Resources Research

Making local sense of food, urban growth, population and energy

How GM ‘science’ misled India

leave a comment »

For the last decade, the reckoning of what agriculture is to India has been based on three kinds of measures. The one that has always taken precedence is the physical output. Whether or not in a crop year the country has produced about 100 million tonnes (mt) of rice, 90 mt of wheat, 40 mt of other cereals (labelled since the colonial era as ‘coarse’ although they are anything but, and these include ragi, jowar, bajra and maize), 20 mt of pulses, 30 mt of oilseeds, and that mountain of biomass we call sugarcane, about 350 mt, therewith about 35 million bales of cotton, and about 12 million bales of jute and mesta.

The second measure is that of the macro-economic interpretation of these enormous aggregates. This is described in terms of gross value added in the agriculture (and allied) sector, the contribution of this sector to the country’s gross domestic product, gross capital formation in the sector, the budgetary outlays and expenditures both central and state for the sector, public and private investment in the sector. These drab equations are of no use whatsoever to the kisans of our country but are the only dialect that the financial, business, trading and commodity industries take primary note of, both in India and outside, and so these ratios are scrutinised at the start and end of every sowing season for every major crop.

The third measure has to do mostly with the materials, which when applied by cultivating households (156 million rural households, of which 90 million are considered to be agricultural only) to the 138 million farm holdings that they till and nurture, maintains the second measure and delivers the first. This third measure consists of labour and loans, the costs and prices of what are called ‘inputs’ by which is meant commercial seed, fertiliser, pesticide, fuel, the use of machinery, and labour. It also includes the credit advanced to the farming households, the alacrity and good use to which this credit is put, insurance, and the myriad fees and payments that accompany the transformation of a kisan’s crop to assessed and assayed produce in a mandi.

It is the distilling of these three kinds of measures into what is now well known as ‘food security’ that has occupied central planners and with them the Ministries of Agriculture, Rural Development, Food and Consumer Affairs (which runs the public distribution system), and Food Processing Industries. More recently, two new concerns have emerged. One is called ‘nutritional security’ and while it evokes in the consumer the idea which three generations ago was known as ‘the balanced diet’, has grave implications on the manner in which food crops are treated. The other is climate change and how it threatens to affect the average yields of our major food crops, pushing them down and bearing the potential to turn the fertile river valley of today into a barren tract tomorrow.

These two new concerns, when added to the ever-present consideration about whether India has enough foodgrain to feed our 257 million (in 2017) households, are today exploited to give currency to the technological school of industrial agriculture and its most menacing method: genetically modified (GM) or engineered seed and crop. The proprietors of this method are foreign, overwhelmingly from USA and western Europe and the western bio-technology (or ‘synbio’, as it is now being called, a truncation of synthetic biology, which includes not only GM and GE but also the far more sinister gene editing and gene ‘drives’) network is held in place by the biggest seed- and biotech conglomerates, supported by research laboratories (both academic and private) that are amply funded through their governments, attended to by a constellation of high-technology equipment suppliers, endorsed by intergovernmental groupings such as the UN Food and Agriculture Organisation (FAO) and the Consultative Group on International Agricultural Research (CGIAR), taken in partnership by the world’s largest commodities trading firms and grain dealers (and their associates in the commodities trading exchanges), and amplified by quasi-professional voices booming from hundreds of trade and news media outlets.

This huge and deep network generates scientific and faux-scientific material in lorry-loads, all of it being designed to bolster the claims of the GM seed and crop corporations and flood the academic journals (far too many of which are directly supported by or entirely compromised to the biotech MNCs) with ‘peer-reviewed evidence’. When the ‘science’ cudgel is wielded by the MNCs through their negotiators in New Delhi and state capitals, a twin cudgel is raised by the MNC’s host country: that of trade, trade tariffs, trade sanctions and trade barriers. This we have witnessed every time that India and the group of ‘developing nations’ attends a council, working group, or dispute settlement meeting of the World Trade Organisation (WTO). The scientific veneer is sophisticated and well broadcast to the public (and to our industry), but the threats are medieval in manner and are scarcely reported.

[This is the first part of an article that was published by Swadeshi Patrika, the monthly journal of the Swadeshi Jagran Manch.]

Written by makanaka

July 21, 2017 at 18:53

Eating out, or India’s exorbitant world food bill

leave a comment »

(This article was published by Vijayvaani in June 2017.)

In the Konkan, small electrically operated oil presses that ingest limited amounts of dried copra to expel oil for households to cook with are common. These can press enough in a day (electricity supply permitting) to fill several dozen glass bottles with coconut oil. As such a filled bottle of freshly pressed coconut oil usually sells for Rs 130 to Rs 160, the price per litre may be estimated at about Rs 180. This price compares quite well with the price range of Rs 190 to Rs 220 that is paid by the household buyer for a litre of branded coconut oil.

But it compares not at all with the trade price of an imported shipment of sunflower-seed or safflower oil which in 2016 was imported into India at an average price of just under Rs 60 per kilogram. India imported 1.53 million tons of sunflower-seed or safflower oil last year, and the Rs 9,080 crore spent on it pushed the total amount spent on imported ‘edible’ oils to beyond the Rs 70,000 crore mark. [The cultivation of oilseeds, like the cultivation of all ‘commercial’ crops that are not food staples, is a matter of crop choice, for which see ‘Why our kisans must make sustainable crop choices’.]

Palm oil

Both by weight and by the total amount paid for it, palm oil is the most visible imported food commodity in India today, and has been for the last five years. In 2016 India imported 8.25 million tons of palm oil (the supplying countries being Malaysia and Indonesia) for which the importing agencies paid Rs 38,900 crore. This immense annual flood of a sort of oil that ought never to have touched our shores let alone ooze into our home kitchens and canteens came at less than Rs 48 per kilogram last year. For this reason – the absurdly low price per landed ton of Malaysian and Indonesian palm oil, a low price that hides from the Indian consumer the deforestation devastation and species extinction in those countries, new cooking oil blends are being shoved into the foods market every other month by the edible oils industry.

Biomedical research which is independent and not either funded by or influenced by the oil palm industry and edible oil traders (which means the world’s largest commodity trading firms) indicates that palm oil, which is high in saturated fat and low in polyunsaturated fat, leads to heart disease. It is considered less harmful than partially hydrogenated vegetable oil, but that is no redemption, for palm oil can under no circumstance be compared to our traditional cooking oils, coconut included.

The colonisation of the Indian kitchen and of the processed foods industry by palm oil has taken place only on the basis of landed price per ton, and that is why this oleaginous menace is now found in many everyday products such as biscuits and crackers and cookies (which school children develop addictions for), snack chips, shampoos, skin care and beauty products, and even pet food. [For a longer discussion on this problem see ‘Let them eat biscuits’ and ‘Cornflakes and oats invasion, 10 rupees at a time’.]

