India teeters on the brink of food crisis

The spectre of one of the worst ever drought situations looms large over the country. Central India suffered a massive 93% deficiency in rainfall in the first week of August, while the North-West remained at 76% below the long-term average. This monsoon, the rain deficit in Punjab, the granary of India, varies from 35% to as high as 87% depending on places. In Bihar, the deficiency varies between 76% and 88%. The average all-India deficiency of monsoon stood at 25%. Desperate farmers have sown paddy twice or even thrice, only to see the crop dry up. Both the President and Prime Minister have expressed concern at the impending spectre of drought in their ceremonial addresses to the nation on the occasion of this year’s Independence Day. The PM has even gone to the extent of giving a call for a “Second Green Revolution” to underline the gravity of the situation.

In a way the PM has hinted at the right malady. It is not only ‘the monsoon, stupid’ that is responsible for this famine-like situation. It is indeed the bleak agricultural scenario that is largely responsible for the present food crisis. Hence the talk of second green revolution! It is an irony that India even after four decades of Green Revolution is still largely dependent on the ‘rain-god’ for its agricultural salvation. The UPA government has already proposed a Food Security Act. This indicates that all is not well on the food front. The questions of food security and right to food have become urgent political issues. The overall growth story so assiduously propagated by the Indian rulers has not addressed the basic issue of providing food security to the masses. Instead, stark hunger still haunts some parts of the country for most part of the year, nutrition indicators stagnates and per capita calorie consumption actually declines in most other parts, suggesting that the problem of hunger may have got worse rather than better.

At the all India level 1.9% of the households suffer from hunger (NSSO data). Malnutrition in the country as a whole, as measured in terms of underweight children below three years, is estimated at 45.9% as per National Family Health Survey (NFHS), 2005-06. The comparable estimate for 1998-99 was 47%. These rates are among the highest rates in the world and nearly double the rate of Sub-Saharan Africa. More than half of women in India (55%) and 70% of children between 6-59 months of age are anaemic.

According to the National Sample Survey Organisation’s (NSSO) data of 2004-05, population reporting a calorie intake level of “less than 100%” of the norm of 2700 kcal, formed 66 percent of the total in rural areas and 70 percent of the total in urban areas. The same survey shows that average daily intake of calories by rural population dropped by 106 kcal (4.9 percent) from 2153 kcal to 2047 Kcal from 1993-94 to 2004-05 and by 51 Kcal (2.5 percent) from 2071 to 2020 Kcal in the urban area. Average daily intake of protein by the Indian population has decreased from 60.2 to 57 grams in the rural area between 1993-94 and 2004-05 and remained at around 57 grams in the urban area during the same period.

According to the Global Hunger Index and the India Hunger Index released by the International Food Policy Research Institute in October 2008, India’s record on hunger is worse than that of nearly 25 sub-Saharan African countries and all of South Asia, except Bangladesh. The Index, which measured hunger by ranking countries on three indicators, -- prevalence of child malnutrition, rates of child mortality, and the proportion of people who are calorie- deficient, -- found that not a single state in India fell in the ‘low hunger’ or ‘moderate hunger’ categories. The best-performing Indian state – Punjab – displays ‘serious’ hunger and ranks 34th on the Global Index. The worst-performing state, Madhya Pradesh, falls in the ‘extremely alarming category’ and ranks 82nd, with its people hungrier than those in Ethiopia or Sudan. Bihar and Jharkhand (73rd and 75th on the Global Index) have worse hunger records than Zimbabwe, Haiti and Bangladesh. Even a supposedly successful state like Gujarat dismally displays ‘alarming’ hunger, coming 13th among the 17 Indian states in the survey. West Bengal too falls within the “alarming” category.

The question of food security is inextricably linked with the agrarian situation in the country. The country is yet to come out of the nagging agrarian crisis. This is all the more borne out by the fact that incidents of peasant suicides are still continuing unabated despite a huge waiver of agrarian loans to the tune of Rs.60,000 crore during the last year. As many as 21 debt-ridden farmers committed suicide in Andhra Pradesh during the last 40 days alone. The toll goes on increasing week after week. The number of farmers who have committed suicide in India between 1997 and 2007 now stands at a staggering 182,936. Close to two-thirds of these suicides have occurred in five states. The Big 5 – Maharashtra, Karnataka, Andhra Pradesh, Madhya Pradesh and Chhattisgarh– account for just about a third of the country’s population but two-thirds of farmers’ suicides. The rate at which farmers are killing themselves in these states is far higher than suicide rates among non-farmers. Farm suicides have also been rising in some other states of the country.

