Everyone loves a Good DROUGHT
Both home and world prices greeted the news of drought by moving up. Will the government rein in the profiteering market forces and 'relief bureaucracy' that loves every drought as a boon?
Kamal Nayan Kabra Delhi
Widespread droughts or emergency policy responses they evoke increase miseries and deprivation that push back millions of people by several years, if not decades. Surely, they are not new or a one-time episode. Their frequent recurrence is not simply a matter of the largely unpredictable nature of monsoon rains. Both market forces and public policy response contribute liberally to the mass misery and its persistent accentuation in India.
Huge outlays on various disaster schemes or programmes to insulate the economy from the ill effects of natural disasters do not seem to have reduced the repercussions. We are inundated with assertions that the government is fully geared up to fight the drought. With our past experience, huge food stocks, foreign exchange reserves and NREGA already in operation, no one will be allowed to die of hunger, we are told.
Yet, there are reports of starvation deaths from Bihar. Andhra Pradesh has confirmed suicides by 70 farmers unable to survive the drought close on the heels of an intense farm sector crisis. In Maharashtra, farmers are going for distress sale of cattle. From the Bundelkhand region, there is mass exodus of youths in search of jobs to cities. There are reports of acute water shortage forcing people to use contaminated water or trek for miles to fetch a bucket.
The government is busy putting its act together to fight the drought. They are estimating the likely fall in farm output and the overall rate of growth of the economy, likely quantum of imports and depletion of food security reserves. The government is waiting to see if they have to mount open market sales of food stocks. Stern warnings are being issued to traders to desist from hoarding and profiteering.
World markets have responded to the announcement by India of its intention to import by jacking up prices. It is apiece with the response of the markets to the prime minister's declaration that food prices are going to go up in coming days and has firmed up the inflationary expectations. The prices in the futures market went up by about 20 per cent within a few weeks and its turnover by almost 42 per cent in the last four months. Both home and world prices greeted the news of drought by moving up.
Grist to the speculative mill has been provided by the Economic Survey. According to the survey, inflation is not a matter of concern this fiscal and the unreal wholesale price index (WPI) is in the negative zone after over three decades!
The response to drought in terms of macro-level supply management and paltry relief programmes under the NREGS are contrary to the insights provided by scholars. For nearly a century, losses inflicted and problems caused by recurring drought are not gauged mainly in terms of the fall in farm output from the previous year's or the past peak. They are understood mainly in terms of loss of livelihoods (made worse owing to rising prices), imminent outbreak of hunger leading to avoidable deaths and suicides by the emaciated and malnutritioned poor, water and fodder scarcity, disappearing food stocks, premature increases in food prices, though the last harvest's food is available in the market.
The precarious economic condition of the poor is what the State has to respond to. It needs to rein in the wildly profiteering market forces and the 'relief bureaucracy' that loves every drought as a boon. Will it succeed this time?
The nation was waiting to hear from the prime minister about a concrete decision to implement the Congress' election promise on NREGS II. That is, instead of every family, each adult would be entitled to at least 100 days of work at Rs 100 per day in real terms. To expand the coverage of NREGS in tune with the usual 'famine code', everyone turning up for work, job card or no job card, ought to be given work and be promptly paid, may be partly in terms of food.
The opportunity to convey directly to the nation a firm commitment to fight drought and provide relief to the people was lost. This would have extended the coverage of NREGS II in line with the number of people below the static official poverty line.
With the State solidly reposing faith in market forces, none of the above measures to deal with the micro-level misery threatening livelihoods of millions has been initiated. The identification of the crisis in terms of an imminent fall in GDP and measures to make good the overall supply deficiency (measures of macro food security) cannot by themselves meet the compulsions of micro or household level food insecurity. Private account imports and unknown quantities of food stocked with many interests that make their access difficult would have a marginal impact on prices. It would still keep them out of reach of the poor.
Merchant importers reap a bonanza by such market-dependent moves rather than from universalising the public distribution system (PDS) that includes pulses and edible oils. It is a measure of the government's real commitment that the drought-induced miseries found no response --- to provide immediate succour to the hungry. Like the parched earth that needs water, parched people need assured purchasing power and adequate supplies at affordable prices.
Unfortunately, higher significance was attached to impact of the global recession and the resolve to restore the growth rate by facilitating enhanced inflow of foreign capital and technology. Recent evidence shows that such growth has no positive impact on 85 crore plus Indians.
Predictably, market forces of mercantile and usurious capital along with land speculators masquerading as real estate businesses look upon the drought as an opportunity to make huge profits. Anticipating a fall in production, stocks are cornered/hoarded. They are aided by government sanctioned and encouraged speculation (commodity futures markets).
Little wonder, the upward movement of prices of essential food grains has become steeper. What the logic of growth rates and market mantra of the government cannot capture is the unfolding of repercussions caused by the drought. Majority of farmers exhaust their food stocks by the sowing season and become market dependent. As sowing for the next crop cannot begin in the absence of rains, work opportunities in the farm sector, too, dry up.
Thus, the economy denies work and income and raises food prices. This is a recipe for large scale accentuation of hunger and misery for the people who even in the best of times have limited and uncertain access to food.
Animal husbandry comes under strain owing to shortage of fodder and water. Cattle die, subsidiary income and food supplements begin to disappear. Distress sale of cattle begins. Farm loans are replaced by consumption loans obtained from village and town Shylocks.
Thus, the distress situation paves the way for eventual loss of land. Small and marginal farmers are reduced to landless farm hands. Recurring droughts are an endemic feature of rural India and accentuates its highly skewed and unjust character. It adds to the existing social exclusion of the masses.
One-dimensional use of growth rates to assess the impact of drought and falsely calling it 'rate of development of the economy' is a perversity of public discourse. Droughts are underplayed as a political compulsion of an electoral democracy or for supporting 9 per cent growth. Agriculture seems to have become unimportant from the point of view of the much sought after 9 per cent growth rate (notwithstanding the bravado of a target of 7 per cent farm sector growth). Its share in the GDP has come down to a little over one-sixth.
It is projected that in about five years its share in GDP would be overtaken by telecom and communication services. The slogan - "Talk India, Talk" - would then become a reality even though the majority would have to talk on half-full stomachs.