Soya oil

The next largest oily invasion is that of soyabean oil, of which 3.89 million tons (mt) was imported by India in 2016 (3.5 mt in 2015, 2.1 mt in 2014). Most of this was of Argentinian origin, just over 3 mt, and because more than 98% of the soya that is grown in Argentina is genetically modified (GM) the millions of tons of soyabean oil India has imported from that country has been used, blended, fractionated, caked and consumed by humans and animals with no indication about its GM origin and with no tests whatsoever for its effects on human and animal health. In terms of rupees per landed kilogram of soyabean oil, at about Rs 53 it is between palm oil and sunflower-seed or safflower oil. These landed prices show dramatically the effect exporting countries’ subsidies for a commodity category have on the related industry (edible oils) in an importing country.

Just as the vast palm oil plantations in Malaysia and Indonesia have waxed luxuriant in place of the old growth tropical rainforests that were cut down, turning the wildlife of these forests into hapless refugees, swelling the lucrative and thoroughly illegal forest timber trade, so too have the vast soya plantations in Argentina immiserated that country’s rural population and caused hunger because of the soya monocrop that has replaced their food biodiversity and whose need for fertiliser grew (as it did with Bt cotton in India) instead of shrinking. Both these long-drawn out eco-social catastrophes have been prolonged because of the inability or unwillingness of Indian consumers and regulatory agencies to acknowledge the faraway effects of our considerable ‘demand’ for palm oil and soyabean oil.

Pulses

Second to palm oil by weight amongst food commodities imported by India is pulses, of which 6.18 mt were imported in 2016 for a price of Rs 27,700 crore. The annual import pattern of a decade of 4 mt to more than 6 mt of imported pulses last year are a large fraction again of the average 18.7 mt of pulses a year grown in India for the last five years (until 2016-17).

Between 2003-04 and 2009-10 the quantity of pulses (tur or arhar, gram, moong, urad, other kharif and rabi pulses) harvested scarcely changed, averaging 14.2 mt over this period. There was a jump in 2010-11 to 18.2 mt and then another plateau followed until 2015-16, with the average for those six years being 17.7 mt. With the 22.7 mt estimated total pulses harvest in 2016-17, we can hope that another plateau is being scaled, and indeed this pattern of a plateau of several years followed by a modest increase does tend to indicate the following of a more agro-ecological cultivation of pulses (these being in rainfed farms) than intensive cultivation dependent on fertiliser, pesticide and commercial seed. [This does have much to do with cultivation practices in different regions, for which read ‘Seeing the growers of our food and where they are’.]

Sugar

What is a new concern is an item that by weight is fourth on the list of food commodity items imported, and that is sucrose: India imported 2.11 mt in 2016, in 2015 it was 1.6 mt, in 2014 it was 1.37 mt. The country with the greatest consumption of sugar, estimated by the Ministry of Agriculture and the Department of Food and Public Distribution to be around 25 mt per year and growing disproportionately above the natural growth in the number of households, the processed and packaged food sector is the destination for the 2.11 mt of sucrose imported in 2016. A ready consumer for the sucrose is the commercial fruit juice sector, which bases its produce on a small amount of fruit pulp (vegetable extract is often added for bulk), water, chemical preservatives, food-like colours, artificial flavours and sweeteners.

The giant bulk of our sugarcane harvests distract from the ratios calculated – that a ton of raw sugar is obtained from 13 or 14 tons of cane. (This is usually net of jaggery / gur / khandsari and also net of molasses, which is used by distilleries and animal feed.) The mountains of bagasse – the crushed residue from which the sugar has been extracted – which remain are used in the paper and pulp industry, are an ingredient in cattle feed, and are used as biofuel. [Commercial crop or food crop is the question every cultivating household faces. See one district’s example in ‘Masses of cotton but mere scraps of vegetables’.]

Nuts

At 730,000 tons imported in 2016 and under the international trade category of ‘edible fruit and nuts’ is cashew nuts and Brazil nuts, on which Rs 8,345 crore was spent. A second important sub-category is ‘dates, figs, pineapples, avocados, guavas, mangoes and mangosteens, fresh or dried’ and 350,000 tons were imported in 2016 (for Rs 6,204 crore), while 280,000 tons of apples, pears and quinces, 182,000 tons of ‘other nuts, fresh or dried’ were also imported.

Under 23 main categories food commodities, which include 167 sub-categories and more than 400 subsidiary categories, the bill for imported foods (including dairy and beverages) and food products that we purchased from all over the world in 2016 was USD 22,041 million (USD 22.04 billion), or at the average rupee-dollar exchange rate for 2016, Rs 152,088 crore! In 2015 this bill was USD 20,877 million which at the average annual rupee-dollar exchange rate for 2015 was Rs 137,794 crore. In 2014 this bill was USD 19,372 million which at the average annual rupee-dollar exchange rate for 2014 was Rs 123,015 crore.

Globalisation

These amounts are astronomical and underline the strength of globalisation’s thrall by which we are gripped, exerted upon us not only by the World Trade Organisation but also by the agreements that India has signed (or intends to, and demonstrates intent by importing) with regional trade blocs of the European Union, the OECD and ASEAN. The financial allocations to some of the largest central government programmes, and the budgetary sums of some of the biggest successes in the last three years shrink in comparison to the size of these purchases: the spectrum auction in 2015 brought in Rs 110,000 crore, the 2016-17 central government pensions budget of Rs 128,166 crore, the Rs 47,410 crore transferred so far as subsidy directly into accounts under the Direct Benefit Transfer for LPG consumer scheme, the expenditure of Rs 51,902 crore in 2016-17 on MGNREGA (the highest since its inception).

Bringing about stability in farmers’ incomes (let alone an increase), encouraging rural and peri-urban entrepreneurship based on traditional foods cultivated by agro-ecological methods, ensuring that consumers can find [read about the link with inflation in ‘The relative speeds of urban inflation’] and are assured by the quality of food staples which are free of GM ingredients, chemicals and additives, and the saving of enormous sums of money can all be had if we but reduce and then cut out entirely the wanton import of food and beverages, and processed and packaged food products.

Masses of cotton but mere scraps of vegetables

with one comment

The sizes of the coloured crop rectangles are relative to each other based on thousand hectare measures. The four pie charts describe the distribution of the main crops amongst the main farm sizes.

For a cultivating household, do the profits – if there are any – from the sale of a commercial crop both enable the household to buy food to fit a well-balanced vegetarian diet, and have enough left over to bear the costs of its commercial crop, apart from saving? Is this possible for smallholder and marginal kisans? Are there districts and talukas in which crop cultivation choices are made by first considering household, panchayat and taluka food needs?

