agricultural products remained subject to import controls. as the reforms progressed and the foreign exchange situation became more comfortable, quantitative import restrictions on a whole range of agricultural commodities were phased out starting in 2001.'
it's pertinent here to remind myself and those suckered into reading this.. that india's journey towards globalisation (or unrestricted trade), though it was formally flagged off in 1994, did not actually start until 2001. but trade in cotton was de-controlled to an extent in 1994, and this research study was primarily conducted on cotton famers in telangana...to get back to the original question: why didn't indian farmers, like the cotton growers of telangana, benefit from the lifting of trade restrictions?
'it is interesting to note that while the government pushed heavily for border policies, input subsidies on fertilizer, power and irrigation remained largely unaffected by the reforms. minimum support policy for major crops (such as wheat and rice) also remained virtually untouched because of the fear of political retaliation.'
the input subsidies remained untouched, the minimum support policy wasn't abandoned and trade controls were not relaxed until 2001 - so what drove the farmers to suicide? and what was liberalized?