The outcomes of the legislative assembly elections in the five states (West Bengal, Tamil Nadu, Kerala, Assam and Pondicherry) which went to the polls in April-May reflect the growing public demand for balanced, equitable economic growth. There is a discernible sentiment — as reflected in the triumph in West Bengal and Kerala of the coalitions dominated by the Communist Party of India (Marxist) — that the benefits of economic liberalisation and deregulation need to be distributed more equitably between shining middle class India and the rest of the population. The massive electoral endorsement of the CPM which is lukewarm about market economics and integration of the Indian economy with the rest of the world, is a signal from the subaltern classes substantially denied any share of the harvest of liberalisation, that they will vote in political parties with a bias towards equity and distributive justice.
That’s a warning which all right thinking people must heed. There’s something clearly wrong with a social order in which stockmarket indices have scaled unprecedented peaks, five-star hotel room prices are among the highest worldwide, Indian businessmen are plentiful in the Forbes list of dollar billionaires, and urban real estate prices rival Manhattan while thousands of deeply-indebted farmers in rural India commit suicide every month, 47 percent of children below the age of five suffer malnutrition and in the poor hinterland the great majority of the population is routinely denied adequate food, clothing, shelter, education and healthcare. Little wonder there’s the distant thunder of revolution with 150 of the country’s 603 administrative districts confronted with a growing naxalite (anarchist) insurrection.
The challenge before liberal political parties, particularly the Congress which has a strong democratic and secular tradition, is to combine its successful post-1991 economic development policy prescription with emotional intelligence and make a determined bid to end the poverty, despair and hopelessness which has wiped out the modest hopes of post-independence India’s first generation. Quite clearly the bankrupt, statist socio-economic development model by which the communist parties continue to swear, is not the answer to 21st century India’s needs. But now there’s a real possibility of the communist and leftist parties acquiring greater power and influence in New Delhi and the state capitals. This means that the handsome gains of liberalisation which have made this country a fast-track globally favoured investment destination, could become history in a jiffy.
Therefore the onus is upon the minority of right-thinking individuals within the Congress and the liberal intelligentsia to deliberate upon ways and means to present the acceptable face of capitalism to the public. The best prescription is to apply the logic of supply side economics to basic needs — food, clothing shelter, education and healthcare — of the population. Admittedly this is a tall order. But extension of the liberalisation and deregulation prescription which has catapulted the Indian economy into the high growth orbit during the past decade to the social sector, i.e massive private sector investment, offers the best chance of stopping the great leap backward, the inevitable consequence of the triumph of the hammer and sickle parties and their red brigades.
Corporate lifeline for Indian agriculture
Despite the hostile pavlovian response of Left parties and fellow travellers, the entry of some of the biggest names of corporate India — Reliance Industries, ITC, Godrej and Hindustan Lever among others — into the horticulture produce and packaged foods businesses is the best thing which could have happened to Indian agriculture. As evidenced by depressing news reports filtering through the celebs and page three obsessed media, almost 50 percent of the country’s 100 million farming-dependent households are heavily in debt, and given the unchecked writ of moneylenders and their enforcers in lawless rural India, farmers across the country are resorting to suicide in growing numbers. Against this backdrop, the belated entry of corporate India into contract farming and the processed foods industry promises capital infusion and better prices for farm produce.
Surprisingly, there is insufficient awareness within contemporary society that although farm households constitute the majority of the population, post-independence India’s Soviet-inspired development model has been cruel and unjust to rural citizens. During the past half century rural savings and credit were routinely siphoned off for investment into behemoth public sector enterprises (PSEs) run by business-illiterate bureaucrats who predictably failed to generate the mighty surpluses for re-investment into agriculture and the welfare sector (education and health).
A second article of faith of the Stalinist development model foolishly adopted by the benighted Central planners of post-independence India, was minimalist prices for agriculture produce to feed the bourgeoning industrial proletariat. For over half a century this objective was attained by the simple expedient of denying licenses to corporate enterprises and entrepreneurs to enter the food processing and packaging businesses. The consequence was that farmers — except for a small minority in north India who were assured government support prices for foodgrains — were left to the mercy of rapacious wholesalers’ cartels which forced them into continuous distress selling. Coterminously the absence of a downstream food processing industry resulted in massive annual loss for the nation’s farmers. Several estimates indicate that 20 million tonnes of foodgrains and over 40 percent of India’s horticulture produce valued at Rs.25,000 crore is lost annually because of failure to develop a vibrant and vigorous food processing industry.
It is this astonishing blindspot of the Indian economy which corporate India is attempting to rectify by belatedly entering the food processing and packaging industry. The Indian economy desperately requires great agri-industry brands such as Kellogg, Del Monte, Heinz and Cargill. Therefore notwithstanding the pavlovian nay-saying of regressive leftists (and environmentalists), the overdue entry of private sector heavyweights into Indian agriculture needs all the encouragement it can get. They offer neglected rural India new hope of capital and technology infusion, higher farm-gate prices and greater prosperity.
