Globalization and Its Impact on Indian Agriculture: A Study of Farmers’ Suicides in the State of Andhra Pradesh

As a central concept in the present day international scenario, globalization is difficult to define. Still, scholars have made attempts to provide a basic understanding of the concept. The concept has become inextricably linked with the process of transformation touching upon every aspect of social, political and economic development in the globe. It can be seen as a process by which the population of the world is increasingly bonded into a single society. In the social front, globalization signifies closer interaction of people and homogenization of culture and value and the world being transformed into a ‘global village’ . Scholars like Anthony (1990), a British sociologist, conceive globalization as “the intensification of worldwide social relations which link distant localities in such a way happenings are shaped by events occurring many miles away and vice versa”. Robert Cox, an American political scientist (1994), visualizes globalization from a different perspective. For him, “The characteristics of globalization trend include the internalizing of production, the new international division of labour, new migratory movements from South to North, the new competitive environment that accelerates these processes, and the internationalizing of state making states into agencies of the globalizing world”. This concept has assumed much significance in both developing and developed nations- more so in the former as the people talk about dilution of state authority and interference of supra national institutions. The present paper is a theoretical study which discusses the impact of globalization on agriculture in India since two decades, the problems faced by the farmers, measures to be taken to overcome these problems and negative influence of globalization so as to improve the productivity, because 56% of the population still depend on agriculture in India, and the process of globalization cannot be reversed now. Hence, an attempt is made to highlight the positive and negative impacts of globalization on this important sector.
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India and Globalization

India has pre-dominantly an agrarian economy. Over 56% of the population depends on agriculture and related occupations for their livelihood. Nearly three-fourth of the population belongs to the weaker sections, some of whom are marginal and small farmers whereas others belong to the working class. They suffer from various forms of social stigma. Thus, they are the most deprived sections in India. Several development and welfare programmes were launched since India became a ‘Sovereign Republic’ to ameliorate their conditions, as mandated by the Constitution. But, the beneficial impact of this is only marginal. With the introduction of economic reforms since 1980s, the plight of the weaker sections became worse as most of them were small and poor farmers. Faced with many structural constraints, they are dangerously getting pushed out of the system, as the entry of machines and highly skilled workforce has resulted in fewer number of man-days, wages and irregularity in employment for the semi­-skilled and unskilled. The cumulative effect of all these led to miserable conditions for the people in India, in general and for farmers in particular. An analysis of the impact of globalisation on the crucial agricultural sector is being taken up.

Globalization and Agriculture

Globalization combined with liberalization has led to the decline of public investment in agriculture. In the pre-globalization period, the country's foodgrain production was 3.5% whereas in the post-globalization period it fell to 1.7%. One factor for this fall is reduction in subsidies given to farmers, which resulted in higher prices of the foodgrains in the market. On the other, in India the average income of the common man did not increase correspondingly. For example, the wholesale foodgrain index increased from 179 points to 410 points, whereas the average national income fell from 193 points to 122 points. Thus, the condition of the common man did not improve as expected in the globalized India.

Tariff levels are guided mostly by the interest of the developed nations. For the Indian farmer, who is already paralyzed by low productivity and lack of post-harvest storage facilities has resulted in heavy loss of produce and revenue, low tariff in imports (due to liberalized import duties) came as a bolt from the blue. The domestic farmer could not stand the competitiveness of international market, which has resulted in migration of labor from agriculture to other industrial activities. Further, the high prices of seeds, fertilizers, and pesticides are driving many a farmers in states like Andhra Pradesh, Karnataka, Maharashtra to commit suicides in desperation. Nature too has not been kind to farmers in recent years as only 50% of agricultural production was seen in India, due to deficient rainfall.

Impact of Globalization on Indian Agriculture

The liberalization of India's economy was stunted by India in 1991. Facing a severe economic crisis, India approached the IMF for a loan, and was granted what is called a ‘structural adjustment’ loan, with certain conditions attached which relate to a structural change in the economy. The government ushered in a new era of economic reforms based on these conditions. These reforms (broadly called Liberalization) can be classified into three areas: Liberalization, Privatization and Globalization. Essentially, the reforms sought to gradually phase out government control of the market (liberalization), privatize public sector organizations (privatization), and reduce export subsidies and import barriers to enable free trade (globalization). There was a considerable amount of debate in India at the time of the introduction of the reforms, as it was a dramatic departure from the protectionist, socialist nature of the Indian economy up until then.

However, reforms in the agricultural sector in particular came under severe criticism in the late 1990s, when 221 farmers in the south Indian state of Andhra Pradesh committed suicide in one year. The trend was noticed in several other states, and the figure today, according to a leading journalist and activist, P. Sainath, stands at more than 200,000 across the country. Coupled with this was a sharp drop in agricultural growth from 4.69% in 1991 to 2.06% in 1997. This paper seeks to look into these and other similar negative trends in Indian agriculture today, and in analyzing the causes, will look at the extent to which liberalization reforms have contributed to its current condition. It will look at supporting data from the Indian state which is badly affected by the crisis: Andhra Pradesh, as its experience is particularly critical in this debate because it was headed by Chandrababu Naidu, the then Chief Minister who pursued liberalization with enthusiasm. Hence, liberalization in this state has been faster than other states, and the extent of its impact has been wider and deeper.

