Thursday, January 24, 2008

land reforms in andhra pradesh

Status of Land Reforms in Andhra Pradesh and the Need to Implement Radical Land Reforms
[A summary of the paper presented by K. Gopal Iyer in the Hyderabad convention on “Land Reforms and State Repression”]

1. Background: Tenancy Reforms
Telangana movement is the precursor to land reforms initiative in Andhra Pradesh. The Hyderabad Tenancy and Agricultural Land Act enacted in 1950 with its subsequent amendments resulted in the Conferment of Protection to nearly 6 lakh tenants with over 75 lakh acres in their possession. This constituted 33 percent of the total cultivated area. The Andhra Pradesh Tenancy Act, 1956 sought to give protection to certain categories of tenants in the Andhra Region from unjust evictions. However, it was preceded by large-scale eviction of tenants by the landlords. In the absence of militant peasant movement, the tenancy legislation in Andhra area had only a negative impact on tenants as the landowners resorted to large-scale evictions and leasing out lands only on oral basis.

1.1. Land Ceiling
The land ceiling which came into effect in June 1961 allowed a family to retain 180 to 360 acres wet land or 1080 to 2160 acres of dry land. It provided nothing about the large-scale benami transactions that had taken place prior to June 1961. High levels of ceiling exemptions were allowed in the case of plantations, orchards, specialized farms, sugarcane farms, religious and charitable trusts etc. There was no provision in the Act regarding the clandestine transfer of land in favour of other members of the family by way of gift, partition etc. The land leased out by the landowner was not taken into account in fixing the ceiling area. The impression given to the legislative assembly was that about 30 lakh acres constituting a little under 10 per cent of the total land would be available for redistribution. After a decade of implementation it was found that only 25584 persons had filed declarations and a total area of 4305.37 acres in the Andhra region and 29995.27 acres of land in the Telangana regions had been declared surplus.

As a corrective the Andhra Pradesh Land Reforms (Ceiling on Agricultural Holdings) Act of 1973 was enforced on 1st January 1975. The unit of application of ceiling was not more than five members. ‘Family’ as defined in the Act consists of an individual, his spouse, their unmarried sons and unmarried minor daughters, major sons and daughters, married and widowed daughters, mother, father, brothers and sisters are not included in the family unit. The ceiling limit ranged from 10 to 54 acres depending upon the class and category of land. Exceptions were made to land held by the government, religious, educational and charitable trusts, land devoted to plantations etc. At the time of introduction of the Bill in the Assembly Government thought that approximately 20 lakh acres of land would become surplus. On 31st March 2004, the distribution of Ceiling Surplus Land in Andhra Pradesh was as follows:

(Area in acres)
1 Area Declared Surplus 799663
2 Area Taken Possession 641655
3 Area Distributed 582319
4 Area declaredsurplus but not distributed 207722
5 Area involved in Litigation 147450
Litigation in Revenue Courts 55289
High Court 78047
Supreme Court 14113
(Source: Annual Report, 2004-2005, Ministry of Rural Development, Government of India, Pages 207-208)




The total number of beneficiaries was 540344. Much of the land distributed was dry and of inferior quality. This is a clear indication of the ineffective implementation of the land ceiling legislation in Andhra Pradesh.

1.2 Government Land
However, the distribution of government land (commonly known as Banjar land) constituted an important component of the land reform programme in Andhra Pradesh. As on March 2004, the distribution of Government Wastelands in Andhra Pradesh was 42.02 lakh acres which constituted the highest area to be distributed by any other state in the country. (Annual Report 2004-2005, Ministry of Rural Development, Government of India, page 211). There are several constraints in the implementation in the State of Andhra Pradesh in the distribution of Government land. In reality a large part of the government land, particularly the better cultivable lands, have been encroached by big landowners. The process of evicting them from their illegal occupation and allotting the land to the landless has proved to be a formidable task. Another problem in implementation is ensuring physical possession of the allotted land as the landlords implicate the poor people in litigation or use coercive methods to prevent the allottees from cultivating the land. There are also cases of land assignment in Andhra Pradesh pending for two or three decades.

1.3. Tribal Land
Andhra Pradesh has a very long record of legislation for the protection of Tribal Land. There are large tracts of tribal lands which are still under the occupation of the non-tribals. For example, as on March 2004 the status on alienation and Restoration of Tribal Lands in Andhra Pradesh are as follows:

1 No. of cases filed in the Court 65875

2 Area 287776 (acres)

3 Cases disposed of by the court 58212

4 Area 256452 (acres)

5 Cases rejected 31737

6 Area involved 150227 (acres)

7 Cases decided in favour of tribals 26475

8 Area 106225 (acres)

9 Cases in which land was restored to tribals 23383

10 Area 94312 (acre)

(Source: Annual Report, 2004-2005, Ministry of Rural Development, Government of India Page 213).

Thus only one-third of the total area alienated has been restored to them. Besides, they are subjected to displacement from thousands of acres due to various development projects and evictions by forest department on the plea of encroachment of forestland. The Samta Judgement and the Panchayat Extension Act of 1996 are silver linings in this respect which should be utilized by the peasant organizations in protecting the land rights of the tribals.

1.4 Impact of LPG
One of the major threats being posed to the land reforms programme is the adverse impact of Globalisation, Liberalization and Privatization under the pretext of encouraging Aqua culture. The Andhra Pradesh Government, by a mere executive order Go/Ms/No. 27 of January 11, 1994 (Revenue Department), granted exemptions U/S 18/2 of Andhra Pradesh Land Reforms Act, 1973 for prawn/pisiculture project upto 200 hectares (500 acres). The area under prawn farms in Andhra Pradesh increased from 19500 Ha in 1993-94 to 66290 ha in 1997-98. The Supreme Court through its directives in 1991 banned the conversion of agricultural land and brackish water poramboke lands into aquaculture. In spite of this, large area of agricultural lands have been converted to aquaculture and Poramboke Brackish Water lands have been encroached by big prawn farmers. Another point is that 92% of the total area under prawn farm in Andhra Pradesh is located within CRS which is prohibited. Besides, the extent of agricultural land converted into aquaculture until 1999 was 31081.74 Ha and 25188-19 ha of poramboke brackish water lands are encroached. Andhra Pradesh agriculture is virtually in an explosive situation and in a seething cauldron.

2. Measures for Radical Land Reforms
In view of this, certain radical land reforms measures are inevitable. There are still enough scope for radical land reforms as indicated below:

2.1 Land ceilings
1. All the exemptions from land ceiling legislations e.g. for temple lands, Charitable Trusts, Plantations etc. should be immediately withdrawn. This would unable 6 to 7 lakh acres of surplus lands to be distributed among landless agricultural labourers.

2. The cases under litigation in Land ceiling should be decided within a year and the lands involving 1.4 lakh acres should be distributed among landless.

3. ‘Absentee Landlordism’ is prevalent on a considerable scale in Coastal Andhra and Telangana Region which should be strictly discouraged by enforcing rigorous definition of ‘Personal Cultivation’ on the pattern of West Bengal Land Ceiling Legislation. This would bring more than 5 lakh acres under ceiling net in Andhra Pradesh.

2.2 Tenancy Reforms
4. The Coastal Andhra has increasing area under tenancy. The latest research studies indicate that the informal/concealed tenancy in the Coastal Andhra ranges from 15% to 30% of the total owned area.

5. It is suggested that Andhra Pradesh Tenancy Reforms Legislation should be amended to confer proprietary rights to all tenants/sharecroppers who are cultivating the lands during last three years on the pattern of Assam. Madhya Pradesh legislation even prescribes proprietary rights to tenants cultivating for past one year as well.

6. The revenue officials at the village level should record the names of actual cultivators in the village revenue records each year to facilitate the tenancy records and conferment of proprietary rights.

2.3 Government Land
7. The Encroachment of Government lands done by landowners should be evicted within six months and such lands should be distributed to landless labourers.

8. A through survey should be conducted of available government lands for distribution to landless labourers.

9. As per Government of Andhra Pradesh Policy Note on the Assignment of Government Lands the Andhra Pradesh Government has undertaken a crash Programme of assignment of lands to tribals in eight districts of Adilabad, Khamman, East Godavari, Warangal, West Godavari, Vishakhapatnam, Vijayanagaram, and Srikakulam. An estimated 12,80,968.22 acres of banjar land is available in the tribal areas of the state. So far area of 5,57,768.87 acres have been surveyed and balance 7,23,199.35 acres are yet to be surveyed. This survey work must be undertaken on a priority basis to be completed within one year for distribution to tribals.

2.4 Reversing the Impact of Globalisation, Liberalization and Privatization
10. The Government of Andhra Pradesh should immediately withdraw the Executive order GV/MS/ Ho. 27 of 11th January 1994 with which the exemptions from land ceiling upto 500 acres have been permitted for Aqua Farms.

11. In Future also the Land ceiling limit as contained in Land Ceiling Act 1973 should continue and exemptions should be withdrawn.

12. The Brackish Water Poramboke land should be distributed to agriculture labour and fishermen.

13. The brackish water Poramboke lands encroached by prawn farmers should be retrieved and distributed to Agriculture Labour and Fishermen

14. The Agriculture land converted to Aquaculture should be taken over by Government and distributed to landless.

15. The Contract Farming and Corporate Farming should be completely discouraged.

UNITED NATIONS ORGANISATION AT THE CROSSROADS

UNITED NATIONS ORGANISATION AT THE CROSSROADS

by Dr Subhash Kapila

Introductory Observations:

The United Nations came into existence in 1945 on conclusion of World War II in which the world witnessed unprecedented death and destruction, made possible by the harnessing of advanced technologies in the instruments of war. The United States use of atomic bombs against Japan at Hiroshima and Nagasaki and the massive destruction in its wake vividly illustrated how horrific future wars could be.

Gripped with this fear and horror, the victorious nations and other nations got together and established the United Nations Organisation. The Charter of the United Nations spelt out that the primary objective was “ to save succeeding generations from the scourge of war.”