Considering the district of Yavatmal, in the cotton-growing region of Maharashtra, helps point to the answers for some of these questions. Yavatmal has 838,000 hectares of cultivated land distributed over 378,000 holdings and of this total cultivable area, the 2010-11 Agriculture Census showed that 787,000 hectares were sown with crops.

Small holdings, between 1 and 2 hectares, account for the largest number of farm holdings and this category also has the most cultivated area: 260,000 hectares. Next is farms of 2 to 3 hectares which occupy 178,000 hectares, followed by those of 3 to 4 hectares which occupy 92,000 hectares.

The district’s kisans allocate their cultivable land to food and non-food crops both, with cereals and pulses being the most common food crops, and cotton (fibre crop) and oilseeds being the non-food (or commercial) crops.

How do they make their crop choices? From the agriculture census data, a few matters immediately stand out, which are illustrated by the graphic provided. First, a unit of land is sown 1.5 times in the district or, put another way, is sown with one-and-a-half crops. This means crop rotation during the agricultural year (July to June) is practiced but – with Yavatmal being in the hot semi-arid agri-ecoregion of the Deccan plateau with moderately deep black soil – water is scarce and drought-like conditions constrain rotation.

Second, land given to the cultivation of non-food crops is 1.6 times the area of land given to the cultivation of food crops (including the crop rotation factor), a ratio that is made abundantly clear by the graphic. This tells us that the food required by the district’s households (about 647,000 of which about 516,000 are rural) cannot be supplied by Yavatmal’s own kisans.

The vegetables required by the populations of Yavatmal’s 16 talukas (Ner, Babulgaon, Kalamb, Yavatmal, Darwha, Digras, Pusad, Umarkhed, Mahagaon, Arni, Ghatanji, Kelapur, Ralegaon, Maregaon, Zari-Jamani, Wani) can in no way be supplied by the surprisingly tiny acreage of land allocated to their cultivation. Nor do they fare better for fruit, which has even less land (although this is a more complex calculation for fruit trees, less so for vine fruits).

Third, 125,000 hectares to wheat and 71,000 hectares to jowar makes up almost the entire cereals cultivation. Likewise 126,000 hectares to tur (or arhar) and 94,000 hectares to gram accounts for most of the land allocated to pulses. Thus while Yavatmal’s talukas are well supplied with wheat, jowar, gram and tur dal, its households must depend on neighbouring (or not so neighbouring) districts for vegetables, as a minimum of 280,000 tons per year is to be supplied to meet each household’s recommended dietary needs.

What the graphic helps us ask is the size of the costs associated with crop cultivation choices in Yavatmal. The cultivation of hybrid cotton in India’s major cotton growing regions (several districts each in Maharashtra, Andhra Pradesh and Gujarat) is associated with heavy chemical fertiliser and pesticides use. Whether the soil on which cotton has grown can be sown again with a food crop is not clear from the available data but if so such a crop would be saturated with a vicious mix of chemicals that include nitrates and phosphates.

The health of the soil in Yavatmal’s 16 talukas is probably amongst the most fragile in Deccan Maharashtra, and after years of coaxing a false ‘productivity’ out of the ground for cotton, it would be best for the district’s 516,000 rural households to take a cotton ‘holiday’ for three to four years and revert to the mixed and integrated cropping of their forefathers (small millets). But the grip of the financiers and the textiles intermediaries is strong.

Written by makanaka

May 10, 2017 at 16:13

The drying of the Deccan

leave a comment »

This panel of 12 images shows the change that takes place in a region of the Deccan. Each image shows what is called a Normalised Difference Vegetation Index (NDVI) for the region. This is a rolling eight-day series computed daily using imagery from the Terra/MODIS system and viewed using the NASA Worldview website.

The colours (green and brown shades, whitish shades) show us the vegetation health with deep green being better than light green, dark brown being better than light brown. The index is also used to signal where areas are beginning to experience arid and water-scarce conditions.

The region is the west-central Deccan – the Karnataka Plateau – corresponds to the Vijayapur (Bijapur) district of north Karnataka with parts of Bagalkot district and is part of the central Indian semi-arid bioclimatic zone.

The pictures in the panel show the vegetation extent and health (NDVI) calculated on that day for an eight-day period. Each picture is a fortnight apart, and this series starts on 4 November 2016 (bottom right) and ends on 7 April 2017 (top left). The retreat of the green is seen clearly from one fortnight to the next.

Of interest in this region is the Almatti dam and reservoir, in the Krishna river basin, which is visible in the lower centre of each picture. On 13 April there was no water in Almatti, which has a full capacity of 3.105 billion cubic metres (bcm). For the week ending 30 March it had 0.015 bcm of water, the week ending 6 April 0.001 bcm.

For the week ending 3 November 2016, which is when the panel of pictures begins, Almatti had 2.588 bcm of water. The reservoir water runs a hydroelectric power plant, of 240 MW, and which needs flowing water to turn the turbines.

When the reservoir is full, the hydel plant produces about 175 million units of electricity. But on 13 March the Central Electricity Authority’s daily report showed that Almatti could produce only 3.02 million units. On 10 April, this had plunged to 0.04 million units, but the hydel plant had produced no power since 1 April.

Written by makanaka

April 19, 2017 at 13:07

Seeing the growers of our food and where they are

with one comment

Where the food that we eat is grown, who the growers of our food are, these are the sort of questions that independent Bharat ought very early to have made central to our understanding of the growing of food crops and the uses to which harvested food crops are put. Instead, we have an administrative understanding, weighed down completely by the bits and pieces of method left by an imperial British administration – whose interests were exploitative and fully colonial.

And assisting this anachronistic administrative view of food and agriculture is a more recent ‘market’ view. This is even more distanced from the farming household and the consuming household than the colonial view was, because its engine is constructed according to the blueprints drawn by a western macro-economics which has served neither the populations of the western countries nor the post-colonial populations of former colonies. The ‘market’ view survives till today only because of the continuous creation of new consumers for food ‘products’ – which is quite different from the seasonal consumption of raw food staples provided by local cultivators.

For these and allied reasons the ability of the central government administration of Bharat – from the time of the First Five Year Plan of 1951-56 – to consider agriculture and food as something other than a ‘sector’, a contributor to gross domestic product (GDP), as an activity through which employment could be supported and poverty kept at bay, has been crippled. There is no reason for it to continue being crippled today. It has continued only because of the legions of planners, advisers, economists and econometricians, academics and researchers, bankers and financiers, and to which assembly must now be added the social entrepreneurs, fin-tech (finance technology) start-ups, and ‘innovators’ who derive dubious means and transient currency out of it.