The Economic Survey, 2008-09 informs us that the food grains production in the country is showing signs of gradual decline. As per the third advance estimates, production of food grains in 2008-09 is estimated to be 229.85 million tonnes, which is a marginal improvement of 1.97 million tonnes over the second advance estimates for 2008-09. This is, however, lower than the target of 233 million tonnes set out for the year as also the final estimates of 230.78 million tonnes for 2007-08. The overall production of cereals in 2008-09 has shown a decline of 0.2 per cent over 2007-08 and a shortfall of 0.8 per cent over target for the year. Wheat production was marginally below the target for the year and production level achieved in 2007-08. In the case of coarse cereals, there has been a large shortfall both with reference to the targeted production as also the level achieved in the previous year. The overall picture of food grains production in the country during the year 2008-09 is depicted in Table-1 as follows:

Table 1 : Food grains production (million tonnes)

1. Rice : Final= 96.69 ### Targets= 97.00 ### Percentage Increase (+) Decrease (-) Over final 2007-08= 2.8

2. Wheat : Final= 78.57 ### Targets= 78.50 ### Percentage Increase (+) Decrease (-) Over final 2007-08= -1.2

3. Coarse cereals : Final= 40.76 ### Targets= 42.00 ### Percentage Increase (+) Decrease (-) Over final 2007-08= -5.1

4. Cereals : Final= 216.02 ### Targets= 217.50 ### Percentage Increase (+) Decrease (-) Over final 2007-08= -0.2

5. Total pulses : Final= 14.76 ### Targets= 15.50 ### Percentage Increase (+) Decrease (-) Over final 2007-08= -3.9

6. Total food grains : Final= 230.78 ### Targets= 233.00 ### Percentage Increase (+) Decrease (-) Over final 2007-08= -0.4


1. Rice : 3rd Advance Estimates= 99.37 ### Percentage Increase (+) Decrease (-) vis-à-vis target for 2008-09= 2.4

2. Wheat : 3rd Advance Estimates= 77.63 ### Percentage Increase (+) Decrease (-) vis-à-vis target for 2008-09= -1.1

3. Coarse cereals : 3rd Advance Estimates= 38.67 ### Percentage Increase (+) Decrease (-) vis-à-vis target for 2008-09= -7.9

4. Cereals : 3rd Advance Estimates= 215.67 ### Percentage Increase (+) Decrease (-) vis-à-vis target for 2008-09= -0.8

5. Total pulses : 3rd Advance Estimates= 14.18 ### Percentage Increase (+) Decrease (-) vis-à-vis target for 2008-09= -8.5

6. Total food grains : 3rd Advance Estimates= 229.85 ### Percentage Increase (+) Decrease (-) vis-à-vis target for 2008-09= -1.4

The commercial crop scenario like oilseeds, sugarcane, cotton etc. is most bleak. The production of most commercial crops (in particular, sugarcane and cotton) is lower than the levels achieved in 2007-08. Total production of the nine oilseeds is estimated at 281.3 lakh tonnes, which is about 5.5 per cent lower than the production in 2007-08 and about 11.4 per cent lower than the targeted production for 2008-09. The production of sugarcane during 2008-09 is estimated at 2,892 lakh tonnes which is lower than the production of 3,482 lakh tonnes during 2007-08. This represents a decline of 16.9 per cent over previous year and of 14.9 per cent vis-à-vis the target for 2008-09. The production of cotton, estimated at 232.68 lakh bales, is short of the final estimates of 258.84 lakh bales in 2007-08 by 10.1 per cent and as compared to the target by 10.5 per cent.

Food security essentially involves procurement of sufficient quantity of food grains by the government to be distributed to the masses through the Public Distribution System (PDS). But the overall procurement of rice, wheat and predominant cereals, which reached 42.4 million tonnes in 2005-06, declined to 35.8 million tonnes in 2006-07, but improved marginally to 37.6 million tonnes in 2007-08. The decline in wheat procurement in Rabi Marketing Season (RMS) 2006-07 is attributable to shortage of production of wheat below the targeted levels, lower market arrivals, high ruling market prices, negative market sentiments due to low stocks of wheat in the Central pool and aggressive purchases by the private traders.