In the last sixty years of its existence, the United Nations had to manage and cope with security conflicts ranging from the Cold War era to post-Cold War and now the abominable spectacle of global terrorism of the Islamic Jehad variety as exemplified by the Al Qaeda, Taliban and Pakistan state-sponsored terrorism against India in Jammu and Kashmir, more specifically.

The United Nations Has Failed:

If the primary aim and role as envisaged by its founders was to spare humanity from the “scourge of war” then it would not be wrong to argue that the United Nations has failed, as the following brief examination would indicate:

Prevention of Conflict: The United Nations in the last sixty years, as the record would show, was unable to prevent conflicts and wars breaking out all over the world e.g. Korean War, Vietnam War, Soviet military occupation of Afghanistan, the United States sponsored Islamic Jehad via Pakistan on Afghanistan against the Soviets, the three Gulf Wars and the wars leading to the break up of Yugoslavia.
Conflict Resolution: Unable to deter conflict, the United Nations has been a failure in conflict resolution also. In fact it seems that over the years, vested interests have impeded conflict resolution as it served the purpose of keeping in being a large number of United Nations missions, observer groups and ‘Advisers’ to the United Nations Secretary General. Cambodia seems to be the only exception.
Nuclear Proliferation and Disarmament: The prevention of Nuclear Proliferation should have been accorded top-most priority along with nuclear disarmament. Here again the record of United Nations agencies charged with this task has been deplorable. The United Nations did not focus, highlight or condemn any of the following developments:
· China’s assistance to Pakistan in development of nuclear weapons.

· China’s supply of nuclear capable missiles and missile technology to Pakistan.

· China’s assistance in building up of North Korea’s long-range and nuclear capable missiles.

· Pakistan’s supply of nuclear weapons technology to North Korea.

· United States permissiveness in tolerating all of the above developments. Inaction despite CIA evidence was sought to be justified by the United States on grounds of lack of “actionable intelligence”.

Obviously, structural inadequacies of the United Nations, the resolve and political inclinations of the United Nations Secretary General and the strategic interests and preferences of the United Nations Security Council permanent members were at play.

War on Terrorism: Terrorism especially after 9/11 has acquired a disturbing salience in global security. More so, when there are indications that the Al Qaedists could use nuclear ‘dirty bomb’ or chemical and biological weapons against their so called enemies i.e. USA, Israel and India and other Western countries too. The United Nations should have been overwhelmingly and single mindedly dedicated in its efforts towards this end.
Why Has the United Nations Failed in its Primary Role:

The United Nations has failed in its primary role of securing the international community against the “scourge of war” in the estimate of this author, due to the following reasons:

The United Nations has deviated from its primary role of preventing conflicts and over-extended into fields extending from education, to health, to humanitarian issues, to social and cultural fields.
The United Nations today has emerged as an overextended empire with vested interests to enlarging its extent from New York to Paris to Rome and all sorts of UN advisors present from Africa to East Timor.
The United Nations bureaucracy is too heavy and flabby with no justifiable functions.
Millions of US dollars are spent on United Nations functions and operations other than the primary role of conflict prevention.
United Nations operations and functions which could be performed by regional organisations or players are abrogated or duplicated by United Nations organisations.
Millions of United Nations dollars are spent on various committee meetings and honorariums to their select members which have no connection at all with global security.
Non-traditional security threats are being given priority at the expense of conflict prevention. This again is part of United Nations empire-building by vested interests.
All of the above could lead to the failure of the United Nations as an effective instrument for conflict prevention and global security, more so today, when the world is passing through uncertain and testing times as far as global security is concerned.

United Nations at the Crossroads:

The United Nations can truly be said to be at the crossroads. This is evidenced by the inclination of the world’s only superpower namely, the United States to bypass the United Nations, tired of its obstructiveness and endless meetings. It is also evidenced by the concern of other powers that the United States as the leading power is hijacking the United Nations and that the United Nations be made more representative by restructuring United Nations Organisation.

In view of the above, the United Nations is at a critical juncture of its existence and the leading powers of the world including the emerging ones have to ponder over the following questions:

Will restructuring of UN organs and making them more representative, especially the Security Council, would make the United Nations more effective?
or

Would reviewing the existing over extended roles and restricting the United Nations to its primary role of global security management and prevention of conflict, make the United Nations more effective?
While deciding on the above questions, certain terms of reference need to be recorded and these are:

United Nations cannot substitute or provide for a ‘world government’.
While pursuing a more representative character of its Security Council, the Security Council as the supreme body for global security management cannot be allowed to become a “trade union”.
Global security management is frightfully expensive and hence United Nations operational costs need to be drastically reduced by a wholesale elimination of organs like UNESCO, WHO, FAO, UNCHR. UN Human Right’s Commission etc, and all the various exotically named standing committees.
In the same context espousing creation of standing and dedicated United Nations Military Force needs to be excluded.
United Nations Future Challenges:

Future challenges to global security are not going to be global wars but more of asymmetric type of wars, limited wars, insurgencies and terrorism. All of these would be more possibly driven by religious fundamentalism, ethnic strife and ethnic genocide.

The Greater Middle East and Africa are more conflict prone than other regions of the world. Conflictual flash points exist in East Asia and South-West Asia.

In terms of security management, the United Nations would be challenged by a variety of scenarios namely:

Regional instabilities caused by ‘rogue states’ especially those with a record of nuclear proliferation.
‘Failed states’, where the state apparatus, rule of law and economic breakdown lead to state disintegration by exorbitant defence expenditure and corruption.
Conflicts over control of energy resources, strategic materials and water-sharing.
United Nations' Responses to Future Security Challenges.

United Nations' responses in terms of security management of future challenges would basically boil down to:

· Preventive Diplomacy

· Conflict Prevention

· Peace Building

Implicit in all of the above would be the necessity of using military force if necessary. In terms of using military force for global security management, the United Nation would have to fall back on the use of any one of the following options:

· Military and diplomatic assets of the Permanent Members of the UN Security Council

· Military assets of any other nations willing to join a UN Coalition.

· Military assets of regional organisations and regional powers to ensure and enforce peace in their regions.

United Nations has to divest itself of UN Peace Keeping Operations (PKO). Such PKO activities, it has been seen become endless. UN empire building exercises draining disproportionate financial resources. Such PKO operations also have a tendency to delay conflict resolution and many a times rendering them totally irrelevant to the existing ground realities e.g. The United Nations Military Observer Group in Kashmir stationed in India and Pakistan wasting resources in redundant roles.

The criteria for both the present Permanent Members of the UN Security Council and those to be included in any future expansion should be:

· Commitment to provide their military assets to the United Nations for global security management when called upon to do so, without any preconditions or reservations.

· Commitment to share expenses for global security management.

· Commitment to share expenses for peace-building operations where and when required.

Countries like China without any financial contribution to the United Nations and no military contribution towards any UN coalition forces should not qualify for Permanent Membership of the UN Security Council.

As in nature, where there is a hierarchical order in operation, so should it be for global security management. It is already operative as seen by United States unilateral military assertiveness by passing the United Nations. This has come about because global security management cannot be done by a “trade union” of countries demanding equitability but without contributing or being in a position to contribute for the “Peace Umbrella” that they seek from the United Nations.

Concluding Observations:

In global security management there is no room for “liberalism” or “peace offensives”. The definition of peace itself is negative; it means a state of absence of war. So if war is to be absent than the resultant peace has to be secured by the United Nations, by use of force if necessary.

United Nations Organisation was primarily charged with the responsibility of saving future generations from the “ scourge of war”. The United Nations should exclusively concentrate on this role and divest itself from social, cultural, economic and environmental issues. The manner in which security challenges are manifesting themselves in the 21st Century and the disparate destructive forms that are appearing can only be combated by a United Nations exclusively focused on global security management.

INDIA’S LOOK-EAST POLICY: More aggressive, Better Dividends

INDIA’S LOOK-EAST POLICY: More aggressive, Better Dividends

by C. S. Kuppuswamy

“I reiterate India’s commitment to work with ASEAN and other East Asian countries to make the 21st century truly an Asian century”

- Prime Minister Manmohan Singh

Introduction

With the participation of India in the recently concluded East Asian Summit and from the level of interaction evidenced at the 4th India-ASEAN Summit, both held at Kuala Lumpur from 12-14 December 2005, it is seen that the Look-East policy is being pursued aggressively and has started yielding results on the economic, political and strategic fields. The policy which was primarily directed towards improving relations with ASEAN will now be enlarged to cover other nations of the region such as China, Japan and Korea where the interaction was more bilateral till date.

Look-East Policy

The policy launched in 1992 had its genesis in the end of the cold war, following the collapse of the Soviet Union. In the aftermath of India’s liberalization, it was more than just a foreign policy alternative as it provided a development alternative as well, in synchronization with the globalization and the resurgence of Asia as an economic powerhouse. To quote Prime Minister Manmohan Singh “it was also a strategic shift in India’s vision of the world and India’s place in the evolving global economy”.

Though the policy was given an initial thrust with the then Prime Minister Narasimha Rao visiting China, Japan, South Korea, Vietnam and Singapore and India becoming a sectoral dialogue partner with ASEAN in 1992, the policy was pursued in fits and starts till recently. It is only since the beginning of this century, India has given a big push to this policy by becoming a summit level partner of ASEAN (2002) and getting involved in some regional initiatives such as the BIMSTEC and the Ganga Mekong Cooperation and now becoming a member of the East Asia Summit (EAS) in December, 2005.

India – ASEAN

India’s interaction with ASEAN in the cold war era can be described as a tale of missed opportunities. India declined to get associated with ASEAN in the 1960s when full membership was offered even before the grouping was formed.

It is only with the formulation of the Look-East policy in the last decade (1992), India had made amends by giving this region due importance in the foreign policy planning. India became a sectoral dialogue partner with ASEAN in 1992, a full dialogue partner in 1995, a member of the ASEAN Regional Forum (ARF) in 1996, and a summit level partner (on par with China, Japan and Korea) in 2002.