For this reason I have in a number of articles, papers and writings such as this one sought to describe ways in which the circumstances of the food grower should be, and must be, seen – very often by using the public data and statistics freely available. Some of the indicators we need to have in the foreground – and these are very much more important than the area-produce-yield obsession of our agricultural science establishment and economics planners – are: how many rural households does it take to feed an urban household? Where are farmers, food growers and cultivators a large part of those who work? What role do the smallest urban settlements (census towns) have in the growing and consuming of food?

This is the result of a very small attempt, using Census 2011, to answer such questions.

1. There are 152 districts in which the ratio of the number of rural households to urban households is 8 and above. This means that in 152 districts, rural households outnumber urban households by a factor of at least 8. In 102 of these districts, the ratio is 10 and above, in 45 of these districts the ratio is 15 and above, and in 24 districts the ratio is at least 20.

Among districts which have a high ratio are Ramban in Jammu and Kashmir has a ratio of 24.7 to 1, Sheohar in Bihar has a ratio of 24.6 to 1, West District of Sikkim has a ratio of 23.7 to 1, Anjaw in Arunachal Pradesh has a ratio of 23.7 to 1, Bhabua in Bihar has a ratio of 23.6 to 1 and Baudh in Odisha has a ratio of 22.5 to 1. Whereas Bhabua has some 2.4 lakh rural households, West District has only about 27,000 rural households.

2. There are 174 districts in which the rural farming population, that is, the number of working adults who are engaged in cultivation of their plots or as agricultural labour, is 80% and more of the total rural working population of that district. In 90 of these districts the percentage is 85% and above, in 25 districts it is 90% and above.

Among districts which have a high percentage of cultivators and agricultural labour in their rural working population are Washim and Nandurbar in Maharashtra (90.7% and 90.5%), Dhar, Khandwa and Khargone in Madhya Pradesh (90.6%, 90.5% and 90.5%), and Jashpur and Surguja in Chhattisgarh (both 90.4%).

3. There are 211 districts in which the number of rural households is 3 lakh and above. Of these in 161 districts the number of rural households is 3.5 lakh and above, and in 129 districts the number of rural households is 4 lakh and above. From among these 129, there are 29 in Uttar Pradesh, 19 in Bihar, 15 in West Bengal, 15 in Maharashtra and 13 in Andhra Pradesh.

Among districts with large numbers of rural households are Krishna in Andhra Pradesh with about 7.53 lakh households, Mahbubnagar in Telengana with 7.43 lakh households, Ahmednagar in Maharashtra with 7.39 lakh households, Malda in West Bengal with 7.34 lakh households, Darbhanga in Bihar with 7.29 lakh households, Allahabad in Uttar Pradesh with 7.21 lakh households and Belgaum in Karnataka with 7.19 lakh households.

4. There are 202 districts in which the farming population both rural and urban, that is, the number of working adults who are engaged in cultivation of their plots or as agricultural labour, is 70% or more of the total working population of that district. In 116 of these districts the percentage is 75% and above, in 58 of these districts it is 80% and above.

Among districts with a high combined percentage of rural and urban households engaged in agriculture are Pratapgarh in Rajasthan (83.8%), Mahasamund in Chhattisgarh (83.6%), Mandla in Madhya Pradesh (83.6%), Katihar in Bihar (83%), Khunti in Jharkhand (83%), Uttar Bastar Kanker in Chhattisgarh (83%), Malkangiri in Odisha (82.9%) and Dohad in Gujarat (82.8%).

Written by makanaka

April 4, 2017 at 20:47

The origins of spiritual agriculture, 2

leave a comment »

In his ‘The twelve ‘ayagars’ of village community in medieval Karnataka’, K S Shivanna has explained how the office of these ‘ayagars’ was hereditary, hence this hereditary character infused in each ‘ayagar’ a devotion and love towards his own village.

In his ‘The twelve ‘ayagars’ of village community in medieval Karnataka’, K S Shivanna has explained how the office of these ‘ayagars’ was hereditary, hence this hereditary character infused in each ‘ayagar’ a devotion and love towards his own village.

Generations of spiritual farmers of Bharat, who have safeguarded the ‘parampara’ of dharmic cultivation, have shown us the worship that ties together the cultural, religious and biological richness of our civilisation. This article follows my earlier writing on the subject, ‘Old krishi for new Bharat’ (part 1 of the krishi series), and ‘How we almost lost our growing tradition’ (part 2). This article was written for the Indic and Indology study website Indiafacts and here is the first part, The origins of spiritual agriculture, 1.

Taking the ‘yajnas‘ and the injunctions about “annadana” as pointers to the size of a society that placed demands upon agricultural production, and of the size and vibrancy of the cultivators to meet that demand, we find that the practice of spiritual agriculture in Vedic, ancient, earlier and later medieval periods, and during the periods of foreign occupation (Muslim, Mughal and British, such as it was able to continue) required a supporting web of knowledge types. These included knowledge of the organisation and administration of the ‘gramas’ and their groups, of the varieties of crops and their properties (for nutrition under several circumstances, for ritual purposes, for medicinal purposes, etc.), of the soils and the cycles of water, of the calendrical and astrological observances and influencers of the seed and its growth.

The study of epigraphs and inscriptions of the different eras, which the Indologists of the modern era (from the mid-nineteenth century) have served us through their laborious researches, have given us a picture that adds to the profundity and breadth of information contained very much earlier in the ‘shruti’ and ‘smriti’. These do in the first place highlight in many ways the size of the populations of the earlier eras and the vitality of the agricultural practices that sustained such large populations. In our times, our view of population and its growth is ordinarily linked to the decadal censuses that began to be undertaken from 1901. The overall trend of these censuses taken together is to show rapid growth in a century, but the trend cannot, in the face of the evidence gathered even by the time of the end of the nineteenth century, be similarly extended backwards.

The records of inscriptions, often copper plates, are from different eras and from a number of locations in Vedic, ancient and medieval Bharatvarsha, include the assigning, by grants, villages, for purposes such as the maintenance of temples and places of religious learning, for senior or high officials of a raja, the maintenance of the families of those who had died on the battlefield. These provide a rich source for understanding the administrative structures to which the ‘gramas’ belonged, and their relationships with the administrators. Under the Chandellas, villages were grouped into ‘vishayas’ or ‘pathakas’, while the heirs of the Pratiharas (of the middle Ganga region) also mention ‘vishayas’ and ‘pattanas’ for towns (as is brought out in ‘The Struggle for Empire’, volume five of ‘The History and Culture of the Indian People’). In dakshin Bharata, under the Chalukyas, there were regions (corresponding to southern Maharashtra) in which the number of ‘gramas’ were grouped into 500, 1,000 and 2,000 under officers whose title was ‘mahamandaleshwara’. Farther south, the number of ‘gramas’ in large groupings rises to 12,000 and more (there are two recorded instances of a Chalukya queen having administered such a large group, and a Chalukya princess having done so).

