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March 6, 2000

BUDGET 1999-2000

Experts decry India's inertness on food issue in WTO regime

Shobha Warrier in Madras Indian agriculture is not 'globalisable', says Gurumurthy

After President Bill Clinton of the USA signed a trade agreement with Mexico, somebody asked him, "How many jobs would the agreement create for the Mexicans?"

Email this report to a friend Clinton said, "I am the President of the United States of America and not Mexico."

Whenever Clinton signs a trade treaty, he says, "My countrymen, countrywomen, this agreement will create one million more jobs for the Americans."

What about the Indian government? It seems, in the name of liberalisation, the Indian government is trying hard to please and oblige the developed countries and not its countrymen, opine three experts.

"Why is the Indian government inactive and silent when the lives of 70 per cent of Indians are going to be trampled upon soon? As per an agreement India signed sometime back with the World Trade Organisation, there is going to be a free import of agricultural products from April 1, 2000," points out an observer.

Take the case of milk production. We are number one in the world ahead of even the superpower USA. But unlike in the USA, 90 million people in India, who own one or two buffaloes, deal in 75 million tonnes of milk. Under the WTO regime, India would be free to import milk and milk products. What will happen to one of the most successful co-operative movements in India now? What will happen to the white revolution we are so proud of?

India, which is the largest producer of vegetables, would import vegetables at a very low tariff. India, one of the largest producers of rice, will hereafter import rice freely under the agreement. What will happen to the green revolution, which made the country (born in the backdrop of famine) the largest producer of food products in just 50 years?

By allowing the free import of pulses and oilseeds, we are going to kill India's dryland farming because pulses and oilseeds are the most important crops of the dry farming areas and it is the poorest of the poor who are in the dry farming business. Although the WTO talks about micro-enterprises supported by micro-credit like our own Grameen Bank, the macro-economic policies of the developed countries are going to destroy the micro-enterprises of the poor and developing countries.

According to the Asian Development Bank December 1999 report, "Close to 900 million of the world's poor, that is, those who survive on less than one dollar per day, live in the Asian and Pacific regions. Nearly one in three Asians is poor. Although the proportion of people below the poverty line has been declining, the trends in poverty reduction have recently worsened. More than half a billion poor people are in this region and out of this, 450 million are in India. That is, nearly 45 per cent of the poor in South Asia are in India."

S Gurumurthy, convenor, Swadeshi Jagran Manch, argues, "If there is any sector which is not 'globalisable', it is agriculture. Agriculture in India can not be viewed as a part of trade. It is so local in character, particularly in India. Forty per cent of our farmers are marginal farmers and they produce only for themselves. I don't think economists and policy-makers who are trained abroad, can understand this problem. If agricultural products are freely imported, it will devastate the Indian rural scenario.

"We follow what the western countries say, that is, hereafter trade and not aid should be the pathway to poverty alleviation. If that is so, trade should stimulate income to the poor. But trade is going to increase poverty in India."

Dr M S Swaminathan, the man behind the 'green revolution', says, "If we go ahead with the import policy, it will be fatal."

Dr U Shankar, director, Madras School of Economics, offer a detailed perspective. "There was no justification in having zero import duty when they have bounded tariff of 50-100 per cent. It was a past hangover, which they have committed and India can raise the issue. And I think, they have already raised the import duty of wheat. The problem here is that so many ministries are involved and there is no coordination in their work. We cannot create policies every year, what we need is a long-term policy. What we need is, we have to make exports attractive. But there is no justification in having free import of agricultural commodities at all.

"The advocates of liberalisation argue about fair competition. They expect an Indian farmer who has invested just $ 100 in his farm and who dries his paddy on the road, to compete with an American farmer who must have invested $ 1 million in infrastructure. So, where is the level-playing-field when the comparison is 1-100,000?

"The countries, which are competing with our poor farmers, have only macro-enterprises where one farming family may have 1000-2000 acres of land and they use highly automated, mass production technology in agriculture. Agriculture in India belongs to the Gandhian pathway of production by masses in contrast to the western, highly industrialised and automated agriculture.