The first India-ASEAN Business Summit was held at New Delhi in October 2002. The then Prime Minister A.B. Vajpayee addressed this meet and since then this business summit has become an annual feature prior to the India-ASEAN Summits, as a forum for networking and exchange of business experiences between policy makers and business leaders from ASEAN and India.

Four India-ASEAN Summits, first in 2002 at Phnom Penh (Cambodia), second in 2003 at Bali (Indonesia), third in 2004 at Vientiane (Laos) and the fourth in 2005 at Kuala Lumpur (Malaysia), have taken place till date.

The following agreements have been entered into with ASEAN:

Framework Agreement on Comprehensive Economic Cooperation (for establishing a FTA in a time frame of 10 years) was concluded in Bali in 2003.

An ASEAN-India Joint Declaration for Cooperation to Combat International Terrorism has been adopted.

India has acceded to the Treaty of Amity and Cooperation (TAC) in 2003, on which ASEAN was formed initially (in 1967).

Agreement on “India-ASEAN Partnership for Peace, Progress and Shared Prosperity” was signed at the 3rd ASEAN-India Summit in Nov 2004.

Setting up of Entrepreneurship Development Centres in ASEAN member states – Cambodia, Myanmar, Laos and Vietnam. (The one in Laos is already functional)
The following proposals were announced by the Prime Minister at the 4th ASEAN-India Summit:

Setting up centres for English Language Training (ELT) in Cambodia, Laos, Myanmar and Vietnam.

Setting up a tele-medicine and tele-education network for Cambodia, Myanmar, Laos and Vietnam.

Organising special training courses for diplomats from ASEAN countries.

Organising an India-ASEAN Technology Summit in 2006.

Organising education fairs and road shows in ASEAN countries.

Conducting an India-ASEAN IT Ministerial and Industry Forum in 2006.
The ASEAN region has an abundance of natural resources and significant technological skills. These provide a natural base for the growth of synergies and integration between ASEAN and India in both trade and investment. The present level of bilateral trade with ASEAN of nearly US $ 18 billion is reportedly increasing by about 25 % per year. India hopes to reach the level of US $ 30 billion by 2007. India is also improving its relations with other elements like offers of lines of credit, better connectivity through air (open skies policy), rail and road links.

Regional Initiatives

BIMSTEC. The littoral states of Bay of Bengal (Bangladesh, India, Myanmar, Sri Lanka and Thailand) came together to form this economic association in June 1997. Myanmar has joined this grouping in December1997 and Bhutan and Nepal in 2004. This grouping aims at promoting economic cooperation between members in key areas like, Trade, Investment, Fisheries, Agriculture, Transportation and Human Resources Development. The first BIMSTEC Summit held in July 2004, renamed the grouping as “Bay of Bengal Initiative for Multi Sectoral Technical Cooperation” with the same acronym.

BIMSTEC has identified six sectors of focused cooperation. For each a lead country has been designated: Trade and Investment (Bangladesh); Technology (Sri Lanka); Transport and Communication (India); Energy (Myanmar); Tourism (India) and Fisheries (Thailand). A Framework Agreement, with the aim of establishing a FTA has been signed in February 2004 and a time frame has been worked for implementation in various phases. India has taken a leading role in this grouping and will also hold the next Summit in 2006.

Mekong Ganga Cooperation (MGC) Project. The foreign ministers of the six nations (India, Myanmar, Thailand, Laos, Cambodia and Vietnam) decided at the ASEAN Ministerial Meeting at Bangkok in July 2000 to launch this cooperative venture. It may be noted that barring India, the rest are member states of ASEAN. This project is aimed at development of overland trade, tourism, communications and transport linkages. The Trans-Asian highway (an old proposal of ESCAP) may become a reality through this grouping. The MGC ministerial level meetings will be held every year.

CSCAP. The Council for Security Cooperation in the Asia Pacific (CSCAP) established in 1993, is a non-governmental (Track II) process for dialogue on security issues in Asia Pacific. India became an associate member in 1994 and a full member in 2000. CSCAP is consolidating its links to the first track ARF. This is a useful mechanism (though unofficial) to discuss political and security issues and make such recommendations and facilitate information exchange with interested actors.

Bilateral Relations

Thailand. The first Framework Agreement for a bilateral FTA (with an ASEAN nation) was signed with Thailand in October 2003. Under this agreement, the commencement of FTA in Services and Investments will be in 2006 and in Goods from 2010. Some Memorandums of Understanding were also signed in October 2003, on tourism, agriculture and cooperation in bio-technology. A Joint Working Group is also in place for information and intelligence sharing on terrorism.

Malaysia. India is Malaysia’s largest trading partner among countries in the south, excluding China and the ASEAN, with the bilateral trade valued at US $ 4.29 billion in 2004. Indian public sector undertakings such as BHEL and IRCON have undertaken and successfully completed a number of projects in Malaysia. There are 57 Indian joint ventures in Malaysia in the fields of palm oil refining, power, railways, civil construction, training and information technology.

During the visit of Prime Minister Manmohan Singh in December 2004, India and Malaysia agreed to initiate a Comprehensive Economic Cooperation Agreement (CECA). 12 agreement/MOUs were also signed covering wide ranging cooperation in satellite technology, biotechnology, information technology, infrastructure and education.

Indonesia. During the visit of the Indonesian President, Susilo Bambang Yudhoyono, to India in November 2005, Indonesia and India agreed to establish a “strategic partnership” based on shared values and commitment to democracy and aimed at broad based development of relations in the political, security, economic, commercial, cultural and science and technology fields. Three MOUs were signed- one on marine and fisheries cooperation, one on establishment of Joint Study Group for CECA and one on training cooperation for training of diplomats.

India has many joint ventures in Indonesia since the 1970s. The bilateral trade currently at around US $ 4 billion will be tripled to US $ 15 billion in the next five years. Indonesia was insistent on the inclusion of India into East Asia Summit and had supported India at the other forums like WTO and OIC.

Myanmar. Myanmar is the only ASEAN country with which India shares both land and maritime boundaries. Hence Myanmar has to be accorded a special position in its foreign policy, especially in view of India’s strategic and security concerns. Consequent to visit ofSenior General Than Shwe, Chairman SPDC,to India in 2004, the bilateral relations are at an all time high.

India has extended a number of general and project-specific credit lines to Myanmar in the last few years. A number of agreements and MOUs, including the Tripartite Maritime Agreement between India, Myanmar and Thailand, the Border Trade Agreement and an agreement on Cooperation between Civilian Border Authorities, have been signed. Indian companies are involved in oil and gas exploration in Myanmar. A feasibility study has been undertaken for a rail link between India and Myanmar.

India had upgraded the 160 km long Tamu-Kalewa-Kalemyo highway in 2001 and will be maintaining it for the next six years. There is an ongoing project for construction of a trilateral highway from Moreh in India to Mae Sot in Thailand to Bagan in Myanmar, the progress of which is being reviewed regularly by the foreign ministers of the three nations. True to Myanamar’s assurances, it has been launching operations against the Indian rebel groups such as NSCN (K) camping in its soil.

Singapore. AComprehensive Economic Cooperation Agreement (CECA) between India and Singapore was signed on 29 June 2005 during the visit of Singapore Prime Minister to India. This agreement which came into effect on 01 August 2005, includes a bilateral investment promotion treaty, a double taxation avoidance agreement and an air services agreement in addition to an FTA. It may be recalled that it was Singapore that paved the way of India’s association with ARF. Lee had also supported India’s bid for a permanent seat in the UN Security Council. Singapore along with Indonesia had also supported India’s entry in to the East Asian Summit.

Cambodia, Laos and Vietnam

These three economically under developed countries of this region, in comparison to the rest of ASEAN, have enough scope and opportunity for India to extend its influence and reap the benefits.

Since 1981, when India recognized the Hang Samrin regime, India had cordial relations with Cambodia. India has entered into a number of bilateral treaties and agreements for cooperation in the fields of trade, science & technology, agriculture, tourism, air services and visa exemption. India has some major projects in the areas of education, entrepreneurship development and information technology. India has helped Cambodia in a big way through the ITEC programme.

India and Laos have signed a number of agreements and MOUs in the fields of culture, cooperation in defence, cooperation in science & technology, agricultural cooperation, drugs and illicit trafficking, and exemption of visas for diplomats and officials. India has also set up and Entrepreneurial Development Centre in Laos and will be setting up an Information Technology Centre shortly.

India has a number of bilateral treaties and agreements with Vietnam in the areas of Consular relations, Avoidance of Double Taxation, Narcotics, Science & Technology and Culture. Since 1976, India has extended 14 lines of credit amounting to Rupees 3,610 million to Vietnam. Another credit line of US $ 27 million to Vietnam was signed in August 2004 between Exim Bank of India and Ministry of Finance, Vietnam. India is also helping Vietnam in setting up an Advanced Resource Centre in IT in Hanoi and HRD in the field of IT in six educational institutions in Vietnam.

India has also proposed in the 4th India-ASEAN Summit at Kuala Lumpur in 2005 to set up Centres for English Language Training, tele-medicine and tele-education centres in these three states.

Visits

Visits to and from the South East Asian nations at the level of the heads of state, at the level of the ministers, at the level of the service chiefs and at the level of the bureaucrats and business leaders have also helped in giving a major thrust to the Look-East policy. Some of the visits in the last three years which were significant are given below:

2003

Prime Minister AB Vajpayee visited Bali (Indonesia) in October 2003 to attend the ASEAN Summit and had also bilateral meetings with the Korean President and the Prime Minister of Vietnam.

Prime Minister AB Vajpayee made an official visit to Thailand on 9-10 October 2003, when a Framework Agreement for a bilateral FTA was signed.

Vice-President of India, Bhairon Singh Shekhawat visited Myanmar from 2-5 November 2003.
2004

Prime Minister ManmohanSingh visited Bangkok (Thailand) in July 2004 to address the first BIMST-EC Summit meeting.

Senior General Than Shwe, Chairman State Peace and Development Council of Myanmar, visited India in October 2004.

