The debate over the years has also shifted to the launch of an income support scheme for farmers and even a universal basic income (UBI) scheme. However, with a huge burden of subsidies already in place, such debates have been hijacked by concerns over fiscal consolidation. Governments at the Centre or in the states have been wary of introducing such income support schemes. Withdrawing existing subsidies would be unpopular and, therefore, the government has shown extreme reluctance to even phase them out. Thus, an income support scheme without eliminating the existing subsidies would increase the overall burden on the exchequer, making the states fiscally broke. Such fears came true just before the 2019 general elections. The Narendra Modi government’s Budget for 2019–20, announced just before the general elections of 2019, launched an income support scheme for small and marginal farmers with landholdings of less than 2 hectares or about 5 acres. However, the scheme has imposed a huge burden on the government’s fiscal capacity—as large as about 0.36 per cent of India’s GDP. And since the new support scheme has come without abolishing or phasing out some existing farm subsidy schemes, the financial burden on the Indian government will be harmful for its overall capacity to undertake the much-needed developmental expenditure in many other areas of the economy. In addition to the problems arising out of the additional fiscal burden, the income support scheme (about Rs 6000 per farmland holding below 2 hectares) suffered from another major flaw: the support scheme benefited only those who owned land and ignored a vast number of landless farmers or farm workers growing crops on land parcels belonging to the landowners. In that sense, the Central government’s income support scheme suffered from the same problem that had dogged the Rythu Bandhu scheme (Agriculture Investment Support Scheme) in Telangana, as per which the state government would offer Rs 4000 per acre per farmer every season to help them purchase farm inputs like seeds, fertilizers and pesticides and pay for farm labour. In Telangana, too, the scheme excluded those who did not own land. The challenges of maintaining land records and verifying them before disbursing the money to the land-holding farmers were even more daunting in a country where land records were poorly kept in many states. But the tendency to offer more such palliatives to Indian farmers has only increased over time. One of the first decisions taken by the Modi government after the BJP’s thumping victory at the 2019 general elections was to extend the coverage of its income support scheme (PM Kisan Samman Nidhi Yojana) to include all farmers irrespective of their landholding size. Universalizing the income support scheme for all farmers was part of the BJP’s election promise and it meant an increase in the government’s annual expenditure from Rs 75,000 crore to Rs 88,000 crore.
CHAPTER 7
A NEW EXPERIMENT BY INDIRA GANDHI
In May 1967, why was Indira Gandhi desperate to seek help from the Burmese head of state for an early dispatch of rice to India? She knew that she could count on only a few countries with close ties for securing food aid for India.
The Indian economy was yet to recover from the adverse consequences of a war with Pakistan in 1965, soon after which she assumed charge as prime minister in January 1966. Lakshmi Kant Jha, Gandhi’s secretary, shared with her that the plan to devalue the Indian currency against the US dollar was ready. This move was going to revive exports, which would revive the economy and boost growth.
By the end of March that year, Gandhi was in Washington for a two-day official visit to the US. By the look of it, her visit was a success as she hit it off very well with the US President Lyndon Johnson.
Pranay Gupte’s account1 of the visit in Mother India: A Political Biography of Indira Gandhi shows that Johnson was simply charmed by Gandhi. In two unusually warm gestures, not only did Johnson walk her down after the talks between the US and India from the White House to Blair House, where she was staying, but he also decided to join a dinner hosted by the Indian ambassador, B.K. Nehru, although he was not scheduled to attend it. On her part, Gandhi did everything she could to please the Americans. She had stopped criticizing the US for its role in Vietnam during her trip and had broadly agreed to devalue the Indian currency. In return of the wheat and project aid that she had sought from the US, she also agreed to Johnson’s proposal to set up the Indo-American Education Foundation with the help of the rupees that it had accumulated from the proceeds against its wheat shipments to India under Public Law 480, or PL 480. The Foundation was to undertake research in education in India. Gandhi’s approval of the proposal was a big concession to the Americans as their earlier attempt at getting the previous two prime ministers (Nehru and Lal Bahadur Shastri) to agree to this proposal had failed.
