HRPC STUDY ARTICLE NO: 1 FOR DEC,2011

THE HINDU
December 12, 2011

FDI in retail UPA retired hurt

P. Sainath AP A shopkeeper talks to a customer in Guwahati. The Centre has suspended its plan to open the retail sector to foreign companies after opposition from several quarters. File photo Here's the wonderful thing about the FDI-in-retail debate: never have struggling Indian farmers found so many champions. They've been crawling out of the woodwork. Foreign direct investment in retail may be on hold, but Hillary Clinton can stop worrying about Anand Sharma and Pranab Mukherjee. How does (Commerce Minister) Sharma view India's current Foreign Direct Investment guidelines? Which sectors does he plan to open further? Why is he reluctant to open multibrand retail? Those were among the questions U.S. Secretary of State Clinton posed in a cable to her embassy in New Delhi in September 2009, some months after Prime Minister Manmohan Singh began his second term. (See: Hillary checks out Pranab, and the competition, from The Hindu-Wikileaks India Cables series: March 18, 2011). Note her pointed query on opening up multi-brand retail.' She had other worries, too. Why was (Pranab) Mukherjee chosen for the finance portfolio over Montek Singh Ahluwalia? How do Mukherjee and Ahluwalia get along? And does Sharma get along with Mukherjee and Prime Minister Singh? They get along fine, Hillary, and they're all in it together, as a team. Hillary has reason to be concerned about FDI in retail. There's the tens of thousands of dollars she earned from serving as a director on Walmart's board. And the other thousands of dollars contributed to her 2007-08 campaign by Walmart executives and lobbyists. An ABC News report on that in 2008 also observed that as a director, Hillary Clinton remained a loyal company woman (Clinton remained silent as Wal-Mart fought unions: ABC News, January 31, 2008). And she surely knows the UPA's FDI retreat is tactical. Pranab Mukherjee put it with disarming candour: we don't want mid-term polls. Hillary too had flip-flopped during her election campaign, going by the ABC News report. (While on its Board of Directors, she had said: I'm always proud of Walmart and what we do and the way we do it better than anybody else June 1990.) Yet, Hillary's campaign website of 2007-08, points out the ABC News report, omitted any reference to her role at Walmart in its detailed biography of her. As the race heated up, she recanted: Now I know that Walmart's policies do not reflect the best way of doing business and the values that I think are important in America.

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Perhaps Hillary's FDI concerns are loftier. She must be worried about the poor Indian farmer. The wonderful thing about the FDI-in-retail debate is the explosion of concern for agriculturists. Never have struggling Indian farmers found so many champions. They've been crawling out of the woodwork ever since the FDI announcement. From Deepak Parekh to Ratan Tata, they've suffered sleepless nights, agonising over the small farmer. They might want to take a look at the American farm population. At their family farms, especially smaller ones, wrecked by corporate monopolies at every level, from giant agribusinesses to mammoth retail chains. Presently less than one million Americans claim farming as their occupation. That figure was over 25 million in the 1950s. With what credibility does our regime, on whose watch farm suicides crossed the quarter-ofa-million mark, speak of helping farmers? Who knows what windfalls the deals struck with retail giants have brought to individuals in this most corrupt government in our history? We need to embrace that old journalistic principle: Follow the money. (Hillary does, though in a very different way.) Meanwhile, look at our government's claims. Who it affects Doing away with the middleman': The first to be devastated will be that poor middlewoman' the vendor who daily provides our towns and cities with fresh produce. She did not push up the prices and has her modest margin squeezed each time they rise. That woman carrying that huge basket to your doorstep, on her feet 14-16 hours a day to feed her family. She's the first middleman' target. The more exploitative middlemen in the chain will be co-opted by giant retail which needs collectors and contractors, though not so many. It will slash their numbers after a while. This is The Mob taking over from the little guys on the block. You're looking at massive displacement in the agricultural supply chain. Only, the new middlemen' will be Cardin-clad and Gucci-shod, with better access to government than the farmers everyone's dying to save. That poor woman vendor, whose life we need to improve, not destroy, brings you fresh produce. She has to, or she can't sell it. (Tip: big retail operators pasting the words natural' or fresh' against their names are selling you stuff that could have been refrigerated, even frozen, for days). Ten million jobs: Try not to die laughing. This comes from a school of economics that has gifted the world jobless growth for three decades now. We worked hard for two of those, making a big expansion of jobs impossible within our policy framework. From the early 1990s, fantastic claims have been made of small farmers gaining from neoliberal globalisation. For instance: farm incomes would rise 25 per cent if Indian prices were aligned to global prices; purchasing power would shoot up. Many steps were taken on such claims, including 100 per cent FDI in sectors like seed. All achieved the opposite. These moves helped double the indebtedness of the peasantry and further spurred the worst-ever recorded wave of suicides. Apart from which we've seen seven-and-a-half million people abandon agriculture in a decade, many driven out by policies to benefit the farmer.' Now we should believe that FDI in retail will undo all the damage that

