Agriculture

Economic condition of India going downhill, with the Government sitting by and letting it happen ..

Major economies such as countries in Europe and the United States are going through a major upheaval, with a strange combination of low rates of economic growth, low interest rates, as well as high deficits. These high deficits have prompted pushes for austerity measures and other means of reducing the debts; which is contrary to the conventional wisdom whereby Governments pump in huge sums of money for schemes so that they can try to force employment, and thus try to kick-start growth. However, with huge debts, Governments are not able to do such measures, and consequently, global economic growth is slow, with few exceptions – China and India are the notable exceptions, with China having the larger growth rate, but India also having a decent 8%+ growth rate. Well, make that 7%+ now.
And this is the main problem. The current Government has, over the past couple of decades, inherited an economy that just needs more decontrol and it will keep on growing. However, for all those who say that India is fast ahead on the path to a high degree of liberalization, a review of the past 2 years shows the extent of the impact that Government policies have on the market.
Inflation is a terrifying word, having a huge impact on politicians as well as the citizenry of the country. For normal citizens, or the ‘aam admi’ in Congress speak, a high rate of inflation means that items they have taken for granted suddenly become more difficult to get. This could mean that driving a car gets difficult for those who have to travel long distances because of higher fuel prices, or families have to suddenly start thinking whether they can afford to take the holiday (either domestic or international), or families have to start wondering whether they can still afford to enjoy fruit or meat to the same extent that they used to, and so on. Inflation, when you consider the high levels of inflation that have been ongoing for the past several years, wreak a tremendous impact on families, sending those on the edge right into the poverty line.
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Farmer’s agitation in Noida gets all the parties involved, but who knows the real issues ?

The ongoing agitation by farmers in the Western Part of Uttar Pradesh is now rocking the entire polity. A few days back, farmers were protesting for a higher amount of compensation / unwilling to surrender their land for commercial purposes in the Greater Noida area of Uttar Pradesh, and as a part of this agitation, there were clashes with the police. The farmers here have a number of retired armymen along with them, and are also fairly active, and as a part of preparing for confrontation, they were prepared with stones, as well as arms. The police swooped down on them, but met active resistance, and in the ensuring clashes, along with the farmers, there were injuries to people on the Government side, including the deaths of 2 policemen. Now, Uttar Pradesh has a police force that is complemented by the PAC (Provincial Armed Constabulary), which is pretty infamous. In an earlier such confrontation, the PAC was attacked, and it went on a rampage. In the current case, one does not really know the composition of the attacking Government forces that went on the rampage in the village of Bhatta Parsaul in the Greater Noida area, whether it was a mix of the PAC and other police forces, but the end result was that the village was cordoned off, the media was not allowed to enter for some time, and when the media came in again, they met a scene where the villagers alleged that the police force went on the rampage, attacking everybody, forcing the menfolk away (to the extent that for the last few days, there were no menfolk to be seen in the village). In addition, the leaders of the agitation farmers was being hunted, with a price being set on his head and information being sought for his arrest.
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Price Rise and the politics around it

A couple of years back, there was a sustained push in terms of liquidity in the global system, and as a result, the huge amounts of cash were pushing up the prices of all commodities, resulting in food inflation numbers being high. However, the recession for the past 2 years brought down this excess liquidity in the system to some degree, causing a reduction in the inflation numbers through 2008. But, to combat the poor economic condition and to ensure that the recession does not become stronger, Governments the world over had to open their purses and spend huge amounts in order to push weak companies (whose collapse could set off domino effects) to remain afloat. One problem with the spending of such huge amounts of money was that they also pushed in an excess of liquidity in the system, causing too money in the system.
This in turn resulted in an overall increase of prices of commodities, and since the Indian Government has been pushing up the prices that they give to farmers for the different crops, there was a push to food based inflation. The Government may well be arguing that they cannot stop international trends, but there are a number of steps, in terms of better monitoring, quick decisions on importing or procurement, letting more players into the retail business for pushing more efficiencies and reducing waste, and a number of other steps. For example, the productivity levels of Indian farmers is not very high, and yet there is no effort by the Government to push for more education to increase the growth levels per acre.
However, politically the increase in prices hurts the Government, and hurts the party in power (the Congress), and gives the opposition a stick to beat it with. Nobody wants to be associated with the political blame game that happens with an increase in prices, so State Government refuse to accept any part of the blame, even the agriculture minister (Sharad Pawar) would rather that all steps taken so far are actually Cabinet decisions (since he does not want the blame to stick to him), and so on. In such situations, the Government can only make statements such as assuring that the worst is over, and that prices will soon fall. It cannot do something else for the short term.