Prime Minister Manmohan Singh visited Vientiane (Laos) to attend the 3rd India-ASEAN Summit and to flag off the India-ASEAN car rally.

Prime Minister Datuk Seri Abdullah Ahmad Badawi of Malaysia visited India in December 2004.

2005

Prime Minister Manmohan Singh visited Indonesia in April 2005 to attend the AFRO-ASIAN Summit.

Thai Premier Thaksin Shinwatra was in New Delhi from June 03-04, 2005 to expedite the setting up of the FTA (agreed in October 2003).

Prime Minister Lee Hsien Loong of Singapore was on a state visit to India from June 29 to July 01, 2005 along with a small delegation of his ministers.

Indonesian President Susilo Bambang Yudhoyono visited India from 22 to 24 November 2005.

Prime Minister Manmohan Singh was in Kuala Lumpur (Malaysia) from 12 to 14 December 2005 to attend India-ASEAN Summit as well as the inaugural East Asia Summit
India International Trade Fair (IITF)

South East Asia was the focus in the IITF this year (2005), which happened to be the silver jubilee of this fair. Companies from Indonesia, Malaysia, Vietnam and Thailand took part in the fair. After more than two decades of emphasizing trade with Europe and U.S., this fair reached out the South East Asian businesses.

The China Factor

China is virtually dominating this region. By the ASEAN-China Accord entered into in November 2004 (during the 10th ASEAN Summit in Vientiane), the world’s biggest free trade area has been created removing all tariffs for 2 billion people. The tariff cuts that began in 2005 will be completed by 2010 drawing the ASEAN’s combined economies of US $ 1 trillion closer to China’s US $ 1.4 trillion. (For more details refer to Paper Number 1184 dated 10-12-2004 of this author titled “ASEAN ECONOMY: Dominated by China”).

James Kelly, Assistant Secretary of State, in a testimony to the U.S. Congress said “China’s bilateral agreements mean little in economic terms, but they serve notice of how China is using its newly won economic power to expand its presence and political influence among its southern neighbors”.

In the Cold war era, South East Asian nations perceived China as dangerous because of its military expansionist scheme in Asia. While now the “peaceful rise” of China is being considered as more of an opportunity despite the challenges. To dispel the fears of this region Chinese Premier Wen Jiabao, said in a speech during the last ASEAN Summit that “China will continue to seek peace and development through cooperation and will strive to achieve development that will bring about peace, openness, cooperation and harmony as well as benefit to itself and other countries”.

Despite the pronouncements of the Chinese Premier some analysts are of the opinion that Beijing preferred a smaller Asian grouping (without U.S., India, Australia and New Zealand) that can move quickly on the economic front and which China can influence more significantly. Perhaps it is this increasing influence of China and its benign motives that had prompted countries like Singapore and Indonesia to co-opt India, Australia and New Zealand into the EAS.

Hence India must be aware that it has not been invited to EAS because of its rising economic potential alone but more as a balancing force to offset the China factor. Prime Minister Manmohan Singh, did mention that in a global environment, India is not afraid of competition. He added that India and China are not rivals and they can complement rather than compete in the EAS. India and China have engaged more purposefully than ever before bilaterally at the Shanghai Cooperation Organisation, at the UN and as part of the India-China-Russia axis.

Indian Foreign Secretary, Mr. Shyam Saran had remarked in this connection that ‘There will be increased capabilities that China will bring to bear in this region and even beyond. India also is going to be a major player in Asia ….I think India and the U.S. can contribute to much better balance in the Asian region”. It is debatable as to whether India should be worried about bringing this balance with the help of the U.S. or assert itself in the region on its own with whatever capabilities it may have or challenges to be met.

Conclusion

The Look-East policy has been given a significant thrust since the beginning of this century and the results achieved are evident as seen from the foregoing.

India has entered into a number of pacts, agreements and FTAs but its record for implementation of such accords has been poor as can be seen from the follow up of the Indo-Thai FTA and CECA with Singapore. The reasons may be – the Indian industry’s doubts about its competitive efficiency or it does not want competition at home or it is scared of cheaper exports to India from these countries.

There are some domestic political compulsions which impinge on the desired reforms or changes and the Indian Prime Minister had to admit at the ASEAN Business Advisory Council about the struggle the liberalization process is undergoing in the ‘minds of our people”. India has come under harsh criticism from Singapore, Thailand and Malaysia for the 1414 “negative items list” in the proposed FTA with ASEAN. This has put India in an embarrassing situation.

The meteoric rise of China’s economic potential and the resultant influence on this region should not deter India, as the region is looking for an alternative in India. However India has to set its house in order and go ahead with its economic reforms, liberalization process and infrastructure development to gain the confidence of this region, which at present is wanting in some respects.

Improvement of bilateral relations with the nations independent of the grouping is equally important. Each nation has its own characteristics – some are supportive of India at international fora, some are predominantly Muslim, some are economic tigers, some are underdeveloped and one is a close neighbour influencing the security of India. Hence the bilateral relations have to be tailored to suit the requirements of that particular state and that of India.

ASEAN and EAS hold great promise for India. Aggressive interaction with these groupings will result in better integration with this region and facilitate India’s entry into APEC, which is the major forum for the strategic and security concerns of this region.

The crux is,that this Look-East policy should reinforce and demonstrate India’s commitment to this region, which accounts for one-third of India’s trade. It should also be made clear that this commitment will not be influenced in any way by the improving relations between India and the U.S. and EU.

POVERTY AND SLUMS IN INDIA – IMPACT OF CHANGING ECONOMIC LANDSCAPE

POVERTY AND SLUMS IN INDIA – IMPACT OF CHANGING ECONOMIC LANDSCAPE

Guest Column by Hari Sud

Western media headlines as usual are as follows – twenty five percent of Indians live on less than a dollar a day and seventy percent live on less than two dollars a day. The forgoing was the headline of May 9, 2005 in a major international newspaper. Others headlines are not any less mischievous. These are all meaningless analysis. It does not reflect that same amount of money has differing values in different places. A more acceptable and bit accurate description of incomes in countries is Purchase Power Parity (PPP), which is, pricing identical products and services as needed by the local population in different countries, thus establishing a new and a more equitable exchange rate. The foregoing is applicable mostly to tradable goods. The PPP will put India’s GDP at $3.7 Trillion. This will raise daily monies of twenty five percent of Indians at the lowest rung of the society to seven dollars. The latter is still low but is much higher than the Western media would like to project. The forgoing is not the point; the point is that poverty is a major shame in India’s otherwise decent, scientifically advanced, peace loving and at times turbulent image. Poverty creates slums and slums breed hopelessness and crime. Hence it needs to be tackled as an integral part of economic development.

The key question that arises - will the current hype in economical development in India alter the landscape for the very poor?

The answer is that, not much will change in next 20 to 25 years. The real impact will be felt later than twenty-five years. That is when 8% growth trajectory will take the PPP daily income of the very poor in India from seven dollars to forty dollars. By then, a $20 Trillion GDP economy (PPP basis) and $600 billion in exports (year 2001 basis) will add one hundred and fifty million jobs, of which forty to fifty million will go to the very poor segment of the society. This general prosperity will not only put food on the table but will add to better living, better housings etc. In the intervening period of 25 years, rising income levels will definitely add to the exodus from the slums to planned living areas. The forgoing also requires massive governmental effort to house people properly.

Let us examine this issue of poverty and slums in Indian cities and its relationship to the betterment of economic conditions of the masses, a bit further?

What Causes Slums in the Cities in the First Place?

It is vicious cycle of population growth, opportunities in the cities (leading to migration to the cities), poverty with low incomes, tendency to be closer to work hence occupying any land in the vicinity etc. The key reason out of all is the slow economic progress. After independence in 1947, commercial and industrial activity needed cheap labor in the cities. Plentiful was available in the rural area. They were encouraged to come to cities and work. People, who migrated to the cities and found work, brought their cousins and rest of the families to the cities. Unable to find housing and afford it, they decided to build their shelter closer to work. First, one shelter was built, then two and then two thousand and then ten thousand and on and on. Conniving governments provided electricity and drinking water. Politicians looked at the slums as vote bank. They organized these unauthorized dwellers into a political force; hence slums took a bit of a permanent shape. More slums developed as more population moved to the cities. By mid sixties Mumbai, Kolkata, Delhi, and all other large cities were dotted with slums.

Very poor people live in slums. They are not the only one dwelling there. Fairly well to do people also reside there. They are either offspring of the slum dwellers that found education and an occupation. They have prospered but are unable to find affordable housing, hence have continued to stay in the shantytowns. Others are avoiding paying rent and property taxes. The latter is more often the case. It is not unusual that in the dirtiest of slums, where misery prevails that TV sets, refrigerators and radios are also blaring music. This is quite a contrast from the image which one gets in the media or from the opportunist politicians.

India’s capital of Delhi has a million and a half out of fourteen million living in slums. Mumbai is worst with greater percentage living in slums. Other big urban centers have done no better. Newly built cities like Chandigarh and surrounding towns where shantytowns could have been avoided altogether have now slums. The forgoing is India’s shame despite huge progress.

How will the growing Economy impact Poverty and the Slum dwellers?

As stated above, 8% growth rate of Indian economy will push per capita GDP to $2,000 level in about twenty to twenty-five years (PPP per capita GDP will be much higher). The forgoing presupposes that the population does not explode in the near future but continue a healthy 1.5 to 2% growth. That is where the magic equilibrium of prosperity and desire to live a better life begins. These two together could end poverty and slums. With availability of affordable housing and jobs, slum dwelling is the last thought on people’s mind.