Hence the government took the decision to import wheat to meet the deficit in the Central Pool for meeting commitments under TPDS and other food-based welfare schemes and emergency relief measures. Government placed orders to import 5.5 million tonnes of wheat in 2006-07 at a weighted average price of US$ 204.7 per tonne and 1.8 million tonnes in 2007-08 at weighted average price of US$ 373.8 per tonne. We are told that the buffer stock position of food grains in the country as on 1 April 2009 was comfortable. Still the talk of further wheat import is making rounds in the corridors of the Food and Agriculture Ministry. The private players have already been allowed to import White Sugar without paying any duty.

In the meanwhile food grains prices are skyrocketing. For example, the prices of pulses have increased by 10 to 45 per cent. Arhar/tur are selling at Rs.90 and Mung Dal at Rs.74 a kilo in Mumbai and the apprehension is that the prices of pulses may shoot up to Rs.100 to Rs.150 a kilo due to the pressure of international market in a globalised scenario. The central government is providing subsidy to the corporate houses to the tune of Rs.4,18,095 crore by way of tax breaks and revenue foregone, whereas the total food subsidy provided in 2008-09 is Rs.43,688 core only, which is just a shade over a meagre 10% of the former. This is the real face of inclusive growth under the UPA regime!

Apart from the faulty agrarian policies and failing monsoon, one of the principal villains behind the spiralling prices of food grains has been the adverse impact of the commodities futures market on the prices of agricultural goods. Commodities traded in the commodities futures market included a variety of agricultural commodities. The total value of trading in the commodity futures market rose from Rs.34,84,485 crore in 2006 to Rs.36,54,487 crore in 2007 and to Rs.50,33,884 crore in 2008. The average daily value of trades in the commodities exchanges increased from Rs.15,000 crore during 2007 to Rs.18,500 crore in 2008. Agricultural commodities accounted for a large share of the commodities traded in the commodities futures market. This spurt in speculative transactions in food grains has encouraged hoarding and manipulation of prices by a few unscrupulous big players through the intervention in the commodities market.

The persistence, in fact increase, of high levels of hunger in times of globalised growth indicates that, as the Resolution on Agrarian Crisis adopted by the CPI(ML)’s 8th Party Congress observed, the “severe malnutrition crisis widespread in India, especially among children and women, is inseparably linked with liberalization in agriculture.” The subversion and dismantling of state procurement and PDS, as well as high food prices thanks to widespread speculation and hoarding have aggravated hunger. The ‘targeted’ PDS regime introduced a decade ago restricts food subsidy to ‘Below Poverty Line’ (BPL) families. In practice, the poor and marginalised find themselves excluded from the BPL lists and the extent of coverage of BPL families is very low. Hence to deal with food insecurity in an effective way, it is not sufficient to restrict the PDS to the targeted sections like the BPL population alone. Because, the process of identification of BPL population adopted in the country is far from fault-free, a large number of people who are food insecure would be excluded in case PDS remains confined to the BPL section alone. For instance, the last NSSO survey found that the percentage of Indians living below the poverty line (BPL) declined from 26.09% in 1999-2000 to 22.15% in 2004-05. Whereas the Arjun Sengupta report found that 77% of India’s population subsist on Rs 20 a day. Are the 55.85% of Indian people excluded from the BPL lists in spite of subsisting on Rs. 20 a day, not ‘poor’? Can we imagine that they are not hungry, or are not entitled to food subsidy?

PDS is a major state intervention to ensure food security to people especially the poor. The Eleventh Five Year Plan has observed that PDS seems to have failed in making food grain available to the poor as is evident from falling levels of cereal consumption over the last two decades. PDS was redesigned as Targeted PDS (TPDS) where higher rates of subsidies were given to the poor and the poorest among poor. However the Economic Survey, 2008-09 candidly admitted that, some major deficiencies were also identified in TPDS. These included high exclusion and inclusion errors, non-viability of fair price shops, leakages and failure in price stabilization. Hence is the need for strengthening and universalizing the PDS mechanism.

On 31 August, 1959, the police of the Bidhan Roy government in West Bengal brutally lathicharged on 3 lakh agitators assembled in Kokata to protest against the rise in food prices. An estimated 50-80 agitators were killed in the police assault on that day. The said incident will go down in the history of the democratic movement of the country as one of the darkest days. The food movement of the sixties gave a body blow to the then Nehru government who resorted to food imports from the US in the form of PL480. At the strategic level, Nehru’s response to the crisis was Green Revolution. Things have come back to square one again. The successors of Nehru legacy are also facing a similar food crisis today and their responses to the crisis has also been almost identical – import food and profess another Green Revolution on the footsteps of the imperialist masters.


