Archive for the ‘Economics and globalisation’ Category
For 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.
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.
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 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.
Belgaum and Mysore in Karnataka with 12 points. Warangal, Telengana with 12 points. Panaji, Goa with 12 points. Munger, Bihar with 11 points. Bangalore, Karnataka with 11 points. Salem, Coimbatore and Coonoor in Tamil Nadu with 10 points. Rourkela, Odisha with 10 points. Sholapur, Maharashtra with 10 points. Vijayawada, Andhra Pradesh with 10 points.
These are not Swachch Bharat rankings nor are they ‘ease of doing business’ scores. They are, for each urban centre, the number of points its consumer price index (CPI) increased in May 2016 over the average for the previous quarter. The data is collected and distributed by the Labour Bureau, Ministry of Labour and Employment. This is one of the ways in which the monthly CPI numbers for industrial workers (a somewhat dated term which suited an era when the public sector dominated the economy, but which still relates to urban households) can usefully indicate the acceleration in inflation of household staples.
The picture changes when the CPIs of urban centres for a month (the latest available being 2016 May) are compared with their own averages for the last six months, the last 12 months or the year which ended 12 months ago. When the frame of comparison is the average of the previous 12 months, I find that in 30 of the 78 centres for which a CPI-IW is calculated, the increase is 10 points or more. Warangal in Telengana, Kollam in Kerala and Mysore in Karnataka are 16 points above their previous 12 month average while Munger in Bihar, Rajkot in Gujarat and Jamshedpur in Jharkhand are 15 points above.
This is the relativist picture that perhaps makes the most illuminating use of a monthly index, whatever its faults and shortcomings. The well-appointed chart that I have drawn helps show why the speeds and acceleration, between a current measure and an earlier set of measures, are more important to consider than the absolute numbers themselves. This is an experimental way to help visualise a subject that is alas rather dry but of great import for every single household. I will update this as new CPI numbers are released by the Labour Bureau every month.
The matter that faces us now concerning the United Nations Food and Agriculture Organisation (FAO) is: how should we consider what its activities represent? Like other UN agencies, the FAO works according to a mandate, which is agreed upon by its member states. Where the FAO is concerned, that mandate has to do with agriculture, not in the form of crops produced per hectare or acre, but in terms of who the cultivators and growers are, what their living and working conditions are, and the manner in which the crop and food they produce reaches the hands of those who need it.
Looked at in this way, an organisation such as the FAO has as one of its responsibilities the provision of support, in as many ways as possible, of the majority of those who grow food and the majority of those who buy food. In recent years however, the UN FAO has set aside this responsibility, deliberately and according to a plan. This dereliction of duty – in fact it is a duty agreed upon by FAO member states, of which there are 197 – can only be explained in one way: the FAO of today no longer represents the smallholder cultivator and farmer and peasant, and no longer represents the rural communities for whom agriculture is a dominant part of their biocultural life.
If the FAO now functions as an industry association (that is, representing the interests of a range of industries and technologies within the agriculture and food sector) then that is the choice of the organisation, presumably with the consent of the member states. However, such a deviation from its role hitherto then calls into question the funding it receives from said members, for that funding has for the 70 years of the organisation’s existence been predicated upon the FAO fulfilling its responsibility towards smallholder and peasant farmers, wherever in the world they may be. If the FAO is today an industry organisation – which its recent actions proclaim it to be – then the 197 member states must stop giving the organisation an annual contribution.
Will such a cessation of financial support make a difference to the FAO of 2016? Let us examine how the organisation is funded. The total FAO Budget planned for 2016-17 is US$ 2.6 billion. Of this amount, 39% comes from contributions paid by member countries, whereas 61% is to come from what are called “voluntary contributions from members and other partners”. Some countries pay more than others, some very much more, some not at all. The USA maintains an outstanding towards the FAO that is ludicrous – it is US$ 96.97 million in arrears.
But what is of concern to us is the alteration in the balance of the members’ contributions and the so-called voluntary contributions, in the rough ration of 40 to 60. This means that 6 out of 10 dollars that the FAO receives is used for what the organisation calls “support technical and emergency (including rehabilitation) assistance to governments for clearly defined purposes linked to the results framework” and which is different from the activities provided for under the “regular budget”.
Under the circumstances that I have just described therefore, the FAO-hosted international symposium, titled ‘The Role of Agricultural Biotechnologies in Sustainable Food Systems and Nutrition’, which is under way 15-17 February 2016, is what any trade organisation would call an interest group gathering with an intent to change policy and practice in a manner that profits and benefits the members of that interest group.