On the other hand if the above does not happen then slums dwellers will triple in 25 years and so will the poverty. Delhi will have four and a half million-slum dwellers. Kolkata and Mumbai will have even bigger numbers. India’s shame will have no end. To avoid that, India’s economy has to remain at a high state of growth. Jobs created by the economic growth, hence higher incomes are key criteria for poverty reduction and slum elimination. The foregoing together with the current urban renewal in progress in the urban areas today will give cities in India a new look. Higher incomes will create a demand for in-expensive housing, which will have to be met with innovative use of land and building techniques. Government provided housing would be a great failure as it has been elsewhere in the world. Instead sufficient cash has to be placed in the people’s hands together with in-expensive land that people’s housing program become efficient and affordable. In addition slum living has to be made unattractive with land taxes and denial of social services. Slum colonies, which opt out of current hopelessness, should get a better deal in housing which replaces the slums. This followed with rapidly growing rural economy will kill migration. That will also reduce pressure on housing.

No single policy has ever brought an end to poverty and slums. It is a concerted effort and better policies, which will end it. No country in the world has ever been able to end poverty and slums completely. That includes the richest nation of the world – USA. The point is that if economy progresses and special effort is made to uplift the poor, poverty and slums will be overtaken by better economic conditions of the people.

How did US Tackle its Slums?

US had its share of poverty and slums in around the immigrant dominated cities. New York and Boston had great amount of poverty and slums at the turn of the twentieth century. These slums worsened further with the arrival of newly liberated African-American population from Deep South. The era pictures give a glimpse of everyday life and it is not pretty. People without jobs and with no prospects crowded cities in the North. A new word, Ghetto was coined, which described these places. Immigrant from different background or race crowded together and gave rise to Ghettos. At that time US did not have control over its economy and Civil War debt and additional monies borrowed to rehabilitate agriculture and commerce after the Civil War was unpaid. As twentieth century progressed a concerted effort was made to clean up the Ghettos and push people inland with free grant of land and promise of prosperity. Industrial Revolution, which was slow in reaching America from Europe, finally arrived. And it made the difference. It provided the much-needed jobs to the immigrants and colored. Also, free land in the West gave rise to food self-sufficiency and paying off of all Civil War and post Civil War debts. First World War gave US economy a boost and America joined the select group of countries of Europe in prosperity. Poverty by the end of the Second World War was a thing of the past. In just fifty years, i.e. by 1950, US were nation of 160 million souls, all prosperous and all well employed (forget the habitual lazy). That does not mean that all the Ghettos disappeared. They continued to exist. They exist today, but on a much lower scale. These are not eyesores.

One critical factor which eliminated slums and poverty in US was quadrupling of the US economy from 1900 to 1940. A free wheeling economy created industrial giants and a super rich class. Need for war material during the WWII resulted in creation of huge industrial infrastructure and innovation. Post war reconstruction in Europe added greater impetus to the economy. General well being of the people living in the poorer section of the cities dramatically improved. US raced ahead of Europe and are still ahead, 60 years after the WWII. In most cities, ghettos disappeared or shrunk. Urban renewal and building boom in last sixty years has completely changed the landscape of the country.

There is a parallel here. Poverty and slums in India are at the same level as they were in beginning of the twentieth century in America. Economic growth over fifty years eliminated them. It is possible in India too if the economy sustains the 8% growth trajectory.

Slums and the Great Briton
Great Briton was a great big slum before they became a colonial power in the nineteenth century. For eight hundred years prior, until 1800s, Great Briton was an agrarian society, where the lord lived happily in his Manor and Castles and the masses lived in a great squalor. Slums were everywhere. London had the biggest slums. Colonization brought prosperity and prosperity brought in a huge effort to improve the lot of the people and clean up of the cities. That is when the unemployed and slum dwellers were pushed to newly developing industrial hubs of Sheffield, Birmingham, Liverpool and Manchester. Compared to that Delhi, Kolkata were heavens. First slums in Kolkata appeared in 1850-70 as a result of systematic destruction of textile industry in Bengal and destruction of trading infrastructure in and around Kolkata. Slums elsewhere followed.

It took all the Victorian age from 1825 to 1900 to vanish poverty and slums in England. Their GDP multiplied 8 times over this period. British factories produced goods and services which were sold at profit in the in the colonies. Work for everybody in England was the cornerstone of building well-serviced cities.

The point is that reduction of poverty and slums follow closely with economic development. Faster the economic development, sooner will the poverty vanish and with it, the slums.

How did China handle its Poverty and Slums?
Chinese had a unique way of making slums disappear from its urban centers. Permit system to live in a city or in a particular neighborhood was introduced just after the Communist took control in 1949. That means that a migration of rural population to the urban areas in search of jobs was arrested. In addition the war ravaged eastern provinces where rural population had moved to the cities and into the slums, were emptied out. Nobody questioned Mao Tse Tung’s wisdom; hence he had a free hand. People were permitted to return to their homes in the cities only after proof of their residency had been established. Outsiders were sent back to their own homes and land in the rural area. Future residency in the cities was permitted on a permit basis only. Hence the major problem of unplanned urban squatting was prevented. Even today the foregoing policy continues. The FDI built cities of Guangdong province carry on with the permit system established in 1949. In order to move there, a person has to have a job and place to reside. The latter could be a factory provided bunk bed. This prevents urban squatters. The above is no comparison to how poverty was vanished in UK, US and elsewhere. Major economic progress in last 20 years has re-invigorated the cities with investment and reconstruction. Whether the same is true in the China’s rural areas is a debatable issue. China likes to pretend that poverty has been removed. Published reports state otherwise. (http://www.economist.com/World/asia/displayStory.cfm?story_id=5636460)

Urban Renewal In India
Urban renewal is in progress in India in a big way for the last 50 years. The British starved cities in India of the funds for two hundred years. They only built regal palaces for themselves in Delhi, Shimla and Kolkota. No new funds were made available to the people to renew and rebuild, hence Moghul Delhi presented a decaying and a rundown look, when they finally left India in 1947. The problem got compounded with migration of people from rural areas. Expanding industry and commerce needed them hence migration was encouraged. Thus urban slums and squatting began in a big way. Today, some estimates place 10 to 15% of Delhi population as slum dwellers. Slums in Kolkata predate Delhi slums. So do the Mumbai slums. They all began the same way – people’s livelihood was destroyed or they were invited to work in factories without adequate housing. The problem grew acute with huge population growth after 1950. From 1950 to today, cities lacked funds to renew themselves and help build additional housing. People lacked adequate jobs hence are caught in the poverty cycle.

Only recently a huge building and construction boom has started in all cities in India. Whereas governments are concentrating on building infrastructure and industrial base, private construction is building work places, shopping districts and housing for the middle class. The poor and slum dwellers are not there in any building equation. Cheap housing projects are lowest in the category. Hence slum dwelling has become a way of life.

How Long the Poor have to wait?
If the experience elsewhere is a guide then poverty, slums and urban squat will be a diminishing phenomenon, if the rapid economic progress keeps its pace. Today we would have smaller of the slums, had economic policies of the present were in place 50 years back. Only now, all signs point to a rapidly rising GDP together with rising per capita GDP. With rise in income level, tendency to head to the slums has lessened. Die-hard slum dwellers who wish to pay no taxes and spend nothing on housing will most certainly continue to stay there. Others will prefer to move out. This is a normal phenomenon. It happened in US and elsewhere. It will happen in India too. An economic equilibrium has not been reached in the society yet, where enough money in people’s pocket will persuade them to vacate the slums. This won’t we reached for another 20 to 25 years. By about middle of this period with increased availability of housing and higher incomes, the growth in slum dwelling will be arrested. Decline will begin only when much higher incomes are reached (as stated above), provided India does not make the mistake of regularizing the slums/bustees with land tenure on tenable land and other amenities. That is a sure fire method to keep the slums going. People will always wait for free grant of land ownership even if these grants never materialize. Even the possibility of this ever happening in a distant future will keep the slum dwellers in the slums.
Conclusion
Poverty, slums and urban squat are not going to go away in next 20 to 25 years. Reversal of this phenomenon will begin after sufficient economic progress had been made. Eight percent GDP growths is a good sign. With quadrupled GDP in 25 years, there is a good chance that the new and upcoming generation may stay away from slum dwelling. It may take another 25 years before the slums are vacated.

Rich & Poor in India – Redistributing the Gains of Improved Economy

Rich & Poor in India – Redistributing the Gains of Improved Economy

Guest Column by Hari Sud

Careers in India’s political systems have been made or lost on one slogan – Vanish Poverty (Garibi Hatao). This slogan has been the buzzword of the ruling political party, since 1950. The irony is that the slogan makers were, very poor economic managers. From 1950 to 1998, India could boast of one or two achievements only i.e. food self-sufficiency and a bit of improved services to the village folks. In contrast, India failed on every other front. Economy slugged at a low 3.5% growth rate and population multiplied from 400 million in 1947 to 950 million in 1998. These additional mouths have to be fed, housed and provided economic means to make a living. Without that, civil disorder will be, the order of the day. Lucky for India , the political party then in power took control in 1998 and decided to redress all the above grievances. First and foremost on their mind was to accelerate economic growth. This they began by making friends with US. The latter is the prime mover of all economic activities in the world. Also the new leaders had a model in front of them. The Chinese had befriended US twenty years earlier and had gained a tremendous economic advantage. India had to do the same. In addition the economy had to be opened up for foreign competition and investment. Once this was achieved over five years, economy accelerated to 8% growth. Then the primary task before new government(s) was to work hard to redress rich and poor imbalance. Gains on economic front have to be felt by the poor also. For this entrepreneurship has to be encouraged at all levels. Skill base of the private sector becomes very useful. To harness private sector energies, they have to be allowed to retain some of the gains of prosperity. It is they, not the governments, who will pass on the benefits to the less fortunate. Governments in their capacity as overall managers have to ensure that the poor get the benefits of economic gains.

Before we discuss rich-poor income gap, we have to understand it and then quantify poverty. This subject is the favorite of economists worldwide. Huge amount of literature and studies have been conducted and advice offered. Much of it is academic in nature. Some simple concepts on the subject are discussed below.

How has the Poverty Curve Moved in last 50 Years?