Labour minister says Labour Laws cannot be enforced

Responding to debates in the Lok Sabha and Rajya Sabha on this issue, the Union Labour Minister Mallikarjun Kharge refused to provide any comprehensive data on job losses, and made it clear that the Government had no plans to protect workers from large-scale retrenchment.

In fact, faced with evidence of widespread violations of labour laws enacted to protect workers from lay-offs, the Labour Minister shamefully pleaded helplessness to enforce such laws. Speaking in the Rajya Sabha, corporate representative Rahul Bajaj (on August 3) openly called for labour laws to be scrapped, saying that “the UPA had hinted in its earlier regime” at “the possibility of relaxing labour laws.” Responding to this, Kharge sought to assure Bajaj and his ilk that the Government never acted on labour laws without the “consent” of employers. He said that the labour laws, unlike IPC or CrPC, were not backed up by any “force,” and even the Government and Labour Department could do little but “plead with employers with folded hands” to implement the laws! The Union Labour Minister’s posture of submission, patently false and unconstitutional, was clearly intended to reassure and embolden Bajaj and Co. It is a shame that the Government sees labour laws as carrying less weight and “force” than the other laws of the land, and leaves them at the mercy of the bosses rather than penalising those who flout them.


From the Horse’s Mouth

The Economic Survey of 2007-08 has candidly admitted some of the structural factors that lead to the systematic decline in agricultural production and built up of the present crisis. "Except for an increase in the rate of growth of credit supply to farmers, there has been a deceleration in the growth of all the other variables/factors" like Technology, Public sector net fixed capital stock, Electricity consumed in agriculture, Area under fruits and vegetables, Private sector net fixed capital stock, NPK use, Gross irrigated area, Total cropped area, Net sown area and Cropping intensity during 1996-1997 -2005-2006

"There has been a considerable decline in the rate of growth of area, production, productivity and area irrigated for the major crops ...The area under the production of foodgrains over a 16-year period witnessed an average annual decline of 0.26 per cent during 1989-90 to 2005-06, largely because of a shift in area away from coarse grains."

"The pace of creation of additional irrigation potential came down sharply from an average of about 3 per cent per annum during 1950-51-1989-90 to 1.2 per cent, 1.7 per cent and 1.8 per cent per annum, respectively, during the Eighth, Ninth and Tenth Five Year Plan periods. The rate of growth of utilization of the potential created declined to 1 per cent per annum during the Ninth Five Year Plan period and improved to 1.5 per cent per annum during the Tenth Five Year Plan period. The average annual rate of utilization remained lower than the average annual addition to the irrigation potential resulting in the cumulative utilization witnessing a continuous erosion."

(Economic Survey 2007-2008, pp. 156-162)


Flood of Nonsense

Nitish Kumar’s ‘drought-relief’ is about as much of a farce as his ‘flood-relief’ was. But the former CM Laloo Yadav reduced the ruling class discourse of opposition to absurd obscurantism. He termed the drought a “curse invited by Nitish,’’ saying the CM mocked Hindu belief that shuns eating during a solar eclipse. ‘‘Not only did Nitish eat biscuits, he also offered it to others,’’ Lalu recalled, adding it was because of this ‘‘sin’’ that the raingods deprived the state of rains. “Even the sungod was furious at Nitish’s audacity and hid behind the clouds, denying the CM the ‘darshan’ for which he had travelled all the way to Taregna,” Laloo added. Bihar may be parched by drought – but its ruling class is ready to provide ‘relief’ with a flood of nonsense…


The mystery of negative inflation vis-a vis escalating prices

India is one of the countries which uses Wholesale Price Index (WPI) as the index to measure inflation. The International Monetary Fund (IMF) statistics reveals that 24 countries use WPI as the official measure to track inflation, compared to 157 countries which use CPI. CPI actually measures the increase in prices a consumer will have to pay for the designated commodity basket (which may be revised every four/five years to factor in changes in consumption pattern). India does not have an aggregate CPI, but only sectional CPIs for industrial workers (CPI-IW), agricultural labour (CPI-AL), urban non-manual workers (CPI-UNME) and rural labour (CPI-RL). The WPI commodity basket has three constituent commodity groups: (a) primary articles, (b) fuel, power, light and lubricants, and (c) manufactured products, with respective weights of 22.02 per cent, 14.23 per cent and 63.75 per cent. Among the primary articles, the weight of ‘food articles’ is 15.40.