  1. The Crisis Facing Indian Agriculture Debt: The biggest problem Indian agriculture faces today, and the number one cause for farmers committing suicides is debt. Forcing farmers into a debt trap is soaring input costs, the plummeting price of produce, and a lack of proper credit facilities, which makes the farmers turn to private moneylenders who charge exorbitant rates of interest. In order to repay these debts, the farmers borrow again and get caught in a vicious debt trap. The need is to examine each of the causes which has led to the current crisis in Andhra Pradesh, Kerala and Maharashtra, and analyse the role that liberalization policies have played. As mentioned earlier, Andhra Pradesh’s experience is particularly relevant to this analysis because of its leadership. Chandrababu Naidu, Chief Minister of Andhra Pradesh, from 1995-2004, was an IT savvy, neo-liberalp and believed that the way to lead Andhra Pradesh into the future was through technology and an IT revolution. His zeal led to the first ever state level (as opposed to national level) agreement with the World Bank, which entailed a loan of USD 830 million in exchange for a series of reforms in his state industry and government - Naidu envisaged corporate style agriculture in AP, and implemented the World Bank liberalization policies with great enthusiasm and gusto. He drew severe criticism from his opponents, saying he was using AP as a laboratory for extreme neo-liberal experiments. Hence, the experience with liberalization is critical.
  2. The Debt Trap and the Role of Seeds: The biggest input for farmers is seeds. Before liberalization, farmers across the country had access to seeds from state government institutions For example, Andhra Pradesh’s APSSDC produced its own seeds, was responsible for their quality and price, and had a statutory duty to ensure seeds were supplied to all the regions in the state, no matter how remote they are. The seed market was well regulated, and this ensured quality in privately sold seeds too. With liberalization, India's seed market was opened to global agri-businesses like Monsanto, Cargill and Syn Genta. Also, following the deregulation guidelines of the IMF, 14 of the 24 units of the APSSDC’s seed processing units were closed down in 2003, with similar closures in other states. This hit the farmers doubly, and in an unregulated market, seed prices shot up, and fake seeds made an appearance in a big way. Seed cost per acre in 1991 was Rs.70, but in 2005, after the dismantling of APSSDC and other similar organizations, the price jumped to Rs.1000, a hike of 142%; with the cost of genetically modified pest resistant seeds like Monsanto's BT Cotton costing Rs.3200 or more per acre, a hike of 355%. BT Cotton is cotton seed that is genetically modified to resist pests, the success of which is disputed: farmers in Andhra Pradesh and Maharashtra now claim that yields are far lower than promised by Monsanto, and there are fears that pests are developing resistance to the seeds. Expecting high yields, the farmers invested heavily in such seeds. Also, BT Cotton and other new seeds guarantee a much lower germination rate of 65% as opposed to a 90% rate of state certified seeds. Hence, 35% of the farmer's investment in seeds is a waste. Output is not commensurate with the heavy investment in seeds, and the farmers are pushed into debt. The abundant availability of spurious seeds is another problem which leads to crop failures. Either tempted by their lower price, or unable to discern the difference, farmers invest heavily in these seeds, and again, low output pushes them into debt. Earlier, farmers could save a part of the harvest and use the seeds for the next cultivation, but some genetically modified seeds, known as Terminator, prevent harvested seeds from germinating, hence forcing the farmers to invest in them every season.
  3. Fertilizers and Pesticides: One measure of the liberalization policy, which had an immediate adverse effect on farmers, was the devaluation of the Indian Rupee in 1991 by 25% (an explicit condition of the IMF loan). Indian crops became very cheap and attractive in the global market, and led to an export drive. Farmers were encouraged to shift from growing a mixture of traditional crops to export-oriented 'cash crops' like chilli, cotton and tobacco. These need far more inputs of pesticides, fertilizers and water than the traditional crops require. Liberalization policies reduced subsidy on pesticides (another explicit condition of the IMF agreement) by two-thirds in 2000. Farmers in Maharashtra who had spent Rs.90 an acre earlier now spend between Rs.100 and Rs. 300, representing a hike of 1000% to 3333%. Fertilizer prices have increased by 300%. Electricity tariffs have also been increased: in Andhra Pradesh tariff was increased 5 times between 1998 and 2003. Pre-liberalization, subsidized electricity was a success, allowing farmers to keep the  costs of production low. These costs increased dramatically when farmers turned to the cultivation of cash crops, which needed more water, hence, more water pumps were needed and there was higher consumption of electricity. Andhra Pradesh being traditionally drought prone, the situation further worsened. This caused huge, unsustainable losses for the Andhra Pradesh State Electricity Board, so it increased the electricity tariff. The fact that only 39% of India's cultivable land is irrigated makes cultivation of cash crops largely unviable, but export oriented liberalization policies and seed companies looking for profits continue to push farmers to the wall.
  4. The Debt Trap, Low Price of Output: With a view to open India’s markets, as per the liberalization reforms tariffs and duties on imports were withdrawn, which protect and encourage the domestic industry. By 2001, India completely removed restrictions on imports of almost 1,500 items including food. As a result, cheap imports flooded the market, pushing prices of crops like cotton and pepper down. Import tariffs on cotton now stood between 0 - 10%, encouraging imports into the country. This excess supply of cotton in the market led cotton prices to crash more than 60% since 1995. As a result, most of the farmers committing suicides in Maharashtra were concentrated in the cotton belt till 2003 (after which paddy farmers followed the suicide trend). Similarly, Kerala, which is world renowned for pepper, has suffered as a result of 0% duty on imports of pepper from SAARC countries. Pepper, which sold at Rs.27,000 a quintal in 1998, crashed to Rs.5000 in 2004, a decline of 81%. As a result, Indian exports of pepper fell 31% in 2003 from the previous year. Combined with this, drought and crop failures hit the pepper farmers of Kerela hard, and have forced them into a debt trap. Close to 50% of suicides among Kerela’s farmers have been in pepper producing districts.