It is opaque to us for now, based on the information provided by the FAO on this symposium, whether the money spent on transporting to Rome “over 400 scientists, representatives of government, civil society, the private sector, academia, farmers’ associations and cooperatives” for a conference to “explore how agricultural bio-technologies can benefit family farmers, particularly those in developing countries, who need to improve nutrition and food systems while facing the challenges of poverty, climate change, and population growth” – whether the money spent to do so comes out of the regular budget or out of a voluntary contribution. An answer either way must only lead to further very critical questions asked of the FAO senior management.
These questions must be asked of FAO at all levels – particularly in FAO member states whose contributions to the organisation’s regular budget may be minuscule, but whose food and agriculture line ministries and departments, whose institutions and laboratories are induced or coerced into accepting an “inter-governmentally mandated package of best practices” that does everything to help the international agriculture biotechnology and industrial crop cultivation corporations and traders, and nothing whatsoever for those member countries’ peasant and smallholder farmers.
What the FAO is doing with this bio-technology symposium is worse than unconscionable and worse than being wilfully unmindful about the evidence of the harm – to animal populations, ecosystems and humans – caused by biotechnologies and especially those employed for agricultural purposes. The serious harm to health and the ecological and agronomical impacts of glyphosate and glyphosate tolerant crops for example are the most thoroughly researched. The same kind of evidence has now emerged for Bt crops and Bt toxins. Evidence that genetic modification per se is harmful is as broad and unimpeachable, with the uncontrollable processes of genetic modification having led to the phenomena of antibiotic resistance (reported from all over the world), the creation of new pathogens, the incidence of cancers, and the hijacking of the human body’s natural nucleic acids to do harm.
It is deliberately misleading and deeply cynical for the FAO to claim, with a banal insouciance, that this symposium “focuses mainly on the broad range of biotechnologies that could result in yield increases, better nutritional qualities, and improved productivities of crops, livestock, fish and trees benefitting family farmers and their food systems, nutrition and livelihoods”. This is the sort of cartoonish PR piffle that the UN sustainable development goals (the SDGs) have been wrapped in to appeal to the social media tendencies of the world’s teenagers.
For the last two years out of the four that José Graziano da Silva has been at the head of the organisation, the tilt towards industrial agriculture and biotechnology has become very much more pronounced compared with the already sorry condition the organisation was during the second term of Jacques Diouf (the Senegalese diplomat who was director-general from January 1994 to 31 December 2011). Under da Silva the “agriculture for nutrition” campaign line has become very much more prevalent, and has been supported – voluntary contributions facilitated by the FAO’s Partnerships and Advocacy Branch (an office by itself, and a very industrious one) – by a host of private sector networks and consortia whose interests encompass biofortification, pharmaceuticals, and agricultural biotechnologies.
The symposium has been condemned fiercely and jointly by 42 international and regional organisations with 131 national and local organisations (173 in all) led by La Via Campesina, Grain and ETC Group. “It is clear that, through the FAO, industry wants to re-launch their false message that genetically engineered crops can feed the world and cool the planet, while the reality is that nothing has changed on the biotech front,” is Via Campesina’s statement which adds that GMO use “throws farmers off the land” while “the industrial food system that it promotes is one of the main drivers of climate change”.
The same corporations (feted by FAO as valuable private sector partners) are going beyond conventional GMO plant varieties toward ‘extreme biotech’ strategies such as synthetic biology to create new genetic constructs, Via Campesina has warned. “Not only do they ignore the rights of farmers, they are using biotechnologies to patent plant genes that are already in peasants’ fields and that we have selected ourselves. They want to forbid us to produce our own seeds and oblige us to buy their patented GMOs every year as well as their toxic pesticides, indispensable to grow those GMOs. In animal husbandry and fisheries where transgenic salmon and pigs already exist, we see the same scenario, the strengthening of industrial production and the increase in the use of antibiotics.”
Grain, which works to support small farmers and social movements in their struggles for community-controlled and biodiversity-based food systems, has in its comments said that two of the FAO keynote speakers at the symposium are known proponents of GMOs, and the agenda and side events over the three days include speakers from the Biotechnology Industry Organization (a biotech trade group in the USA), Crop Life International (the global agro-chemicals trade association), DuPont (one of the world’s largest biotech seed companies) and CEVA (a major veterinary medicine corporation), among others.
“FAO has only invited one speaker or panellist openly critical of GMOs,” Grain has said (that one is from Via Campesina). “One of the two speakers at the opening session is a former assistant director general of FAO who has pushed for so-called Terminator seeds (GMO seeds programmed to die at harvest time forcing farmers to purchase new seeds every growing season), in opposition to FAO’s own public statements.”