While the group inflation rate as on end-March 2009 registered at 5.2 per cent, it was 7.0 per cent in food articles, 0.1 per cent in non-food articles and 7.2 per cent in minerals. The corresponding figures in 2007-08 were 6.5 per cent for food articles, 11.4 per cent for non-food articles and about 50 per cent in minerals in end-March 2008. As for the contribution to inflation, that of food articles stood at 129 per cent as of end- March, 2009.

The WPI has the advantages of a comprehensive and economy-wide coverage and the weights in the commodity basket are based on the value of quantities traded in the domestic market. The CPIs are consumer group-specific and measure the changes over time in the general level of prices of goods and services consumed by the group, with the commodity basket being based on consumer expenditure surveys and the weights proportionate to the expenditure. Food articles carry much more weight in CPI than WPI. The WPI inflation reached a peak of near 13 per cent in August 2008 which had come down to 1 per cent in March 2009. The corresponding peaks in the CPIs were in October 2008 in the CPI-IW at 10.5 per cent; in January 2009 in the CPI-AL at 11.6 per cent as also in the CPI-RL at 11.4 per cent; in the CPI-UNME at 10.8 per cent in November 2008. The difference between the WPI and the CPI indices in respect of food articles is brought out in the figures presented below:

WPI : Food Group= 25.43; CPI-IW : Food Group= 46.2; CPI-UNME : Food Group= 47.13; CPI-RL : Food Group= 66.77; CPI-AL : Food Group= 69.15

*CPI-IW–CPI for Industrial Workers; CPI-UNME–CPI for Urban Non-Manual Employees: CPI-RL–CPI for Rural Labourers; CPI-AL–CPI for Agricultural Labourers.

The average inflation rate (in %) as per different price indexes during 2008-09 is furnished as follows:

WPI= 8.4; # CPI-IW= 9.1; # CPI-UNME= 8.9; # CPI-RL= 10.2; # CPI-AL= 10.2

The weekly average increase in WPI has become negative mainly due to the factor that white goods carry more weight and food articles less weight in calculating WPI, whereas it is the other way round in the case of the CPI. Another reason behind this phenomenon is the high base on which WPI is being calculated in as much as the WPI was very high during the last year and hence the rate of increase w.r.t the last year appears softer.


Estimates of job losses in the wake of global financial crisis and economic slowdown

(by the Labour Bureau, Ministry of Labour and Employment)

According to the report on “Effect of Economic Slowdown on Employment in India,” which is based on a sample survey of 2,581 units conducted by the Labour Bureau, Ministry of Labour and Employment, during October-December 2008, there was decrease in employment of about half a million workers during the period. The most affected sectors were gems and jewellery, transport and automobiles where employment has declined by 8.58 per cent, 4.03 per cent and 2.42 per cent respectively during the period. In textile sector, 0.91 per cent of workers have lost their jobs. Another thin sample survey conducted to assess the employment situation in January 2009 over December 2008 indicated a loss of about 1 lakh jobs in the month of January 2009. However, it may be possible that the unemployment indicated is seasonal in nature since the employment estimated in the reference period of the study is not in comparison with the same period in previous year and the employment in period October to December 2008 is compared to that in September 2008 and later January 2009 against December 2008. The survey conducted by the Labour Bureau for the period January to March 2009 covering 3,192 units in 21 centres, however, indicated improvement in the selected sectors with employment rising by a quarter million. Sectors registering increased employment were gems and jewellery (3.08 per cent), textiles (0.96 per cent), IT-BPO (0.82 per cent), handloom-powerloom (0.56 per cent) and automobile (0.10 per cent).

Department of Commerce, Ministry of Commerce and Industry

A sample survey conducted by the Department of Commerce for 402 exporting units revealed job loss (direct and indirect) to the tune of 1,09,513 persons during August 2008 to mid-January 2009. Another sample study conducted earlier (for the period August-October 2008) by the Department of Commerce for 121 export-related companies belonging to several sectors, primarily employment-oriented sectors like textiles including garments, leather, engineering, gems and jewellery, handicrafts, food and food processing, minerals, marine products has revealed loss in export orders to the tune of Rs. 1,792 crore and loss of jobs of around 65,507. Two other surveys for the period August 2008 to February 09, 2009, and August, 2008 to February 28, 2009 revealed job losses (direct and indirect) of 1,17,602 and 1,19,159 persons respectively.

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