Gandhi realized the enormity of the impact of her move to come closer to the US. To balance it, perhaps, she scheduled a stopover at Moscow on her way back to New Delhi. Soviet Prime Minister Alexei Kosygin noted the warming up of relations between India and the US. However, he graciously committed to continuing all Soviet assistance to India as provided for under the existing agreements between the two countries. Such an assurance proved to be crucial.
In the next few weeks after her return, however, Gandhi realized that she had been actually spurned by the US. She had pleaded for 12 million tonnes of wheat and $435 million in loans from the US but what Johnson agreed to was to send only 3.5 million tonnes of wheat and approve $900 million in project aid to India. Kosygin’s gesture of continued Soviet assistance during her trip had helped secure the Indo-Soviet relationship that was almost on the verge of collapse after Gandhi’s meetings with Johnson in March 1966.
As domestic politics heated up over India agreeing to the US setting up the Indo-American Education Foundation and the impact of the devaluation of Indian currency by over 57 per cent—from Rs 4.76 a dollar to Rs 7.50 a dollar—Gandhi decided to stage a retreat from her pro-US stance. What also complicated the situation was the way the shipments of the promised wheat were held up because of the red tape, and the Johnson administration was simply not able to address the delays. Gandhi decided to change course and resumed her criticism of the US actions in Vietnam and also withdrew her government’s support to the proposal on the US setting up the Indo-American Education Foundation. That was in July 1966.
It was a short honeymoon with the US. While food aid was what prompted Gandhi to engage with the US a little more favourably, her disenchantment with the US also led to the unfolding of a new series of measures that charted a new direction of India’s economic policy.
The Green Revolution
M.S. Swaminathan, India’s most renowned agricultural scientist and the man who would later play a crucial role in ushering in the Green Revolution in India, explained the stagnating agricultural output and the challenge the country was facing from a different but more relevant point of view. The focus during the ten years of the first two Five-Year Plans was on improving the irrigation network in the country and on raising fertilizer production, but little attention during this period was paid to the need for improving farming practices and the productivity of Indian farmers. Agricultural scientists during that decade were simultaneously experimenting to assess the response of rice and wheat varieties to the application of fertilizers and the spread of irrigation facilities. Wheat and rice varieties grown by most farmers were noticed to have tall and thin straw. The overwhelming opinion of experts was that Indian farmers should have the benefit of wheat and rice seed varieties that would produce plants that have short and stiff straw. Tall crops also suffered from another disadvantage. In the event of a storm or windy rain, they were more likely to be flattened and damaged compared to shorter plants.
Early efforts at boosting farm output saw scientists exploring cross-breeding of plants that would address the issue of crop height. Dr K. Ramiah, a rice scientist, suggested in 1950 that the country should experiment with the crossing of the japonica varieties of rice with the indica rice varieties. Japonica varieties had to be imported from Japan and the indica varieties were available in plenty in India. The objective of the cross-breeding programm
e was two-pronged—to gain the advantage of higher productivity from the Japanese varieties and benefit from the hardiness and adaptability of the Indian strains. Japonica varieties had an average yield of over five tonnes in a hectare of land compared to only about one tonne to two tonnes for the indica varieties. Research and experimentation on these lines had begun in the early 1950s at the Central Rice Research Institute in Cuttack. However, the indica-japonica rice hybridization programme did not make much progress as some genes to develop semi-dwarf varieties of rice were available in the 1960s from Taiwan and the International Rice Research Institute in the Philippines.