There are many ways to measure poverty. Western economists prefer GDP and per capita income as a measure. GDP of less developed countries suffer a currency conversion disadvantage hence another measure – Purchase Power Parity (PPP) has been coined to recalculate GDP. Then again, GDP does not show what segment of the society is poor. It is a measure of overall prosperity of the nation. Indian politicians have their own formula for measuring poverty. They define poverty as lack of three meals a day, enough clothing and shelter. This is hard to quantify and a measure still harder to compare your performance with others. Hence, the Western economic measurement technique has been adopted. One such measure is called GINI coefficient (Index). It measures economic inequality in a country, with zero implying perfect equality and 1 indicating perfect inequality. Wealthy nations with high standard of living in the West, should have a value close to Zero and poor countries have close to One (It is usual to multiply the coefficient by 100 to get a more manageable number). This index, more or less, measures income distribution in a country. In 2005, India had a GINI Index of 37.8, indicating significant inequalities in income distribution. If this index for India increases in next ten years then it means that India has done a miserable job in income re-distribution. Fortunately it is at about same level for a number of years. That means 8% economic growth has provided equal relief to the poor and also made a few more millionaires. The same index for Brazil is 60. The latter indicates that there is a huge income disparity in the country. This leads to one conclusion that if high economic growth is accompanied by high GINI index then poverty reduction via economic progress has been entirely lost. This is true about Brazil.

The above Index is not the best measure of poverty and income mal distribution. Consider this – relatively poor countries of Eastern Europe have a GINI index close 25, but US has an index of 45. That means, income in Eastern Europe (formerly Communist ruled) is well distributed and in US it is not so well distributed. Does it mean that, that poverty has vanished from Eastern Europe ? Not true. It only indicates that low income there is well distributed, with no high-income millionaires/billionaires. At 45, the GINI Index does not state well about US. It only indicates that there are very many billionaires in US. Looking at the prosperity in US and opportunities for everybody, this concept fails to clarify the discrepancy. Hence let us look at other means to study and quantify poverty.

A number of studies undertaken in the last 50 years have tried to explain income disparity in multiple segments of a society in almost all the countries. These concepts are again hard to follow just like the GINI index above. Interestingly, there is an Australian study, which simplifies this concept. It divides a nation e.g. India into five income groups. Then it plots these income groups against incomes. Superimposed on this chart are the Word Bank’s one dollar a day (extreme poverty in 1986 dollar value) and two dollars a day poverty lines. A graph for every ten years starting from 1970 is plotted. The resulting chart gives a little better understanding of poverty. The Chart below shows that in 1970 & 1980, about 40% of the total population in India was below the $1 level. But there is a dramatic shift by the time 1998 rolls in. This percentage decreases to about 20%.

Income Distribution – India





Reference: Australian Government, Treasury reports on Poverty, inequality and Distribution of Income in G20.

The above also shows a definite shift in the incomes towards higher numbers. In fact poverty reduction has made a definite progress in last 20 years. A similar graph for 2005 (unavailable) will show a movement to the right indicating smaller segment below the poverty line and a bigger size of the middle-income group. This fact is evident in India as the middle-income group is making its presence felt.

The same graph as above plotted from available data for China shows similar results. Note that statistics is not the best-kept science in China and available data for China for 1970 and 1980 is confusing. Still let us plot it and see, what it tells us.

Income Distribution - China







Chinese chart is very similar to India’s chart. One glaring difference is that the Chinese chart (1998) has much bigger inverted bell with a flat top, indicating that a big percentage of people have graduated from $1 and $2 a day income to higher income bracket in last 20 years. The forgoing is evident from all reports emanating from China. There is a large population base of 200-300 million on the East Coast, which has distinctly better life style than the rest. They have to thank the Foreign Direct Investments for it.

Hence, both China and India have made enormous progress against poverty. If extreme poverty as per World Bank (in 1986 dollars) is defined as $1 a day, then shift of the graph towards right and its flattening as seen in 1998 graph for both China and India is a good sign. It would appear that still about 15 to 20% of the population is below the poverty line in 1998. One wonders where do the skeptics in the Western media get their figure of 350-400 million people in India below the poverty line.

Changes in India with Economic Progress

These changes are evident as you pass through rural as well as urban India . Slums are cohabitated with high-rise buildings in the cities. Even slums have a significant population of well to do residents except that they have not moved out. Rural India, although still poor, is much better off today than any time in the past. Thatched roofs have given way to slate or cement roofs. One-room hovel residents are dwindling rapidly. Roads and transport has reached the remotest corner. Electricity and clean water, barring a few exceptions are almost everywhere. Schools and medical dispensaries are every 3 miles. Prior to that it was always 10 miles for a primary school and 30 miles for a hospital. All the forgoing is a social change achieved with economic progress. This author hails from a remotest village in Himachal Pradesh. All the forgoing is clearly visible as the author observed during his visit last January. Much of this social change has been induced with self-help. Governments have lent a hand, but government efforts are always slow and cumbersome. Hence people have forced the change on themselves.

Have the Government Poverty Reduction Schemes worked in the Past?

Too many schemes have been implemented to reduce poverty in the past 50 years. None have worked. Bulk of the money is lost in bad management and other significant portion is lost in the bureaucratic hassle. Only scheme, which seem to work in the rural areas is upgrading of the agriculture and general availability of education. Both have provided a stable environment for progress. The urban areas have not done very well. The slum population has multiplied and crime rate has increased. Slum dwellers even if they could afford better living are unable to move out because housing and other facilities are too expensive. Few poverty reduction schemes specifically tailored for the urban areas are successful. Newer of the new schemes – National Employment Guarantees Scheme has been initiated recently. It guarantees employment of 100 days for anybody willing to work, especially in the rural areas. As a matter of fact it was an act of Parliament, which created this scheme in 2005. Funding of this scheme is 75% Central Government and rest from the State Government. In order to make it work, a huge civil bureaucracy is needed, which in itself will eat away the funds allocated. Hence apart from minor benefits here and there, especially during failure of the rains, success of this venture is unlikely. True impact on rural economy and poverty reduction will be when the agriculture is made even more productive. Current production of 2.5 tons of grain from a hectare is high as compared to twenty years back. But it is low compared to US and European standards. A 50% improvement in this sector with better water management, improved seeds and other agricultural inputs will go a long way to change the face of rural India. With higher agricultural productivity, poverty in villages will be a thing of the past.

Targeted poverty reduction programs in urban areas with development of infrastructure like sanitary & waste management, housing, and urban renewal investment etc. have a significant poverty reduction component. Each of these provides meaningful employment together with cleaning up of the cities. These schemes are low on government priority. Hence poverty in urban areas will stick around for a little bit longer.

Conclusion

A figure of 350 to 400 million poverty stricken people in India is false. It is a figure on which Western media and vested political circles thrive. They only wish to foul mouth India’s achievements. The figure is half or even third of that. One point, which needs to be borne in mind is that when the country attains 8% a year growth, income redistribution must go hand in hand. Otherwise the benefits of the national growth to the poor are lost and inequalities become more apparent. Government schemes on poverty reduction other than infrastructure upgrade in rural and urban areas never work. In urban areas industrial activity is already providing significant employment. This in itself provides the biggest push to the poverty reduction. Governments have to help to upgrade the lot of poor with more employment, housing and slums clearance etc.

World Trade Organization (WTO) & India

World Trade Organization (WTO) & India

Guest Column by Hari Sud

India’s Commerce Minister Kamal Nath walked out of WTO meet in Geneva on June 30, 2006 and returned home. It was a well-orchestrated policy to let the West (all the leading industrialized nations) know that India and other developing countries (LDCs) are no longer a push over. The sticking point at this time has been the huge farm subsidies, which the West provides to its farming sector. Massive farm subsidies undercut the competitors and prevent the rest of the world from enjoying benefits of trade. This impasse will persist until the West works harder to level the playing field and help liberalize the trade. Geneva meet has ended. Both the developed countries as well as the LDCs (through a group called G-20) are internally busy to consolidate their respective position before the next ministerial meet. Failure to reach a deal by yearend will prevent the US and the EU, enjoying greater benefits of trade liberalization. Their industrial products, which is the other side of the trade off on farm subsidy cut, will continue to face import restrictions in the LDCs.

What is WTO?

It is a 149-member organization with Pascal Lamay as its head. It represents all the trading nations of the world, who import-export goods & services. Created on Jan1, 1995, it was considered the biggest reform in trade since WWII. Its predecessor, GATT (General Agreement on Tariff & Trade), had a tumultuous 47 years history. GATT made a beginning in 1948, and provided a framework for trade expansion vis-à-vis removing barriers on free movement of goods and services. It provided platform for 8 trade negotiations in its checkered history until 1994, the last trade negotiations the Uruguay Round, resulted in the creation of WTO. In each of these ‘Rounds’ (high level negotiations), the West, mostly Europe, Japan and North America negotiated trade deals with themselves in mind. The developing world including India, China, most of Africa and Latin America were forgotten as backward and without any clout. For Example, the Kennedy Round of 1963 quadrupled the world trade. At that time India and China had not emerged and hence did not figure in the world trade talks. Tokyo Round of 1973-79 quadrupled the already quadrupled world trade in last 25 years. In each case tariffs and trade distorting subsidies were progressively reduced on industrial goods & services. The West enjoyed unprecedented prosperity. US & Japan were the biggest gainers, followed by the all the nations of the Europe. Poor countries stayed poor. Nobody spoke on their behalf, and they had no clout to make their presence felt. There are simple reasons for that. First, the poor countries had no money to compete in the international market with quality goods, second subsidies provided by the nations to encourage development after WWII made their products much cheaper. Hence a die was cast for poor to stay poor. In 1982, China burst on the international trade scene. In 2002, India became an upcoming star for the world to take note. Hence a new trade body was needed to regulate and encourage trade. Hence at the Uruguay Round, a decision was taken to set up a new body (WTO) to manage the growing trade.