"Every fourth farmer in the world is an Indian farmer. Still when it comes to taking policy decisions, he has no voice and his needs and requirements have no value at all. Agriculture is the mainstay of our economy though it provides only less than 30 per cent of GDP. But 70 per cent of our people depend on agriculture and their livelihood is on agriculture.

"But in the western economy, agriculture contributes only 3-4 per cent of its economy. About 20-25 per cent are involved in the secondary sector, which includes processing, etc, and 65-70 per cent are in the tertiary sector, that is, various services like transportation, communication, electricity and infrastructure. But in India, 70 per cent are in the primary sector, 5-10 per cent are in the secondary sector and only 3-4 per cent in the tertiary sector. It is a totally different scenario. The growth rate of the secondary and tertiary sectors in India is also very poor.

Indian farmers get subsidies on inputs like power, fertiliser, water, but not global prices "The urban India cribs about Indian farmers enjoying subsidies. But Western Europe has a tariff of 70-80 per cent as 'producer's subsidy equivalent', and in Japan, it is even more. Even though all the European countries have a common agricultural policy, each country wants to encourage production and they attain it by giving high subsidies. Thus these countries produce more than what they need and find that they cannot sell the surplus at the producers' price.

"Naturally, the government subsidises. And the subsidies are as high as 80 per cent to 90 per cent in Western Europe! And as per the agreement they have with the WTO, they need to reduce the subsidies only by 25 per cent to 30 per cent and even if they reduce by 25 per cent to 30 per cent, they still have more than 60 per cent as subsidy. When developed countries like the European Union, Japan, Canada, the USA, etc, subsidise agriculture, poor countries like India, Brazil, and some of the African countries talk about taxing agriculture.

"The findings of a study conducted by Anne Kruger, a well-known economist and three others in 18 countries from Latin America, Africa and Asia, show that agriculture is 'dis-protected' in many of these countries. In India, we have subsidies on the input side like the fertiliser subsidy, irrigation subsidy, electricity subsidy, etc, but the Indian farmers are denied the opportunity to sell their products at international prices because of various quotas and other restrictions. So, what our producer or the farmer gets is far below the comparable international price.

"Take the case of Japan. The food price in Japan is 200-300 per cent more than the international price and their farmers are pampered with all kinds of subsidies.

"Why is it that Japan wants to sell their automobiles and electronic items elsewhere but refuses to open up their agricultural market? The agricultural export group or the CAIRNS, which includes countries like Australia, New Zealand, Canada produce huge surplus of agricultural products. Even though they belong to the developed countries and are members of the OECD, they want Western Europe and Japan to reduce import duty. So, the solution, according to experts, is that India must join the group and put a lot of pressure on these countries. Under pressure, the US and Canada have reduced the tariff a little already.

"If we were to compare the case of Indian agriculture with Indian industries itself, we would find that Indian industries enjoy a lot of protection. The import duty on most of the industrial commodities is 50-100 per cent. As the industrialists have powerful associations like the CII, FICCI, etc, their voices are heard. But who will talk for the emancipated, poor farmer?

"India is one of the largest producers of horticulture products but the Indian farmer is denied the advantages of advanced technology. So, in the post-harvest period, a lot of items like onions, tomatoes and many other vegetables go waste. We need storage facilities so that vegetables and fruits do not go waste. The gap between the producers' price and the retailers' price is very high.

"In commodities like rice, cotton, vegetables and fruits, we have a very big advantage over other countries. We are one of the cheapest producers of these items in the world. But we don't have the infrastructure to store. India can easily export all these items and export is very important for us as we import oil and it is a big burden on the Indian economy. Even though we have excellent prospects in agriculture, we talk only about the export of software. We can easily export rice products, wheat products, agro-based products, processed fruits and vegetables and thus employment and income are generated.

"But the major problem that we face is lack of technology and safety standards. But there is a huge market for such products. And here in India, labour is cheap, production cost is very low and this is where we have to invest."