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these policies from the very same authors caused? And these guys predict 10 million jobs within a year? The UPA wants to open up a sector that for all its awful flaws and hardships presently employs 44 million people and has total sales of close to $400 billion. (That's about 20 times the number Walmart employs on roughly the same turnover.) And gives some sustenance to many millions more if you think families. Small shops and big box retail' can co-exist, so croons the corporate choir. Sure, after wiping out countless thousands of tiny shops, the survivors can co-exist' with the big guys, who might even have minor errands for them to run. India's powerful will run the more important errands. That was clear from 2005 when then Walmart International Division chief John Menzer told his company's annual meeting: In our six government meetings, we created a very positive image [of Wal-Mart] And: We've energized the FDI lobby and preempted the anti-FDI lobby in India. (Wal-Mart's Hot in India, CNNMONEY.COM, June 6, 2005) Efficiency: The giant chains can never match the efficiency of farmers' markets selling food produced locally or nearby. Their sourcing of produce from all over the world, central warehousing systems, giant transport operations all these are hugely energy intensive. Which means a lot of what you get is old and much-refrigerated or frozen. Know the other costs of what you pay for. Benefitting farmers: Here's a paradox. Just when we march determinedly towards super markets, people in the homeland of Big Retail are buying more and more from farmers' markets. That is, the oldest form of direct marketing by small producers. More and more Americans seek decent produce not drowned in chemicals, pesticides and preservatives. Growing numbers of that nation's small and family farms are selling through farmers' markets each year. In India, every market was once a farmers' market. Over time, farmers have lost control of such markets to traders and moneylenders. Now comes the coup de grace. The coming of Big Retail is not simply about shops in the towns of over one million. It brings a radical restructuring of the entire agri-supply chain. The kind of investments above $100 million will obviously not go towards labour-intensive operations. The new structures that will confront farmers are stronger than any they have ever known. As a paper on the U.S. Farm Crisis from the Kerr Center for Sustainable Agriculture, Oklahoma, puts it: large corporations have in recent years moved to curtail farmer independence through production contracts and other forms of vertical integration. These moves have included establishment of huge corporate-owned Confined Animal Feeding Operations, where animals are raised without farmers. The new middlemen the government welcomes have no regard for village and community. Maximising their own profit is their sole concern. As the number of buyers shrinks to a handful of corporations, farmers will have fewer places to sell their produce. What kind of bargaining power will they have against these mega-middlemen, some of whose worth would place them, if treated as nations, amongst the top ten economies in the world? The contracts in the new dispensation will reflect that power equation. The National Commission for Farmers headed by Dr. M.S. Swaminathan had observed that rushing into contract farming without ensuring the needs, safety and bargaining power of the farmer would result in major displacement in the sector. But not to worry, Hillary, your team is still out there batting. Only retired hurt for the moment.