Just when the biotech companies that make transgenic seeds are merging, the ETC Group has stated (with Syngenta having agreed to sell itself and its technologies to the government-owned China National Chemical Corporation, or ChemChina, only a fortnight ago), “the corporate vision of biotechnology is showing up at FAO” with the symposium being “another attempt by multinational agribusiness to redirect the policies of the UN agency toward support for GMOs”. ETC Group has demanded that FAO put an end to biopiracy and to its support for genetically modified crops, but as I have outlined earlier, the biotechnology purveyors in the FAO will have none of it because the structures of funding and control have been altered perhaps beyond the reach of the organisation’s member states.
What is left to do? Proscribe the UN FAO for its anti-small farmer and anti-peasant activities, encourage members states to demand that FAO mend its ways or step out of the organisation, and meanwhile demand that governments central and local ban all environmental releases of GMOs and synthetic biology. As the 173 signatories to the statement on the symposium show through their work, action can be taken locally in communities, villages, towns, municipalities, regions, as well as nationally and globally. As for the benighted symposium, here is a news article by FAO on the conference, this is the page for the event, the brochure, summaries of presentations (which provide one more confirmation of the fundamentally destructive intentions of the biotech industry), and a ‘key messages’ sheet from FAO whose manner and attitudes betray the extent to which an industrial mind now runs this particular UN agency.
For the last three years, India has imported between 3.2 and 4 million tons of pulses a year. These imports supplement our own production of pulses, which alas and despite several ‘missions’ and ‘schemes’ we do not grow enough of.
Apart from why we should import pulses at all instead of growing all that we need, the matter of what we spend (that is, the foreign exchange with which importing agencies pay for the pulses) has I think not been placed in perspective, which is the aim of this short inquiry.
For this I have used the Department of Commerce ‘System on Foreign Trade Performance Analysis’ which provides the monthly imports and exports under major heads as compiled by the Directorate General of Commercial Intelligence and Statistics.
Of the 21 major heads, the import of pulses falls under the group ‘agriculture and allied products’. Considering the 24-month period of April 2013 to March 2015, the value of pulses imported has varied between 10% and 21% of the agriculture group imports.
However, the average monthly value of pulses imported over this period Rs 1,171 crore and this average lies between the monthly amount spent on ‘internal combustion engines and parts’ (Rs 1,130 crore) and ‘paper, paperboard and products’ (Rs 1,205 crore).
Hence our questions ought also to be: why is India spending Rs 720 crore a month to import fresh fruit, Rs 898 crore a month to import man-made yarn and made-ups, Rs 1,031 crore a month to import rubber other than footwear, Rs 720 crore a month to import fresh fruit, Rs 2,684 crore a month to import electronics instruments, Rs 2,745 crore a month to import electronics components, Rs 2,928 crore a month to import electric machinery and equipment, and Rs 4,539 crore a month to import vegetable oils?
West of Hong Kong lies one of the most extraordinary landscapes in the world, as much for the dense concentration of urban zones, of industrial and factory regions, but also for the change that has occurred over the space of a generation. In the 1970s, the Pearl River Delta was a mainly rural region. Of course there was Guangzhou (known to the world as Canton) but the rest of the sprawling delta was village. The Pearl River itself (‘Zhu Jiang’ in the Chinese) is China’s third longest river, but the second largest by volume of water which moves (after the Yangtze) and its course and seasons governed a basin in south-central China that is just over 400,000 square kilometres large.
The nine cities of the Pearl River Delta together form the world’s most urbanised region. Where did they come from? According to most annals of trading history concerning China, in the late 17th century the Qing government became more open to foreign trade and when that happened Guangzhou (Canton) quickly became a suitable port.
The Portuguese in Macau, the Spanish in Manila, Arabs from the Middle East and Muslims from India were already actively trading in the port of Canton by the 1690s, when the French and English began frequenting the port through the ‘Canton System’ (which was the name given to the imperial court’s regulatory response to what it saw, that long ago, as political and commercial threats). But for the Pearl River Delta, the gates had been opened – the Ostend General India company arrived, so did the Dutch East India Company, then came ships from most western colonial powers.
By the middle of the 18th century, Guangzhou had already emerged as one of the world’s great trading ports, and the ‘Thirteen Factories’ (not in fact factories at all but the designated areas of the port in where foreign trading was conducted) which were given imperial leave to operate, ensured the distinction was maintained until the outbreak of the First Opium War (1839) and the opening of other ports a few years later.
