Public Policy and Expenditure Mailing List Archive

["Vinay Chand" <<address removed>>]

I don't think we can ignore the seismic shock of the Indian Election result and 
its implications for what we are discussing. A popular Government, the darling 
of the media, riding on the wave of unprecedented urban middle class prosperity 
was summarily dismissed by Indian farmers. The opposition was shocked to find 
it had won.

There is near unanimous agreement that the Indian election turned on the farmer 
and urban poor votes. The outgoing Government realised, a little bit too late 
as it transpires, that they had not done enough to help the poor farmers who 
make up a decisive part of the electorate. They tried to compensate for this 
immediately preceding the election by a series of measures designed to increase 
farmer choice and making available $11 billion to help the sector. The farmers, 
who have a track record in the biggest democracy in the world, of passing harsh 
judgements over incumbents, as Indira Gandhi found to her cost after her 
emergency rule, threw the government out of office in a humiliating fashion. 
There was simply too large a difference between promises and ground reality. 
This is, of course, one of the central themes that has been running through 
this Consultation.

What has happened in India is common throughout the world. The development 
business may have said noble things about helping framers but have done very 
little to actually do so. The Green Revolution, subject to increasing critical 
analysis, is at least credited with significant progress because it combined 
technology with Government action and improvements in irrigation. Significant 
steps have been taken towards food security but what is required today is 
greater equity towards the small farmers. Where the Indian farmers have 
ventured, others may follow.

Agricultural policy in my experience usually consists of a accumulation of ad 
hoc steps taken under pressure. India started off favouring self sufficiency 
and a mixed economy and can claim to have gone a long way towards these basic 
goals having assured security and generating a surplus but with too many 
farmers not gaining enough from the process. The Thatcher-Reaganomics period 
led to a global re-evaluation that turned the focus towards market driven 
forces and trade liberalisation. In his period as Finance Minister Manmohan 
Singh is credited with furthering this cause in India. But the actions taken by 
developing countries were never considered enough by the neo-liberals and in 
particular by the Development Banks who have persisted with a relatively hard 
line position on liberalisation even after the more recent modification in 
industrialised countries. In particular, while most industrialised countries 
protect agriculture, the neo-liberals keep insisting that developing countries 
open their markets.

I was Team Leader for an ill fated TA Mission to India recently where the 
Indian Government kept telling us not to repeat ideological rhetoric against 
their regulatory system which was designed to protect farmer interest and if 
anything did not do so enough. They told us that if we did so they would pay no 
heed to what we said because they were sick of hearing the old slogans 
endlessly repeated. The Government made available the $11 billion mentioned 
above and increased price support, public procurement and efforts to help 
farmers. They did so while also formalising market led changes in the 
regulatory regime. What they wanted from my Team was that we should try within 
the existing general system which could only change gradually to encourage 
parallel systems that would afford farmers choice and to come up with ideas on 
how to reduce obstacles to private mobilising the resources of the private 
sector. The latter and farmer representatives agreed with the approach and 
wanted more not less positive Government action. We thought this was reasonable 
and workable but our report was substituted by one that reasserted the need to 
end subsidies, price support, public distribution etc. etc. What this did not 
take into account was that the election taking place at the same time was to 
result in a Government which is simply in no position to compromise on these 
issues, not that they have the slightest wish to. If the Government does not 
help small farmers, it is certain to loose power. It is no longer sufficient to 
restrict intervention to after harvest activities. The backward linkages have 
become all important.

India is now committed to helping farmers through increased state intervention. 
Those who cannot abide with that should simply forget about working with India. 
Those who would like to increase the standards of living of farmers as a way of 
fostering more equitable economic growth will find a receptive situation for 
ideas on how to to get assistance through to farmers. That does not mean that 
all the usual obstacles will disappear, all that has changed is a recognition 
that this task will have first priority. The United Kingdom is tied to India in 
a unique way and there is no doubt that citizens will expect the Government to 
help in any way possible. The DFID Consultation is taking place at the right 
time for the new agenda.



Best wishes,

Vinay Chand,
230, Finchley Road
<address removed><mailto:<address removed>>