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ANNEXURE NO: 1

THE HINDU

March 18, 2011

Hillary checks out Pranab, and the competition

P. Sainath

To which business groups is Mukherjee beholden?'; Why was [he] chosen over Montek?' To which industrial or business groups is [Pranab] Mukherjee beholden? Whom will he seek to help through his policies? What are Mukherjee's priorities in the upcoming budget... ? Why was Mukherjee chosen for the finance portfolio over Montek Singh Ahluwalia? How do Mukherjee and Ahluwalia get along? These were among the questions U.S. Secretary of State Hillary Clinton posed in a cable to the New Delhi Embassy in September 2009, a few months after Prime Minister Manmohan Singh settled in for a second term. The questions are focussed on India's New Government Economic Leaders, particularly on the Finance Minister. They seem to imply that Washington had been expecting either P. Chidambaram to return as Finance Minister or Montek Singh Ahluwalia to be elevated to that post. How does Ahluwalia feel about remaining in this position? Which, if any, particular agenda items will he be pushing? Does he get on well with the prime minister? Also, What is Mukherjee's relationship with the Governor of the Reserve Bank of India, D.V. Subbarao? How does Subbarao view the removal of Chidambaram from the Minister of Finance slot? What impact has his removal had on relations between the finance ministry and the RBI? The September 14, 2009 cable (225053: secret/noforn) asks: What are Mukherjee's primary economic concerns and his views on Prime Minister Singh's economic reform Agenda? How quickly does he plan to 5-pursue these reforms? What is his ability to enact reforms? The sharp Secretary of State also asks: What are Mukherjee's views of the US bilateral economic relationship and where does he see the relationship Headed? What areas of cooperation is he eager to advance? How does he see the US-China economic relationship in comparison to the US-India relationship? Washington analysts, writes Ms. Clinton to the New Delhi Embassy, are closely monitoring the newly appointed economic leaders in the United Progressive Alliance (UPA) coalition government. We are interested in their views regarding future economic policy, opportunities for bilateral economic cooperation, and their ability to work together as a cohesive team. As time and resources permit, we would highly value any information on the following topics and questions, and plan to incorporate post reporting into finished analysis for policymakers. The topics include the attitudes and likely directions of a few Ministers and top officials. What policies are Mukherjee and other leaders considering to address the global financial crisis? What does Prime Minister Singh think about Mukherjee's new role as finance minister?

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Ms. Clinton wants to get the measure of Minister for Commerce and Industry Anand Sharma. Why was Sharma chosen for the job? What are his larger ambitions? Why was [Kamal] Nath moved to the road transport and highways portfolio? What are Nath's views on the change? Does Sharma get along with Mukherjee and Prime Minister Singh? And also, What is Sharma's relationship with Ahluwalia? Other queries on Mr. Sharma: What policies does Sharma plan to pursue? How does he view India's trade policies? What are his views on Prime Minister Singh's plans for gradual economic reform? What does he perceive as India's primary trade obstacles? What are Sharma's views on the World Trade Organization (WTO)? How will he approach initial meetings with his counterparts? What does he think of previous Minister of Commerce Kamal Nath's actions over the past five years? How close will Sharma remain to the NAMA11? Is he willing to begin discussions with the US to advance WTO negotiations? How does Sharma view US-India economic relations? How does Sharma view India's current Foreign Direct Investment guidelines? Which sectors does he plan to open further? Why is he reluctant to open multi-brand retail? What are his views on the special economic zones?

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HRPC STUDY ARTICLE NO: 2 FOR DEC,2011

THE HINDU
December 5, 2011

Some States fight the trend but

P. Sainath

Five States did manage a significant decline in the average number of farm suicides between 2003 and 2010. However, more States have reported increases over the same period. The television story was genuine and sensitive. At least 90 farmers, it said, had committed suicide in two months in Andhra Pradesh. These were cotton growers. Actually, last year, Andhra farmers killed themselves at the rate of 210 each month on average, according to the National Crime Records Bureau. But it is heartening that somebody took note of what's going on. The more so when dishonest bureaucrats feed gullible sections of the press awful crud on farm suicides being at a 15-year low.' NCRB data show Andhra Pradesh has seen the second worst increase in farm suicides among all States (after Maharashtra) over the last eight years for which data exist.