A similar pattern of research and experimentation followed so that wheat cultivation in India could improve its yield. The per hectare yield of wheat with the existing crop varieties in India used to be as low as two tonnes per hectare. Soon after the Second World War, research on the semi-dwarf wheat plants with a high-yield potential had led to the development of a new variety in the US by the name of Gaines. The average yield for the newly developed varieties had reached as high a level as 10 tonnes per hectare. Around the same time, Dr Norman Borlaug, who was working in Mexico, obtained the seeds containing these dwarfing genes and began work on developing a new variety of dwarf wheat crops. The key difference between the Gaines variety and what Borlaug was working on was the time of the year when these crops would be cultivated. The Gaines variety worked well during winter, but not in spring. Borlaug, on the other hand, was working on a variety that would be suited for India’s rabi crop.2
In 1959, Swaminathan approached Borlaug to explore if his semi-dwarf wheat varieties could be used under Indian conditions to improve wheat output. It was a partnership that resulted in a disruption for Indian agriculture that was largely positive in its impact—the Green Revolution. Borlaug wanted to acquaint himself with the growing conditions in India and visited India in March 1963. Recalling those days, Swaminathan writes:
We tested the material at locations all over North India during the rabi season of 1963. The multi-location trials revealed that the semi-dwarf wheats of Mexican origin could yield four to five tonnes a hectare, in contrast to about two tonnes a hectare of the tall Indian varieties. It became clear that India had the tools with which to shape its agricultural destiny.
Mere success in the trial of hybrid semi-dwarf varieties of wheat was not enough to bring about the desired transformation of Indian agriculture in terms of its output levels and productivity. A blessing was the appointment of Chidambaram Subramaniam as the minister of agriculture and food in July 1964. Subramanian gave the idea of spreading the cultivation of the high-yielding varieties his full support, along with the adequate provision of irrigation and mineral fertilizer. The outcome became evident in 1968.
In 1968, Indian farmers harvested about 17 million tonnes of wheat, surpassing by a long margin the previous highest output level of 12 million tonnes recorded in 1964.3 ‘Such a quantum jump in production and productivity led Indira Gandhi to announce the “Wheat Revolution” in July 1968,’ Swaminathan wrote in an article in 2012 to celebrate the development of India’s agriculture to a level where the state could guarantee food availability for all through a right-for-food programme. The desire to improve production and productivity in other crops led to an expansion of the programme to use hybrid, high-yield varieties for other crops like maize, jowar and bajra. With the assistance of the Rockefeller Foundation, Indian scientists worked on developing hybrid and high-yielding seeds and succeeded in introducing new varieties in wheat, rice, maize, jowar and bajra in 1967. Indian farmers also became more yield-conscious, which was perhaps the most durable gain of the Green Revolution.
The Other Side of the Green Revolution
Not everyone, however, looked at the Green Revolution the way Swaminathan did. Ashok Mitra was certainly one who didn’t. Between 1966 and 1970, the Agricultural Prices Commission (APC) got a new chairman in Mitra, who would later become the finance minister in the West Bengal government with Jyoti Basu as the chief minister. This was also the time when Indian agriculture was going through a crisis and the shortage situation was overcome through the launch of the Green Revolution. Mitra, however, had a different assessment of both the need for the Green Revolution as also of its impact.
In his autobiography A Prattler’s Tale: Bengal, Marxism, Governance,4 Mitra was quite forthright about the ill-effects of the high-yielding variety of seeds that contributed to the Green Revolution in the country in the late 1960s. ‘The men in power had become aware of the varieties of “high-yielding seeds”, the Ford Foundation was sending teams of scientists and technologists to explain to Indian politicians and civil servants how the country’s agricultural sector could be transformed through the application of such seeds,’ Mitra wrote.