Special Mention of Doha Round
Doha Round deserves special attention, as it is the first trade related conference after GATT was re-incarnated into WTO. At a ministerial conference in Doha, Qatar, WTO member countries, 149 in all, agreed to launch new trade negotiations. This time it was different, India and China had emerged on the scene as major trading nations. Also the developing world was not going to sit around idly and watch as the West implement trade policies favoring them-selves. In short, developing countries made it clear that unless the developed world allowed them greater access to their markets, there will be no changes to the multilateral trading framework. A bunch of nations (G-20) spearheaded this policy with India & Brazil as its leaders. The G-20s approached the negotiations with the developed world with three main areas of unhappiness:

Discriminatory tariffs on goods and services between developed world and the developing world as against tariffs they use between themselves. This prevented a level playing field for all the developing nations of the world.
Farm subsidies, which the developed world gives to its farmers, distort the cost structure. Agricultural production in EU & USA is heavily subsidized. These subsidies have been in place for decades. Major beneficiaries of these subsidies are US corporate farmers, and French farm and processing sector in the EU. With these subsidies in place the developing world loses its advantage. Additionally farm imports from developing world are under heavy tariff, which effectively keeps these products out.
A major irritant in the trade policies have been the textile exports. Quota system effectively killed any cotton textile business from prospering in the developing world. Luckily, the EU & US relented on these policies. As of last year this policy has been disbanded.
Doha Round discussions began with this background. WTO intentions were good except these could not be translated into concrete policies. These irritants have resulted in the deadlock in negotiations. Brazil the most efficient agricultural products producer has concentrated its energies during Doha Ministerial discussions on reduction in farm subsidies in EU and US. India & Pakistan are concentrating on textiles and farm produce. Additional trade concessions on service sector have also been sought by India. The service sector is the key to India’s future as an economic power.

The Current Impasse and the Looming Time Table of 2006
The trade discussions take long-long time to make even a small headway. Ministers, who discuss at the meetings, revert back & forth on their position as their home governments like or dislike progress at the talks. The current inconclusive talks in Geneva were the continuance of earlier talks in Hong Kong. The latter were also inconclusive. Politically developing countries are unlikely to accept any formula on their industrial tariffs, without corresponding cuts by the developed countries in subsidies and tariffs. Anything less will be a political suicide for any political system in a democratic country. But there is a deadline looming. The present US President has been empowered by the US Congress to finish trade negotiations by middle of 2007 and present them with a trade deal, for an up or down vote. This fast track mechanism has actually simplified trade negotiation process with the world’s biggest trading nation i.e. US. In order for that to happen, virtually all trade discussions have to be completed by end of 2006. This deadline is driving all the current hectic activity. US being the most powerful of all the trading nations and with its currency as the basis of trade deal settlement is in the driver’s seat.

Agriculture is at the heart of this round of talks. Consider these few statistics: Agricultural trade is about $800 Billion worth worldwide. It is about 9% of the world total trade. Unfortunately it is the most protected sector. EU is the largest trader in agricultural products including internal trade between member countries. It exports $350 Billion worth of agricultural products (including internal trade) and imports about $380 Billion. US are distant second with $80 Billion in agricultural exports. The sticking point is amount of subsidies and tariffs to be cut by both EU & US. G-20 has urged EU to cut 54% of its tariffs on agricultural products and US to slash 75% of its agricultural subsidies. These are unacceptable to the EU & US. In return they have offered 39% reduction in tariffs and 53% reduction in subsidies.

The above gap, in what the developing countries want and what the developed countries have offered has not changed one bit in last six months of negotiations, hence the angry walk out by the India’s Commerce Minister from the Geneva discussion. Although the Western media heralded it as an astringent Indian attitude yet the truth is otherwise.

If no deal is reached and the US Congress deadline passes then this missed opportunity will not herald an end of the world trading system. Trade will continue as before. But its expansion may not be as dramatic as one would hope. Next opportunity may not arise for a decade or so. At that time, another ‘Round’ of discussions will be initiated and US Congress may empower its president to give another opportunity to negotiate a fast rack trade treaty.

Success or Failure of these Talks
In macro terms, India’s Commerce Minister laid out the impact of these talks on India. He said that success would mean that India could hope to boost its growth from about 8% to 10-11% in five years. Failure could take away a percentage or two from its growth. Hence stakes for India are very high. Similar benefits will accrue for Brazil, Pakistan, and South Africa. Other smaller nations will enjoy benefits in varying degrees. For the developed world of EU, and US, there will be a great satisfaction with the opening up of the markets, which hitherto have been closed. Industrial activity in Europe & US will multiply. As the developing world exports more, they will import more of West’s industrial goods & services. Hence, benefits to both groupings are huge. World trade could see a multifold expansion in twenty years.

World Bank has estimated that freeing trade of all barriers & subsidies, about 320 million people, living on $2 a day will be lifted out of the poverty line in about ten years. Other analysts have put a higher figure of 440 million. With that kind of possibilities, success at these negotiations is of great importance. Although, next ministerial discussions of WTO have not been scheduled yet both sides are busy re-evaluating their position. Soon they will meet again with upcoming deadline in mind. In any trade talks progress is slow. In these talks, the fundamentals have already been sorted out. It is the details, which are a contentious issue. Soon these will be sorted out too.

Challenges Within the EU Community, which are hindering Trade Talks
EU Commissioner holds the mandate to negotiate on behalf of the 25 member nations, but its hands are tied. The Common Agricultural Policy (CAP) of EU and its reform may present a big hurdle. EU also knows that in order to get a better access for its industrial goods, they have to give up something. None of the member nations are willing to give up anything. Hence it may cause split on national lines. France, a major agricultural products producer would veto any deal, which contains a significant subsidy cut. On the other hand Briton and Germany would prefer reduced tariffs worldwide for their industrial products. In short, there is unlikely be a deal in the agricultural sector without French being on board. They are unlikely to be onboard without private incentives to them from within the EU. So far nothing has happened. EU commissioner is shuttling between capitals looking for an opening to break the impasse. He has not succeeded so far.

Is failure of Trade talks an Option?
If the talks fail, credibility of WTO will at stake. Nobody will take it seriously anymore. Bilateral trade agreements between nations will proliferate. This will circumvent the whole concept of multi-lateral trade co-operation. A huge market opening opportunity will be missed and all that have been accomplished in prior discussions may or may not be salvaged. In the absence of a global instrument, trade dispute resolution may also suffer. Worst impact will be on the developing countries. Their chances of progress will be curtailed. All the above will reflect poorly on WTO.

Let us hope that these talks succeed. It is in the greater interest of developed and the developing countries that this impasse is broken. Next such opportunity may be a decade away. At that time new realities will have to be taken into consideration. Some of the developing countries like India & China may ask for bigger piece of action. The West again may refuse and impasse may continue. By then WTO will be irrelevant and would have to be re-incarnated into something else. In the preceding years bilateral trade agreements will take the place of multi-lateral agreements. These bilateral agreements will be harder to circumvent, should any time in future WTO agreement is negotiated.

India - food security & Its future

India - Food Security & Its Future



The first green revolution in India began in 1960s. It resulted in doubling of food grain production from 120 million tons in 1960 to 210 million tons today. It was the combined effort of high yield seeds, extensive use of fertilizers, land reforms and irrigation schemes that resulted in this remarkable achievement. Food self-sufficiency was achieved by 1984. As the year 1995 dawned, India was a net food exporter. This remarkable feat also included increased acreage of cultivable land from 116 million hectare in 1960 to 170 million hectare in 1990. In 1995, 850 million souls had about 190 million tones of food grain to share. Although the forgoing could not be classified as excess, yet it was enough to feed everybody about 2,200 calories a day. A few unlucky one did not get the basic minimum food intake, but it was a far cry from the days of famine and ration of 1950, 1956, 1965-67 and 1975-77.

In the last ten years, India has added 150 million more mouths to feed but has increased food production by only 15 million tons. Hence there is beginning to be an imbalance in supply and demand. Government of India in last 12 months has initiated steps to import as much as 5 million tons of wheat from Australia and elsewhere. It is not for lack of trying that food grain production has not kept up pace, but the present food grain production infrastructure can only produce this much. For a bigger harvest in coming years, different initiatives have to be taken to jump-start the stagnant agriculture sector.

This initiative could be three fold:

a) Use technology together with newer cultivation techniques.

b) Water management with harvesting excess Monsoon rainwater in the North and transporting it to the parched West and South.

c) Ensuring a better return to the farmers.

Each of the above has been under Government of India’s scanner. The latter is concerned about possible social upheaval, should the masses go hungry. The forgoing is not only a serious challenge in India, it has also been recognized as a serious challenge in China. Both India and China while focusing heavily on industrialization have not given due attention to food grains production. Now it is becoming increasingly important for both to shift focus a bit from industrialization to agriculture. China is worse off because rapid industrialization has created a massive acid rain problem. Acid rain is having a detrimental impact on agriculture. Already their wheat production of 125 million tones in 1995 has declined to 100 million tones in 2005. While in India, acid rain is not an issue increasing population will be one.

How Technology Will Help?

Technology is going to play a major role to take the grain production from about 210 million tones today to 300 million tons by 2020 (i.e. 6% increase per year). That much food supply is needed to feed the population, which by then will hit 1.4 billion mark. Any political party compromising on that requirement will not survive the ballot box. Hence technology has to become essential part to deliver higher food grain supply needs. Technology will play its role in the following ways:
Agricultural input management
Better seeds and cultivation techniques
Mechanization of Agricultural Machinery and Handling

A farmer has to become a part agronomist and a part economist. He has to depend upon the information age to know the weather pattern in advance (prior to planting crop), inputs like fertilizers needed for a particular crop, pest control schedule to safeguard crop and maximize advantage from the local irrigation schemes. Once the crop is harvested, the storage and handling losses are to be minimized with careful planning and good local storage. A farmer has to become party to the distribution system to prevent mal-distribution and handling losses. Genetically Modified crops (GM) will play a vital role in future. It should be remembered that Dr. Norman Borlaug’s developed the dwarf variety wheat in Mexico, which was adopted in India and thus began the first green revolution. Without adopting newer varieties of seeds and scientifically planned inputs, it will be harder to boost food grain output. Also Indian agriculture is heavily dependent on labor. In other words it is not fully mechanized. Although, tractor has become common in India to plough the fields, yet further mechanization until harvesting is scanty. There is one very basic requirement, which is mother of all agriculture output, i.e. timely rains and irrigation. Monsoon rains of June-September play a vital role in a particular year’s crop success. Timely rain helps; delayed rain or no rain hurts badly.