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However, five States did manage a significant decline in the average number of farm suicides each year between 2003 and 2010. Andhra Pradesh was not amongst them. Of those who did, only Karnataka is amongst the worst five States which account for nearly two-thirds of farm suicides in the country. On average, 2,259 farmers killed themselves each year in Karnataka between 1995 and 2002. In the next eight-year period, that figure was 2,123 a fall of 136 in yearly average. But the fall is fragile, and the last two years 2009 and 2010 have seen the State's numbers rising again. And Karnataka remains the second worst State for farm suicides (in absolute numbers) after Maharashtra. It has seen 35,053 farmers kill themselves since 1995, according to the NCRB. The NCRB data on farm suicides now cover 16 years. Let's divide that into two halves of eight years each. By comparing the first half (1995-2002) with the second (2003-10), we can figure out whether things are getting better or worse in the major States. What qualifies as a significant decline? That's when a State's yearly average in the second eight years is at least 100 farm suicides less than in the first eight-year period. Tamil Nadu (126) and Uttar Pradesh (-109) are two others in this bracket. But there's better. Kerala managed a drop of 221. And West Bengal pulled off the biggest decline among all States. Its 2003-10 average is 436 lower than its figure for 1995-2002. Except Karnataka, all the Big 5 States show terrible upward spikes in their 2003-10 annual averages. The yearly average of farm suicides in Andhra Pradesh in this period was 711 higher than it was in 1995-02. In Maharashtra, the figure was 1,294 higher. Madhya Pradesh and Chhattisgarh were one composite State for six of the 16 years and what has happened in that region is best understood by still treating them as one unit in terms of data. They show a rise of 525 in the second eight years. But comparing the two eight-year periods doesn't work for the smallest States with very few farm suicides. For instance, Manipur's average for 1995-2002 was one farm suicide. It was two during 2003-10, a massive increase' in percentage terms and quite meaningless. However, among small States that have seen farm suicides, Tripura brought down its annual average by 90 in the second half, a drop of 78 per cent. The decline Kerala has managed (-221) is in many ways the most significant one. Kerala is perhaps India's most globalised economy. Its agriculture is hugely cash crop-based and fragile at the best of times. Cash crop prices are highly volatile, and often rigged by powerful corporations at the global level. This makes Kerala more vulnerable to price shocks than any other State in India. In the early years of the last decade, for instance, vanilla fetched Kerala farmers prices of up to Rs. 4,000 a kilogram. It then crashed to under Rs. 80 a kg or less (where it remains), wrecking farmers who had invested huge amounts of (borrowed) money in its cultivation. Most plunged into debt, several committed suicide in despair. Price shocks have also hit Kerala in coffee, pepper, and other cash crops into which the State is deeply locked. The price of coffee, for instance, is controlled by about four major global corporations. These companies always seek to drive down the share of the original producers to boost their own profits. They will do that even more strongly as economic problems mount in Europe to where much of our coffee is exported. Across India, suicides amongst cash crop farmers are far higher than those amongst food crop growers. Cash crop farmers run far greater risks, incur much higher cultivation costs, and have to borrow a lot more money than their food crop-growing counterparts.

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So that drop of 221 in Kerala's yearly farm suicide average is remarkable and came against the odds. The period from 2008 to 2010 was better for that State than any other in the entire 16 years for which data are available. Kerala set up a debt relief tribunal in 2005, raised support to the farm sector and took other steps to mitigate distress. Even its troubled food crop sector received a boost. Between 2005 and 2010, Kerala doubled the support price for paddy from Rs. 700 to Rs.1,400. Yet, the State will take a worse hit than any other due to the multiple free trade agreements the Union government has signed or will enter. And reports of rising farm suicides again in the cash-crop citadel of Wayanad signal which way Kerala is now headed. West Bengal's (-436) drop in farm suicide yearly averages is perhaps best understood in comparison with Maharashtra. Bengal has a smaller population (91 million) than Maharashtra (112 million), but is a more rural State and has many more farmers. Yet, the annual averages are starkly different. During 2003-10, almost four times as many farmers (3,802) killed themselves each year in Maharashtra. In West Bengal that figure was 990. Though Bengal has its own sharp concentrations of cash crop, it produces more food crop than Maharashtra and has been the country's largest producer of rice for some years. In the latter, cash crops continue to overwhelm food crop. In 2010-11, as Maharashtra's Chief Minister informed his colleagues at a kharif review meeting earlier this year, the area under cereals and pulses dropped further by about 3.7 million acres. (BusinessLine May 28, 2011). West Bengal had, in fact, begun procuring grain through the panchayats (a scheme derailed by the Centre) and pushed other measures to promote rice and vegetable cultivation. Overall, 15 of 28 States showed worse averages in the second eight years. Across the entire 16 years from 1995-2010, more than a quarter of a million Indian farmers have committed suicide.

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