For decades, mothers around the world told their children not to waste food because of the millions of starving people in India. That India was a beggar with its ministers running around the world begging for aid from every country that could spare some.
Today the situation seems radically different, at least on the production side. As Deepak Gopinath writes in his India’s Agriculture on the Brink article on Yale Global Online:
- “India overtook Thailand to become the world’s biggest rice exporter – shipments accounted for 25 percent of global exports. Wheat exports also rose sharply, with India’s share reaching 5 percent; the country also overtook Brazil to become the world’s biggest exporter of buffalo, capturing 24 percent of the global beef market.”
- “High levels of procurement have resulted in rapid accumulation of grain stocks, now 66 million tons, more than double the required buffer. To place this in perspective, India’s wheat stocks are equivalent to Australia’s entire annual production of the grain, while its stocks of rice are 50 percent more than Thailand’s yearly output.”
India is no longer the sleeping giant of agriculture. So what’s the problem? The first one is what every one knows & what Gopinath argues.
- “The level of stocks far exceeds the government’s storage capacity and results in significant wastage. The government has estimated preventable post-harvest losses of food grain at about 20 million tons per year, equivalent to 10 percent of total production. Faced with excess stocks and need to make room for the next harvest, the government is forced to resort to exports.”
So what’s wrong with exports? Wouldn’t that help India’s balance of payments problem? Well, these exports are not by choice because India’s poor remain hungry and without adequate food. And secondly, as Mr. Gopinath argues, these exports are not sustainable. Why?
- “India’s breadbasket states are reaching the limits of productive capacity. The overproduction of grains due to ever-rising MSPs has rapidly depleted underground aquifers and sharply reduced soil.”
- “The government will have no alternative but to increasingly depend on international markets when output in the major grain-producing states starts to lag demand.”
So India’s agriculture is dysfunctional. Serious stuff without doubt but surely not a nightmare.
Just you wait as Eliza Dolittle & Deepak Gopinath would say to our readers. Why? Because the Indian Electocracy is about to get serious. And when do they get serious? When they run scared of losing the next election. And what do they do when they get scared? Launch a populist program to win the next election regardless of the long term damage to India and the Indian people.
Right now, the ruling party is pushing a Food Security Bill through the Parliament as its main plank for the 2014 election. This is the brain child of Mrs. Sonia Gandhi, India’s ruling Viceroy, who learned all she knows from the stunning successful 1971 Garibi Hatao (remove poverty) campaign of Mrs. Indira Gandhi.
The only objective of Mrs. Sonia is to make her son the next prime minister of India. She needs to win the 2014 election for that and so she needs to get all the poor to vote for her son. So the campaign will be run on her & her son delivering food to the poor. This is why we call her India’s Viceroy. Complete disregard for the country in the interests of personal objectives is quintessentially viceregal behavior.
What does this bill do? According to Deepak Gopinath:
- “The bill creates a right to food for two-thirds of India’s 1.2 billion people and requires the government to distribute heavily subsidized food grain on a massive scale”
What impact will this have?
- “The law will reduce exportable surpluses over the next two years because it will require the FCI to carry higher stocks of grains in order to avoid having to resort to large, expensive imports in case of a drought.”
- “The law will also hasten India’s transformation into a net grain importer by putting additional pressure on already overstressed farmland.”
So this bill will force India’s integration into global agricultural markets and benefit wheat producers in Americas, pulse & palm oil producers like Australia, Indonesia, Malaysia & Myanmar.
What about Indians? As Gopinath writes,
- “Indians will lose out. Food inflation, primarily driven by protein-rich foods such as pulses, dairy, meat and eggs, in addition to post-harvest shortages of grains in the open market, will continue to weigh on incomes. And price volatility will increase as the country’ import dependency increases exposure to the vicissitudes of global markets.”
If India has a current account deficit now, imagine how bad it will get when India begins to importing food to distribute to 800 million people. Where will the Rupee go? What will happen when food inflation, already high, ratchets up so high that people won’t be able to afford food? And all this because one mother wants to make her son the next prime minister.
But what about India’s veteran leaders? The ruling party has educated-Indians like Prime Minister Dr. Manmohan Singh with his Oxford DPhil degree in Economics, Finance Minister Chidambaram with his Harvard MBA and Planning Commission Deputy Chairman Montek Singh Ahluwalia with his Oxford MPhil degree in economics. Why don’t they speak up?
Because they are mere servants of the ruling party, meaning Sonia Gandhi. In the Indian electocracy, nothing matters except the power to win elections and none of these Oxford-Harvard degree-holders can win an election, not even in their own dreams.
So the food security bill will pass and become law before the election campaign begins in earnest. After that, it really doesn’t matter who wins the election. Because once an entitlement as basic as food is given to 800 million people, taking it away will prove suicidal for any politician, any political party.
This is why Deepak Gopinath ends his article with his vision:
- “The sleeping giant of global agriculture may be waking to a nightmare.”
Only the Indian electocracy can convert India’s success in agriculture into a nightmare. With rulers like these, do the Indian people need enemies?
Send your feedback to email@example.com Or @MacroViewpoints on Twitter