Water Supply Situation In India

Geographically, India has two major river basins. In the north, it is the Ganga River Basin, which together with Jamuna and other smaller rivers drain the rainwater and melting snow from Himalayas into the Bay of Bengal. This drainage system is joined by mighty Brahmaputra, which hugs the northern Himalayan contour in Tibet, then bursts into Assam plains and finally joins river Ganga in Bangladesh. This northern basin is surplus in water (34%) and acts as major source of water for irrigation and also inflicts misery during the Monsoon floods. This forgoing is supplemented in the West by five rivers, which originate in the Himalayas and drain south through Punjab and Pakistan into the Arabian Sea. These rivers, two in India and rest in Pakistan have been dammed carefully and canal system provides irrigation to Punjab, Haryana and northern Rajasthan. These rivers and canal system is independent of the Ganga river basin, although they all originate in different parts of Himalayas.

Southern river basin of Godavari, Krishna and Cauvary (and also Mahanadi in Orissa) provides the water and irrigation needs of the peninsular India. This area is south of Vindyachal mountain ranges, which runs roughly east to west, and stands as a hump in the middle of India. It is a dry and parched plateau except during the rainy season it receives sufficient rain to sustain a few rivers. Two of these rivers (Narmada & Tapti), flow east to west horizontally, and discharge into the Arabian Sea. Three more rivers, Chambal, Betwa and Son also originate from Vindya Ranges and flow north and join the Ganga river system. The only reason that these forgoing three rivers flow north are that the high plateau of Vindaya Ranges prevents drainage south. The above-mentioned southern peninsular river system irrigates the rice fields of Andhra Pradesh, Tamil Nadu and Karanataka. Irrigation dams have been built on all the rivers and water and power potential had been harnessed. Although these four mighty rivers flow in the peninsular India, yet it is deficient in water (-20%). This deficiency prevents the southern India from utilizing its full agricultural potential. Hence, there is always a hope that some day, surplus water from the northern basin will be transferred south. It is easier said than done. Main problem is the Vindaya plateau. It runs 300 to 600 miles wide with an elevation of 300 to 1500 metes. Taking water over this hump is beyond present day engineering skill except at the expense of huge amount of electric power consumption. It will consume about 40% of all the power India generates today to undertake this step. Three times in last 50 years, this idea has been advanced and three times it has been rejected as unworkable.

The only idea, which seems to make sense, is to transfer the surplus northern water, westwards towards Rajasthan and Gujarat via Haryana. There is no major elevation disadvantage in going west and southwest. Minor mountain ranges can be circumvented. With the arrival of fresh water, parched lands of Rajasthan and Northern Gujarat will become fertile lands. A canal system about 1,600 miles long will eventually bring prosperity to these areas and add additional much needed food grain output to India. The forgoing scheme will also require interlinking Ganga, Jamuna and other Ganagetic plain rivers first. This could be further improved if surplus water of Brahmaputra is also added to this canal system. But Bangladesh stands in the way and is not amenable to any proposal.

Rainfall Pattern In Indian Subcontinent

Rivers in the north are perennial in nature, with a constant flow from the melting snow of the Himalayas. Their flow multiplies four times over during the rainy season from June till September. Annual average rainfall in Eastern India (Assam & Arunachal) is about 200 centimeters, with hilly areas receiving a much higher amount. All the rain, which falls in Arunachal, also flows back into Assam, hence adding to the tremendous surplus in water in River Brahmaputra. This becomes source of misery and destruction year after year. Northern Gangetic plains and the middle Himalayas receive about 100 to 250 centimeters of rain with Himalayan ranges receiving the higher amounts. All this water eventually flows back into the Gangetic basin and causes floods. By the time river Ganga & Brahmaputra join together in Bangladesh, they have too much water and all of it flows into Bay of Bengal but not before inflicting tremendous damage there.

Western Indian plains of Punjab, Haryana and Western UP receive anywhere from 100 to 150 centimeters of rain. This much rain is sufficient to grow good crop as well as keep floods in check. Occasionally the five rivers of Punjab overflow their banks, this happens when greater amount of rain falls in western Himalayan region. These floods have now been contained with floodwater being stored in mighty dams both in India and Pakistan. This later is used to sustain a very progressive agriculture. That does not mean that floods do not happen in Punjab and Pakistan. They do happen but happen less and less.

Western Rajasthan and northern Gujarat receives only 20 to 30 cm of rains. This much rain is insufficient to sustain agriculture, hence making a living there is a bit harder.

The southern peninsular region of Andhra Pradesh, Tamil Nadu and Karnataka receives about 50 cm of rainfall during the June-September season but gets additional 35 centimeter of rains during winter October-March time frame, giving it a reasonable total of about 85 centimeters of rain in a year. This much rain although not sufficient but sustains life there. Western Maharashtra, Madhya Pradesh and part of Orissa receives about 50 to 75 centimeters of rain during June-September time frame, but receive no rain during the winter period, hence these areas are perpetually deficient in water resources. West Coast of India receives a huge rainfall of about 100 to 250 centimeters in a year. This area has never been deficient in water. Sometimes it rains so much that cities on the West coast of India start floating in water like what happened in Mumbai this year.

Overall India receives average of 100 to 150 centimeters of rain in a year. This is a respectable amount. But the vagaries of the weather make it harder to forecast where and when the rain will come first. Farmers depend upon timely rain; otherwise the crops suffer a tremendous set back. The above amount of rainfall results in about 4,000 Billion Cubic Meters of water looking for an exit to the sea. Since 75% of this precipitation occurs in June-September time frame, hence much of this water is looking for an exit in a hurry, in this time frame. At times it overflow the banks and into the cities and villages in the surrounding areas. It has been an accepted theory that about half of this water (2,000 Billion cubic meters) soaks the soil, which has been parched during the summer months; remaining half becomes the river run off. 50% of the this run off is in Ganga-Brhmaputra basin, 20% in Punjab rivers, 10% in central India rivers and remaining 20% in the southern peninsular rivers. In short, there is too much water in the northern basin and much less in the southern peninsular region. As stated above, north has a 34% surplus of water and south has 20% deficiency.

Cost and Benefits of Taking Gangetic Basin Water To Rajasthan

It is a common knowledge that North-South link has to wait until future engineering achieves a breakthrough and makes it possible to pump huge amount of water over 300 meters height inexpensively or canal boring could be done over a distance of hundreds of miles through the central Indian plateau. There is something, which is possible today i.e. taking the surplus Gangetic basin water to Rajasthan. As much as 1,000 billion Cubic Meters of surplus water could be transferred to Rajasthan and Gujarat. It will bring additional 25 to 30 million hectare land under cultivation. This bonanza will produce additional 50 to 60 million tons of food grains annually. In addition, floods and misery known year after year in the Gangetic basin will be a thing of the past. If ever a deal is truck to dig a canal through Bangladesh to take excess water of Brahmaputra, then more land could be brought under cultivation and the benefits will multiply.

The above is feasible now. Costs may be as much as $40 billion over 15 years to build dams; storage facilities and digging up a main canal and multitude of smaller canals to distribute the available water, but the payback will be fast. An estimated $60 billion worth of crop will be available for consumption or export every year. Ancillary industry will most likely add an equivalent amount to the national GDP.

Ensuring Better Returns to the Farmers

India’s farmers are vary from very wealthy to very poor.. Farmers with large holdings are wealthy. They enjoy the benefits of government aid, mechanization and technology. Farmers with smallholding are worst off. The latter is the backbone in food grain production. It is they who need to be looked after most. There are only two ways farmers could be helped:

Subsidize agriculture on the same line as the Western countries do to make farming profitable.

Or

Price structure should be such that it ensures a fair return to the farmers

Help in form of subsidy has created more problems than it ever solves. Dependence on subsidies kills initiative. Hence this alternative has to be discouraged. West (Europe and US) who heavily subsidize their farmers is in fact have built a monster at their doorstep. Subsidies cannot be easily eliminated without a political suicide for the ruling government. Subsidies also make international commerce and trade difficult. Today, WTO talks in Geneva are stuck on the subsidy issue. If the agricultural subsidies in Europe and US are removed then for example, wheat prices in the international market, which currently are in the $140 per ton range, will increase to about $220 a ton. This will make international wheat price at level with Indian wheat prices and remove a major irritant in trade relationship between India and the West. Alternative to direct subsidies is easy long-term credit, better irrigation, higher availability of power, and easy access to other agricultural inputs including mechanized harvesting.

Also stable and guaranteed price is the best mean to ensure prosperity to the farmers. Currently state owned procurement system is highly inefficient. Losses of food grains in storage and transit amount to about 10%. This ultimately reflects in the price the state systems offer to the farmers. If these losses could be cut to bare minimum, the farmer will get 10% or so better price for his produce. Additional money in his pocket will allow him to pay off his credit easily and modernize his farming. Not only that it will give him a more stable life style. Other areas for improvement include further land reforms and easy access to technology to make him a smart farmer. Ultimately, higher output per acre with a combination of the forgoing will translate into more money in farmer's pocket.

Conclusions

In order to boost agricultural output from current 210 million tons to about 300 million tons, technology has to play a greater role. Hopefully immediate needs of the rising population will be met with the combination of technology and efficient management of water resources we already have. Next quantum leap in agriculture cannot be achieved without bringing additional areas under cultivation. There is no more agricultural farmland left to cultivate except in the arid west, southwest and in peninsular India. Both will require transport of surplus water from north to south or southwest. The former is proving to be difficult to achieve. But the latter is achievable. It will take about 15 years to implement this scheme and 5 years to plan. By 2025, India can add additional 50 to 60 million of food grains to a total of about 350 to 360 million tons a year. Hopefully by then the West would have eliminated its agricultural subsidies. At that time India could enter export market in a big way.