The argument against such a high-yielding variety of seeds was that these alone were not enough to sustain agricultural growth. Equally important was irrigation, pesticides and sufficiently large holdings of land so that irrigation efforts could be undertaken without much difficulty. Mitra believed that the success of the Green Revolution by the use of such high-yielding variety of seeds also meant a big boost to rich farmers since such cultivation was possible only on large landholdings owned by them. While small farmers could be left out of the benefits that would accrue through improved earnings, Mitra stated, ‘Rich farmers who participated would also receive adequate loans from the government, thereby enabling them to have access to high-yielding seeds and other necessary inputs including irrigation water in the right amounts.’ In short, the Green Revolution was not an egalitarian experiment and was biased in favour of rich farmers. Since the focus of the Green Revolution was to increase productivity and yield, rich farmers with larger landholdings benefitted more than the small or marginal farmers. Marginal landholdings have indeed trebled in the four decades after the Green Revolution. Consequently, more than 85 per cent of operational landholdings in the country are below 2 hectares or with small and marginal farmers. Such farmers cannot reap the full benefits of high-yielding varieties of seeds that need better farming practices and the use of fertilizers, which are outside the reach of most of them. Not surprisingly, 85 per cent of Indian farm households earned 9 per cent of total farm income, while the rest cornered as much as 91 per cent.5
Mitra’s regret is that the benefit of the Green Revolution was restricted not just to a sharp rise in output from large landholdings owned by the rich farmers. Inequality in the farm sector increased with rich farmers becoming richer even as poor and marginal farmers became poorer. Worse, the rise in farm output was quickly followed by demands from rich farmers for higher minimum support prices from the government so that they could hold up the market prices to help improve their earnings. The APC was specifically mandated to fix the minimum support prices of all these crops so that the farmers did not lose out on account of a fall in prices, which was quite likely after a sudden spurt in output and availability in the market. Around the same time, the government also asked the APC to devise a mechanism for announcing minimum support prices for these crops.
The minimum support prices were used to procure foodgrains from the farmers. This was aimed at ensuring remunerative returns to farmers. At the same time, the policy was expected to help the government build sufficient stocks in its godowns, which could be used if there was a shortage on account of crop failure in any year. However, the dilemma that arose was that if the minimum support prices had to be raised to provide remunerative prices to farmers, the prices for crops to be sold under the public distribution system too had to go up unless the government stepped in with higher subsidies. Thus, the Green Revolution saw a section of farmers prosper with higher output and increased earnings. However, new challenges arose before the government in the form of keeping a check on food subsidies and ensuring that the marginal farmers were not left out of the overall improvements in the farm sector.
On how the rich farmers benefitting from the Green Revolution behaved, Mitra’s commentary is
instructive:
Wherever I went, I noticed the growing clout of the rich peasantry. They were in possession of the largest land-holdings, the best of the high-yielding varieties of seeds were being provided to them, and the government gave them the requisite irrigation facilities besides power, fertilisers and pesticides at subsidised rates. Their average cost of production should therefore have been lower than that of farmers who remained without these benefits. But few amongst the rich farmers and their lobby would accept this argument.
The acute food crisis the country faced in the 1960s caused a huge disruption to the political system as also to Indian agriculture. It also paved the way for the Green Revolution. But Mitra’s assessment shows that the Green Revolution caused another disruption that created greater inequalities in Indian agriculture. The success of higher foodgrain output led to the government ignoring the more fundamental problems of the farm sector—its need for more investment, better technology and market linkages to secure better returns for farmers’ produce.
Challenges of the Green Revolution
Like any other disruption, this shift in the way Indian farmers began looking at farming also threw up fresh challenges. There were criticisms that the use of hybrid high-yielding varieties encouraged greater use of fertilizers and chemical pesticides, which were harmful for the environment. Also, as mentioned earlier, many believed that Green Revolution tended to bypass poor farmers who had small landholdings. Thus, the benefits of the technological disruption in Indian agriculture were cornered by rich farmers or kulaks. To a great extent, there was merit in and justification for such criticisms. This surely called for more policy intervention so that there was no concentration of economic power among the few rich farmers. Years subsequent to the Green Revolution have seen this conflict in policymaking in evidence from time to time, without any successful resolution of the issues and dilemmas arising out of them.
The Rise of Goliath Page 9