With ‘vishayas’ and ‘mahamandalas’ containing within their administrative boundaries, several thousand ‘gramas’, and the kingdoms and empires of Bharatavarsha encompassing an area from Kabul to the river Airavati (Irrawaddy) in present-day Burma, the number and density of provincial divisions and the ‘gramas’ and ‘pattanas’ they sustained can only, pending painstaking research, be surmised. The fertility of the soil, which was already legendary in the wider world of the ancients (as evinced by exports to the regions of Babylonia and Rome), and the application of the interlinked modes of spiritual agriculture are the factors that made this astonishing scale of sustenance possible.

In the 'gramas' were the practitioners of spiritual agriculture, which included as a practice the manner in which they maintained both their own autonomy and the autonomies of the religious institutions – the temples and associated 'mathas'.

In the ‘gramas’ were the practitioners of spiritual agriculture, which included as a practice the manner in which they maintained both their own autonomy and the autonomies of the religious institutions – the temples and associated ‘mathas’.

At its base lay the ‘grama’. Around the ‘grama’ lay its ‘khettas’ or pastures, and its woodland or uncleared jungle. Agricultural land is considered among the ten kinds of external possessions (other being buildings, gold, seeds of grain, collected wood (for fuel), grass, friends and relatives, means of conveyance, furniture and utensils). The ‘khetta’ was divided into ‘setu’ and ‘ketu’, the former being irrigated by water-wheels (also called Persian wheels, or ‘arahatta’) and the latter by rainfall. Agriculture was required ploughing. There was a ploughing deity (‘Sita-janna’ is one such given name) in whose honour a festival was held. “In a prosperous country, the land was ploughed with hundreds of thousands of ploughshares; and sugarcane, barley and rice were cultivated by ‘karisaya’ (farmers),” as explained in ‘Life in Ancient India as Depicted in the Jain Canons’. “There is mention of the limiting of the cultivable land for each plough could plough one hundred ‘nivartana’ of land (as stated by Baudhayana), which is described as an area sufficient to support one man by its produce.”

Indian farmers in their wisdom have followed certain precepts throughout history. For example, on sowing of seeds, a handful bathed in water and a piece of gold was sown first with the following mantra (as transmitted by the Arthashastra):

Prajápatye Kasyapáya déváya namah.

Sadá Sítá medhyatám déví bíjéshu dhanéshu cha. Chandaváta hé.”

(“Salutation to God Prajápati Kasyapa. Agriculture may always flourish and the Goddess (may reside) in seeds and wealth. Chandaváta hé.”)

They likewise took guidance from Rishi Parashara (about 400 BCE), who wrote a general text on field crop agriculture and whose contents are so arranged that they may with scarcely any alteration be followed today as a book on introductory agriculture:

“Even the rich who possess a lot of gold, silver, jewels, and garments have to solicit farmers as earnestly as a devotee would pray to God.”

“An agriculturist, who looks after the welfare of his cattle, visits his farms daily, has the knowledge of the seasons, is careful about the seeds, and is industrious, is rewarded with the harvests of all kinds and never perishes.”

“Even a fourfold yield of crops procured at the cost of the health of the bullocks perishes soon by the sighs of their exhaustion.”

As the predominant grain harvest was rice of different varieties, the methods for its storage was a science unto itself. The paddy was sown during the rains and when ripe was harvested with newly sharpened sickles, threshed, winnowed and then taken to the granary, where it was stored in new earthenware jars, says the Vyavahara Bhasya. Elsewhere, piles of rings (‘valaya’) made from interwoven straw and leaves also served as receptacles for the grain. The floor beneath these receptacles was coated with cow dung and dried. Such heaps of grain were arranged close to the wall, besmeared with ashes, sealed with cow dung and screened with straw and bamboo. In the monsoon, the grain was stored in a variety of ways: in earthen containers, in receptacles of woven straw and bamboo, in granaries that stood on pillars, in upper storeys of houses, always well sealed with fresh clean mud and cow dung, often sealed with earthen seals. ‘Kumbhi’, ‘karabi’, ‘pallaga’, ‘muttoli’, ‘mukha’, ‘idura’ and ‘alindaa’ are among the more common forms of storage. “Those, who stored crores and crores of ‘kumbhas’ of these grains in their granary were called ‘naiyatikas’,” the Vyavahara Bhasya has tantalisingly mentioned, indicating the great yields and the equally great responsibilities of those, the ‘naiyatikas’, in whose care the stored grains reposed.

Such a person represented the harmonious combination of a practitioner, administrator, and a religious institution (in the form of a temple or a temple complex with an associated seat of learning, a ‘matha’) that characterised agrarian-centred life in Bharat. Crop production, ownership, land tenures, assessment and revenue were the subjects that brought together the three parties locally and the fourth, the administration of the desa or the kingdom, distantly. Two kinds of land tenure, ‘agrahara’ and ‘devadaya’, were followed in the lands being utilised and belonging to one of the better known of such temple complexes in dakshina Bharata, that of the Somanathapura, on the banks of the Kaveri, in Mysore district. Teachers attached to the temple were given land grants in lieu of salaries, thereby illustrating the continuum of education, sustenance from the produce of the land, the crop cultivation knowledge ‘parampara’ of the region, and the support of the ‘parampara’ scripturally with the participation of the teachers.

Under the Hoysala (and subsequently the Vijayanagara), temple lands were managed by the ‘sthanikas’ or managers and the tenants of such lands were named differently from tenants of other cultivated land. Whereas the Somanathapura of Mysore was relatively large, well known and attracted large numbers of worshippers, its regular daily and festival consumption of agricultural and non-agricultural produce is common to all such temples and temple complexes. The ‘mahajans’, ‘sthanikas’ and ‘nambis’ of the Somanathapura temple purchased locally: rice, paddy, wheat, toor dal, green gram, black gram, soapnut powder, turmeric, jaggery, pepper, cardamom, sesame, arecanut, oil, sandalwood, ghee and curd. Where such temples and temple complexes thrived, they motivated agricultural expansion, mobilised and redistributed royal resources, linked ‘mandis’, gave employment to craftspeople and a great diversity of non-agricultural professions, all on the basis of the inseparable ties between the cultivator and the temple.

The complaint that though the Hindu rulers spent very little on themselves, they suffered from “two great vices”, which are the giving away of most of what they had to the Brahmins and to the temples, was made by an early governor-general of the British occupation, and by several of his predecessors and successors, as recorded by Dharampal. He has remarked that it is possible that the terms ‘Brahmin’ and ‘temple’ were used in a much wider sense and included all who were given to scholarship and support of one kind and another, and to institutions which catered not only to religious needs, but which also served purposes of scholarship, culture, entertainment and comfort. “It does imply that every person in this society enjoyed a certain dignity and that his social and economic needs were well provided for,” Dharampal has written. “Food and shelter seem to have been a natural right, given India’s cultural norms, and made easier by [the] fertility [of the soil].”