"Agriculture shouldn't be viewed as a tool to produce agricultural commodities needed for the urban consumers. That is so in the western world. So, you have to look at trade policies from two ways, one is our external obligation, which is to WTO, etc. At the same time, we have our internal obligation also. And our obligation should be to our own people and not to the WTO," says Swaminathan.

On April 1, are we obliged to allow free import of food products? No, says, Swaminathan. "Some may say that we are obliged to do so under the trade agreement. But we are not. In the trade agreement, there are provisions for non-tariff barriers. And so far, the non-tariff barriers are invoked only by the industrialised countries by raising issues like child labour, environmentally harmful effects, etc. They argue strongly because the industrialised and developed countries want a free market on their terms, and unfortunately we have never argued our case well."

Other than the issues raised by the developed countries, there is also a provision in the agreement that allows a country to invoke non-tariff barriers when it feels that the import of a particular item will affect the food security of the country. Swaminathan says, "I say that food security in India is security of livelihood. Today, the famine of jobs is the cause of famine of food in India. Where there is income, there is food and where there is no income, there is no food.

"So, our country should immediately develop a precautionary package on non-tariff barriers, which will safeguard our environmental security and the livelihood security of the poor. Trade must become an instrument in poverty eradication as is being advocated by the rich nations. Trade policy should be such that it should encourage and not kill micro-enterprises, cottage industries, food processing industries, etc. It is going to be disastrous if we don't look at this problem seriously.

"Yes, we can get out of this mess and it is entirely in our hands. We have to study the rules of the game, which are supposedly pro-poor and pro-woman. So, the precautionary package shouldn't be an arbitrary package but a well-argued package which should carry conviction.

"The question is, what do we want? More slums in the urban areas or prosperous rural sector? The urban slum is a good index of the lack of opportunities in the rural areas for livelihood. Otherwise, why should the villagers come to the city and live in such horrendous conditions? No human being wants to live on a pavement. They would rather live in a hut in a village than lie on the urban pavement.

"This is the fifth anniversary of the Copenhagen social summit, which was also called the poverty summit. Copenhagen warned that if we could not eliminate poverty, soon it would lead to social disintegration and there will be more ethnic conflicts and violence. We have started seeing the unrest in Africa, and also to some extent in India.

"As the WTO is not like the IMF where a country's voting power depends on the shares it holds in the bank, every member in the WTO has a vote. There is no difference between a Nepal or a Bangladesh or a Japan or a USA there. It is mandatory in the forum to have consensus in every policy. So, if twenty countries block a policy, nothing can be done."

But the problem with India, according to Dr Shankar, is that India never goes to the WTO meetings well prepared. "They don't do their homework at all. If you talk in favour of the poor, nobody interferes as in the multilateral negotiations; there is a consensus that you must have special treatment for developing countries. Unfortunately, we don't use expertise or argue our case. The other countries go well prepared and it is not only the government but the labour unions, academics, economists, members of commerce and even the press go to argue for their country. There are 70-80 developing countries and India can group all of them together and be the leader," says Shankar.

Gurumurthy holds the English speaking Indian responsible for this devastating condition. "The problem is the bureaucracy also is a Macaulayan product. They are Macaulay's children. So, they don't go there to argue our case but to seek posts in the WHO, WTO or UNCTAD. We have not produced patriotic bureaucrats of a higher order. We need hardened patriots. Why should you blame the bureaucrats alone? What about the media? Politicians, by far, are the most trustworthy people as far as the country is concerned. They won't compromise if they know what they are compromising and what they are not. But the problem is they are ignorant."

Still Gurumurthy is optimistic because he feels "the WTO is a collapsible institution and it is bound to collapse because life is lead locally by the majority. Who fought at Seattle? The local forces."

Swaminathan wants India "to take pride in poverty". He says, "Let us not hide it. Say that we are a poor nation and our obligations are with the poor. Our first obligation should be to the 450 million poor people and not to the World Trade Organisation."


India and the WTO

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