From the above discussion, it is evident that globalization did not yield the desired results in India.  It has been of little help in eliminating poverty, and eradication of social inequalities.  The proclaimed objectives of globalization, namely increased employment and prosperity of the people have not been achieved in India.  It has deepened the division in the society between the rich and the poor. It has marginalised and alienated a vast majority of the common people on whose sweat and toil the nation's pillars are built.

The overall impact of reforms on Indian society, especially among the weaker sections, has been of great concern. In the words of Gamani Corea,  former Secretary- General, UNCTAD, “Globalization instead of being an equalising process, has only widened the gap between the two in terms of monopoly in science and technology, flow of capital, access to natural resources, communication and nuclear armament”

Globalization with a Human Face

That the process of globalisalion is affecting the well-being of the poor in the poorest countries is not surprising. No nation at present can escape globalization. India has gone too far into the reform regime and cannot reverse the process. The government has onerous responsibility, and has to take corrective measures to sec that the reforms arc implemented with a human face, so that they give the desired results to the common man. If not, India and its majority population may face dangerous consequences in the future.

Some “safety nets” had to be evolved with the implementation of SAP. These could be identified as the following.

  1. Protection and development of home market which would be subverted if liberalization of export-import trade were effected.
  2. Indigenous research and development has to be encouraged which is subverted by imposition on intellectual property and patent rights.
  3. The poor farmers should be protected with subsidies and loans, at least to the subsistence level.  Supply of food grains at subsidized prices through PDS is to be continued and further streamlined.
  4. The government must take up mass public employment programs through the public sector, where the interests of the farmers and weaker sections can be protected.
  5. The poor who are mostly uneducated and low-skilled must be educated and skills imparted to them so that they can face the competition from skilled and well-educated workers, and also become partners in development. One nation which has used their human resources to its advantage is China.
  6. The fiscal crunch, which affected public expenditure on social sector, has to be readjusted in favour of services which benefit the poor farmers in agriculture.
  7. The economic reforms implemented should be transparent. There has to be accountability and responsiveness. Peoples' involvement would be total if it is from the initial stage of planning, through implementation and monitoring, to the final stage of evaluation.
  8. There has to be a shift from ‘token welfarism’ to ‘effective empowerment’. Welfarism merely makes the people dependent and look to the State help. Effective empowerment will make people enthusiastic so that they will gel involved in the development process with devotion.

The implementation of safety nets is fraught with severe constraints of resources, inability to properly target the beneficiary groups, lack of properly conceived public works programs and half-hearted efforts to provide health and education facilities to the poorest sections. The consequences of all these effects has been one of growing deprivation of the poorest of the poor whose very right to life with dignity stands seriously jeopardized. A focus on the human rights implications of market-driven growth is necessary to challenge the current trend in industrialized countries to undermine the role of the UN in human development, while conceding greater power and authority to the World Bank and IMF.

SAP by emphasizing market-induced growth excludes vulnerable groups like women, weaker sections and the poor, in general, from the benefits of growth. In fact, often these marginalised nations and groups and farmers appear to suffer the worst deprivations of their basic rights like secure employment and stable income. The withdrawal of the State from the responsibility of promoting inclusive growth results in severe hardships to the poor wherever they are. There must be proper safety mechanisms and measures to take care of them. Development of the poor and the deprived must be a part of any development strategy and not ‘Development Vs the Poor’ as it is understood in the Third World context.


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