Hence, it is the village communities, by which term is meant the ‘grama’ with its cultivators, its professions and vocations agriculturally related and not, the associated temple (or where extant a temple complex with possibly a ‘matha’), with its intricate and mutually supportive webs of knowledge and scriptural practices, which altogether was later described as the agrarian institutions of Bharat. In his ‘The twelve ‘ayagars’ of village community in medieval Karnataka’, K S Shivanna has explained how the twelve ‘ayagars’ contributed to the growth and the self-sufficiency of the village. “The village hardly received anything in return from the towns. The village produced all its own needs from within. The affairs connected with agricultural production were conducted by the cooperation of a body of these twelve village functionaries. Each one of them rendered service to the economic well-being of the village. The office of these ‘ayagars’ was hereditary, hence this hereditary character infused in each ‘ayagar’ a devotion and love towards his own village. The British in the early 19th century were struck by the vitality and usefulness of this system.” Shivanna has quoted Mark Wilks, who spared no admiration for the timeless resilience of the system, he had beheld, one which no conquests, usurpations, or revolutions have been able to influence, whose whole frame of interior management remain unalterably the same, with “every state in India is a congeries of these little republics”.

Such self-sufficiency and insulation as ‘little republics’ can in no way be interpreted to mean that the ‘gramas’ stultified in any respect. On the contrary, particularly for cultivation (and animal husbandry) techniques, aspects concerning the employ of water and soil, and innovations in the use of the many materials of natural origin (furniture, vehicles, basketry and crafts), the network of markets served as mediums of exchange. The renown of regional and local varieties of cereals owed much to the exchange of method and modification between the ‘gramas’ that had been conveyed through such media. For example, in aromatic rice, following local varieties had attained renown: the ‘panarsa’ of parts of modern Himachal Pradesh, ‘laungchoor’ of Mirzapur and Sonbhadra in Uttar Pradesh, ‘ambemohor’ of Pune district in Maharashtra, ‘badsabhog’ of Paschimi Champaran in Bihar, ‘borjoha’ and ‘krishnajoha’ of Assam, ‘chinoor’ of Bhandara and Gondia districts in Maharashtra, ‘katanbhog’ of Coochbehar in West Bengal, and ‘vishnuparag’ of Barabaki and Bahraich districts of Uttar Pradesh. Aromatic rice varieties such as these, prized for centuries, require a depth of knowledge and application of practice that must nonetheless be added to with every season, to judge the ‘gunas’ of their favoured soils, supervise the passage of ‘jala’ into and from their fields, gauge the temperatures, plan their sowing by the ‘nakshatras’, time the festivals and then proceed to the labour.

In this, our agriculturists met and even excelled the expectations of the vaidyas, who had long ago enumerated the foods, their qualities and their uses based on the principle that there is no medicine comparable to food and it is possible to free a person of ailments solely through diet. One such compilation is the treatise, the Bhojanakutuhalam of Sri Raghunathasuri, which in 44 sections deals encyclopaedically with foods. In this, rice is classified as growing in burnt soil, wet lands, uncultivated soil, by cultivation, from fresh paddy, grown after harvesting. As major groups, they all have combinations of properties and tastes, and affect the three ‘doshas’ (‘vata’, ‘pitta’ and ‘kapha’) differently. The ‘kutuhalam’ dwells on certain rice species that are valuable from the perspective of ayurveda. Amongst these are the ‘rajanna’ of Maharashtra and Andhra Pradesh; ‘krishnasali’, which is famed for growing on the banks of the river Godavari; ‘raktasali’, which is highly valued for its effect on all three ‘dosas’; ‘mundasali’, which treats poisoning and wounds; ‘sthulasali’ or ‘mahasali’, which is sweet and wholesome for children and youth; ‘suksmasali’, ‘gandhasali’, ‘tiriya’, ‘sastivasaraja’ and ‘gaurasali’.

These few examples is sufficient to illustrate the presence of wide range of crop varieties and their associated, abundantly spiritual webs of knowledge, throughout Indian history. This article and its earlier companion article provide a very brief outline of the spiritual basis of agriculture in Bharat, the characteristics of the ‘gramas’ in which the practitioners of such agriculture were to be found in earlier eras, and the manner in which they maintained both their own autonomy and the autonomies of the religious institutions – the temples and associated ‘mathas’ – with respect to the administration of the region and of the raja. The practice and the application of generationally transmitted knowledge, strengthened by the dharmic principles retold in each age, and the expectant resting of an exacting ayurvedic tradition (itself as ancient as the texts in which the nature of food is revealed to us) upon the methods of the cultivators, serves to illumine the integral whole that is ‘prana’, desh and ‘anna’.

Subhash Palekar, who is Bharat’s foremost ‘karyakarta’ of spiritual agriculture, has often, and in writing, rued the slow, but inexorable dismantling of the little republics so admired by Dharampal, Wilks and Shivanna. He has said that when farmers began purchasing their seeds from the towns, when fertilisers (instead of the ‘bijamrita’, ‘ghanjivamrita’ and ‘jivamrita’ that he makes) is bought from the town to be applied to the fields of the ‘grama’, when the flow of goods that was earlier from ‘grama’ to town has been reversed, that is when the natural order was upturned, and that is why spirituality in agriculture must be restored. Over the last three or four decades, ideas from the west, which are termed ‘agro-ecology’ or ‘organic farming’ or ‘bio-dynamic agriculture’ or ‘holistic farming’ have found currency in the Bharat, whose spiritual agricultural practices are superior to these concepts, in the way that a summit of the Vindhyas is superior to the just-assembled mound of the mechanical earthmover. Palekar and his peers (the late Bhaskar Save and late G Nammalwar among them), the generations of spiritual farmers of Bharat, who have safeguarded the ‘parampara’ of dharmic cultivation, have shown us the worship that ties together the cultural, religious and biological richness of our civilisation. Behind them stands Balarama, the eighth avatar of Vishnu, and on his shoulder is the plough.

Written by makanaka

January 4, 2017 at 14:39

Villages in their splendid talukas

leave a comment »

rg_mah_villages_talukas_201701

As part of my continuing and long term study on the relation between populations both rural and urban, the land base upon which they depend for the growing of food, and the socio-economic changes taking place in our districts, I have begin an examination of how households are distributed in administrative regions, that is, districts and talukas. This graphed plot describes one kind of finding. (Click here for a full size plot that lets you explore each data point.)

rg_nrega_pics_201612States are administratively divided into districts (earlier the concept of a ‘division’, which was a group of districts, was more common – the ‘division’ is still used, for revenue determination but also for home affairs) and these are divided into talukas. How many talukas does the typical district have? Some have four, others as many as 12. There are talukas whose households are entirely rural as there is not a single census town, let alone a municipal council, within its precincts. The taluka contains villages and these can be numerous. Some talukas may have 50-60 villages whereas others may have 200 and more.

It is always an interesting matter to ponder. How did households in a small sub-region – at the confluence of a stream and a river for example or at the edge of a plain and at the margins of hills – become villages and what determined the distribution of such hamlets in a very local habitat? The factors were always environmental and there was often a strong cultural reason, such as proximity to a sacred site, a mandir or a venerated shrine, historical sites (such as those mentioned in the Ramayana and documented in detail thereafter in numerous local commentaries).

From the set of districts analysed so far a few guiding figures have emerged. The number of rural households in a taluka varies from 7,200 to 96,800; the number of villages in a taluka varies from 28 to 338; the average number of households in a village is 330; there is one urban household for every 3 rural households.

Where the agro-ecological conditions are favourable, there is to be found a denser gathering of villages and these will have larger populations. This can easily be understood. It is less clear how the toil of the households accommodated in a large number of villages are required to maintain, in many ways, urban households which are now clustered in a town or two of the same taluka. This dependence is what a study of not only the rural-urban population, but also how it is distributed within agro-ecological boundaries, can help uncover. The graphed plot included here is one step towards that understanding.

Debt and kisan households

with 2 comments

rg_cultivator_hhs_debt_201612For the 21 larger states, this is the picture of how much average debt a cultivator household has incurred, and how many amongst cultivator households are in debt.

The data I have used for this chart are taken from the report, ‘Household Indebtedness in India’, which is based on the 70th Round of the National Sample Survey Office (NSSO), Ministry of Statistics and Programme Implementation, Government of India, and collected during January to December 2013.

The states are plotted on average debt of such households, in lakh rupees on the left scale, and the proportion of such households, as a percentage of all such households, on the horizontal scale. The size of the circles are relative and based on the amount of average debt.

The average amount of debt per cultivator household seen in this chart is for most of the 21 larger states, lower than the overall rural household average debt of Rs 1,03,457. However the cultivator household is one of six types of rural household (the categories are: self-employed in agriculture, self-employed in non-agriculture, regular wage/salary earning, casual labour in agriculture, casual labour in non-agriculture, others). About 31.4% of all rural households are in debt.

The chart shows that cultivator households in Punjab and Kerala carry the highest amounts of debt, and that a highest percentage of cultivator households carrying debt are in Telengana and Andhra Pradesh. There are two distinct groups. One group of nine states occupies the right and most of the vertical area of the chart. The second group is of 12 states clustered towards the lower left corner of the chart panel.

This difference describes regional variation. In the first group are all the southern states. In the second are all the eastern and central states. Madhya Pradesh, Gujarat, Uttar Pradesh and Uttarakhand cultivator households exhibit the greatest similarity, with average debt of under Rs 40,000 and with less than 35% of cultivator households carrying debt.

Bihar, West Bengal and Odisha are likewise similar, their average debt being less than Rs 20,000. Assam, Jammu and Kashmir, Chhattisgarh and Jharkhand cultivator households bear the lowest average debt and less than one in five of such households is in debt.

These are the broad brush strokes of debt amongst cultivator households in the 21 major states painted by the NSSO’s ‘Household Indebtedness in India’ report. A more detailed examination of such debt, and also the debt of the other kinds of rural households, will give us a deeper understanding of the subject.

Written by makanaka

December 16, 2016 at 09:24

Of money good or black, digital or paper

leave a comment »

500 and 1000 Indian rupee banknotes are kept in front of an image of the Hindu deities at a cash counter inside a bank in Jammu, November 10, 2016 REUTERS/ Mukesh Gupta

500 and 1000 Indian rupee banknotes are kept in front of an image of the Hindu deities at a cash counter inside a bank in Jammu, November 10, 2016 REUTERS/ Mukesh Gupta

The decision by the BJP government on 8 November to demonetise the 500 and 1,000 rupee currency notes has been presented as “strength in the fight against corruption, black money, money laundering, terrorism and financing of terrorists as well as counterfeit notes”.

The release added: “Prime Minister Shri Narendra Modi made these important announcements during a televised address to the nation on the evening of Tuesday 8th November 2016. He said that these decisions will fully protect the interests of honest and hard-working citizens of India and that those five hundred and one thousand rupee notes hoarded by anti-national and anti-social elements will become worthless pieces of paper.”

Rs 14 lakh crore – 86% of the value of Indian currency currently in circulation – became useless from midnight of November 8, 2016. The Rs 500 notes amount to Rs 7.85 lakh crore and Rs 1,000 notes amount to Rs 6.33 lakh crore, according to Reserve Bank of India data. The immediate result was panic, in hundreds of towns and cities, as citizens ran for ATMs. Confusion prevailed as on the next day, 9 November, all banks were to shut to the public and ATMs too.

There was chaos outside hospitals, railway stations and petrol pumps which were allowed to accept Rs 500 and Rs 1,000 notes till Friday (but interpreted the directions as they pleased). Smaller denomination notes such as Rs 100 and Rs 50 were in short supply due to the heavy demand. Small traders, rickshaw pullers, taxi and auto-rickshaw drivers, daily wage labour, and unorganised sector workers said they have been hit hard.

This public inconvenience was necessary, said the government, to have the time to restock bank branches and ATMs with new currency notes and to prepare the bank branches for the exchange services they would have to begin on 10 November.

The government explained that:

1. A law was passed in 2015 on disclosure of foreign bank accounts. In August 2016 strict rules were put in place to curtail benami transactions. During the same period a scheme to declare black money was introduced. These efforts have over the past two and a half years, brought more than Rs. 1.25 lakh crore of black money into the open.

2. These efforts have led to India emerging as “a bright spot in the global economy”, a preferred destination for investment and an easier place to do business in. “Leading financial agencies have shared their optimism about India’s growth as well.”

3. Indian enterprise and innovation has received a fillip due to the ‘Make in India’, ‘Start up India’ and ‘Stand up India’ programmes for enterprise, innovation and research in India.

There is no doubt that India’s economy has been plagued by the creation of wealth in some quarters that is obscenely disproportionate to the stated sources of individual and family income (see the press release from the Department of Economic Affairs, pdf). This has for long signalled corruption, and the means by which the corrupt (both giver and taker) become so is cash (but not only). The demonetisation has affected the political class and bureaucracy which accounted for the bulk of the corrupt money. The other difficulty the government and enforcement agencies have grappled with especially over the last decade is counterfeit currency notes, which have been used to maintain anti-national, secessionist and terrorist networks.

With about 86% (by rupee value) of currency in circulation being in the notes that have been demonetised. There are 16.5 billion Rs 500 notes and 6.7 billion Rs 1,000 notes in circulation now, and replacing them with lower denomination notes, and also the new series of Rs 500 and Rs 2,000 notes, will take several weeks.

Old high denomination bank notes are seen kept in buckets at a counter as people stand in a queue to deposit their money inside a bank in the northern city of Kanpur, India, November 10, 2016. REUTERS/Adnan Abidi

Old high denomination bank notes are seen kept in buckets at a counter as people stand in a queue to deposit their money inside a bank in the northern city of Kanpur, India, November 10, 2016. REUTERS/Adnan Abidi

I have several concerns about the demonetisation of the 500 and 1,000 currency notes, and the accompanying directions that the banking and financial services sector in India is now pushing the public.

Question 1 – Estimates are that currency in public circulation in 2006 was around Rs 4 lakh crore. In 2016 it was about Rs 16 lakh crore. If this estimate is of what RBI printed, why did it for ten years print physical currency at a rate higher than top annual GDP growth estimates?

This article explains the extraordinary rise of cash economy through high denomination notes, powered by generation of black money in real estate, stocking of gold, bribery and corruption. But it does not help answer my question above. “While the high denomination notes made illegal businesses, including hawala transactions to transfer money out of India easy to execute, it has facilitated huge tax evasion even in the otherwise lawful businesses. High denomination notes have made it easy for the bribe taker to handle huge bribes with ease.”

Question 2 – As the 500 and 1000 notes are ‘high value’ and so used for hoarding ‘black’ cash, why is the higher of the two (1000) being replaced by a note twice its value, that is, Rs 2000?

Since yesterday, there have been explanations offered about the effect of demonetisation on consumption and on slowing down an economy whose GDP growth is rated as the best amongst the large economies. “Consumer spending will likely fall in the immediate weeks as households adjust to the new system. India’s economy grew 7.1 percent during April to June, the slowest in 15 months, but the government and experts have been pointing out that a pick-up was likely in the next few months riding on good rains, a pay bonanza for government employees and festive-season buying.”

According to the national income data for the first quarter (April-June) of 2016-17, private final consumption expenditure (PFCE) – which measures household spending – at current prices is estimated at Rs 21.19 lakh crore, or about 55% of the gross domestic product (GDP). These are the numbers that a new class of ‘growth’ advocates in India are betting on. There is a connection to inflation – in the price of services, cost of manufactured articles and the prices of food – which however has not been answered as yet. Raising the denomination of the highest value currency note from Rs 1,000 to Rs 2,000 is in my view such a signal.

A person stands with his documents in a queue outside a branch of the State Bank of india as people wait to exchange old high denomination bank notes in Old Delhi, India, November 10, 2016. REUTERS/Cathal McNaughton

A person stands with his documents in a queue outside a branch of the State Bank of india as people wait to exchange old high denomination bank notes in Old Delhi, India, November 10, 2016. REUTERS/Cathal McNaughton

A number of petitions challenging the notification by the Department of Economic Affairs, Ministry of Finance, Government of India (which is the order for demonetisation) have been lodged at various High Courts and with the Supreme Court. Some protest the order as “illegal and arbitrary” and others for the order not granting reasonable time for ordinary citizens (presumably with legitimate cash in hand) to comply without jeopardising livelihood (by having to spend time in bank branches, for which leave is to be taken or a day’s income has to be foregone). While the Supreme Court may hear a petition next week, the response of the Madras High Court – that it cannot interfere in the policies of the government related to monetary system – should help prise open to greater public scrutiny one of the most opaque areas of policy making: the public monetary and fiscal system.

Question 3 – Is the net monetary gain by Government of India – more physical money from the ‘black economy’ brought onto the national accounts books – a way to ensure that India will next financial year also record the ‘fastest GDP growth’ (without the manufacturing, service and agriculture sectors doing so)?

For this question I can see only a few partial answers. These have to do with the enlargement of the digital rupee and digital payments, and this is the most serious concern. A government-appointed panel was set up in August to suggest ways such as tax rebates and ‘cash back’ to incentivise card and digital transactions. The government is also examining the feasibility to create a history for all card and digital payments, how to use the Aadhar database for authenticating card/digital transactions, providing low-cost micro-credit based on credit history.

Another partial answer comes from the Ministry of Finance, which said that “weak global demand” is among the “strongest challenges” in the near term for Indian economy. “Weak global demand is one among the strongest challenges in the near term. Exports and imports together constitute 42 per cent of the GDP (gross domestic product), even at the reduced levels in 2015-16.” The ministry said that reviving the savings and investment cycle in economy is challenging. The savings rate that stood at 34.6% in 2011-12, declined to 33% in 2014-15. Investment rate declined from 39% of GDP in 2011-12 to 34.2% in 2014-15. So these are the conventional macro-economic arguments, but the demonetisation will as I see it push any revival in savings and investment in quite a different direction from what the rural and agricultural base of the population require.

That direction is the ‘cashless’ one, with cash being blamed for fuelling the black economy. This is a danger-filled direction, one which we have already had a troubled history to look back at recently – the micro-credit bubble of the 2000-10 decade – to serve as a guide of what not to do. The banking and financial services industry has been expanding over the last two years, in tandem with the mobile telecom industry, with mobile payments and ‘wallets’.

“You cannot have 12% of India’s GDP in shape of currency,” Finance Minister Arun Jaitley has said. “Ideally developed countries have only about 4% and therefore you have to squeeze the amount of currency available and you need to get people into the habit of using digital, cheques, plastic currency and so on.” This – apart from the short-term gain by herding cash hoards into banks to be taxed – is what the direction is: the rupee as a bit, the rupee’s already tenuous basis in a physical standard now becoming more virtual, and this in a monetary and fiscal environment about which the public has scant understanding and in which the public has no participation.

Such a direction only widens the already troublesome gap between an acceptable physical basis for a value that the rupee represents (we have no gold standard, or any other acceptable equivalent) and the assigning of a notional value to a digital rupee whose issue, transfer and control will be entirely electronic. When viewed against the increasing “liberalisation” (or increasing “reforms”) of the banking, insurance, non-banking finance, financial services, small credit industries that has taken place in the last two years, and especially the opening up of these new services to foreign direct investment (FDI), the picture of the cashless economy so strenuously advocated by Finance Minister Arun Jaitley.

Consider this gleeful reaction from what is called the fintech sector (we had IT, BT and there’s FT): “We might grow 10x when it comes to digital payments. Today, three to five percent of the transactions happen digitally, but we will see a 10x growth to almost 15–20% when it comes to digital transactions in the country. This is huge and this rise in digital transactions will lead to a digital exhaust where better credit risk scoring will happen, catapulting into exponential growth.”

This is the very troubling new landscape that the demonetisation decision – taken with the good reason of weeding out a black economy – has brought the rupee into.

Written by makanaka

November 10, 2016 at 09:26