When, in the 1990s, China became known as the factory of the world, the province of Guangdong (of which Guangzhou is the capital) was where these manufactures were done. This is the activity which has made the province both the most populous in China and the biggest contributor to national GDP. What has also happened is the most rapid urban expansion in human (and Chinese) history. In a little more than 30 years, the Pearl River Delta region has become the epicentre of the Chinese manufacturing and consumer economy.
Over two generations, the urbanisation rate has increased from 28% to 83% which in effect means that where once not very long ago two-thirds of the residents pursued agriculture-based livelihoods, now four-fifths live in fully urban environments. The scale and speed of this transformation is astonishing. The cities of the Pearl River Delta have since 2008 been also referred to as a single interconnected zone of megacities, as their perimeters have blurred, they merge through wide highways and fast railway links and the endless manufacturing zones with their vast factory structures. The entire region has a geographical size larger than Denmark or Switzerland – with a wide river lined thick with docks and crammed with watercraft running through in the middle.
Working and living here is the largest urbanised population in the world – Guangzhou with 12.8 million, Shenzhen with 10.5 million, Dongguan with 8.3 million, Foshan with 7.3 million and the rest (Huizhou, Zhongshan, Jiangmen, Zhaoqing and Zhuhai) with another 18 million together) for a linked agglomeration of 56.9 million people. This enormous urbanised region accounts for 4.2% of China’s total population, and for 9.3% of its GDP. The multi-megalopolis has been assembled through the completion (and continuous expansion) of more than 150 major infrastructure projects (each by itself would be a significant milestone in a small country) which have helped the colossal network of transportation, water, energy supply and telecommunication to function every day.
There are labyrinths of roads, tunnels and bridges across the delta, as well as intra- and inter-city railways so that the residents of the Pearl River Delta speed from any one of the nine cities to another in an hour or less. Extending south-eastwards, these lead into Hong Kong, the Special Autonomous Region, whose economic might and cultural richness are both natural guides for the Pearl River multi-megalopolis but also (as seen from within Hong Kong, and perhaps Beijing) its competitor. Will the Pearl River Delta – the world’s biggest concentration of manufacturing megawattage, of people and of infrastructure – eventually absorb Hong Kong?
[Photos by Rahul Goswami, 2015.]
The 2015 Nobel prize for economics has been awarded to Angus Deaton, who is based in the Princeton University, in USA. Deaton’s work has been on poverty and his contemporaries in the field are Amartya Sen and Jean Dreze; all three have focused on poverty, malnutrition, consumption by households and how to measure these.
Herewith my view which I set out in a series of 37 tweets:
1 – like every single Nobel award category, the one for economics is calculated recognition of the use of Western ideas.
2 – There is no Nobel in economics for, say, Pacific islander economics or nomadic/pastoral economics. The boundary is clear.
3 – There is the additional problem, and it is a weighty one, of what is being recognised: a science or a thought experiment?
4 – Western economics can only ever and at best pretend to be a science (ignore the silly equations). There’s more.
5 – It has to do with food and food consumption choices. Do remember that. For the last 5-6 years the food MNCs and their..
6 – collaborators in Bharat have moved from hunger to nutrition. Remember that we grow enough food for all our households..
7 – and there are in 2016 about 175 million rural and 83 million urban households. So, food is there but choice is not yet..
8 – as clear as the marketeers and retailers pretend. No one truly knows, but economists claim to, and this one does.
9 – What then follows is the academic deification of the thought experiment, done carefully over a decade. The defenders..
10 – of the postulations of Deaton, Dreze, Sen et al turn this into a handmaiden of poverty study. And India is poor..
11 – (but Bharat is not). So we now have consumer choice, poverty, malnutrition and a unified theory to bridge the mess..
12 – for such a third world mess can only find salvation through the scientific ministrations of Western economics. The stage
13 – was thus set some years ago, when the Congress/UPA strove abundantly to craft a halo for this thought experiment..
14 – and in the process, all other explanations concerning food and the manner of its many uses were banished from both..
15 – policy and the academic trend of the day. But Deaton’s experiment is only as good as his references, which aren’t..
16 – for the references, as any kirana shop owner and any mandi bania knows, are more unreliable than reliable. What our..
17 – primary crop quantities are have only ever been a best estimate subject to abundant caution and local interpretation..
18 – for a thought experiment which seeks to unify food, malnutrition, poverty and ‘development’ this one has clay feet..
19 – which nevertheless is good enough for the lords of food crop and seed of the world, for it takes only the shimmer of..
20 – academic respectability such as that accumulated by Deaton, Dreze and Sen to turn postulate into programme. What we..
21 – will now see is what has been seen in medicine (and therefore public health) and in ‘peace’ (hence geopolitics) because..
22 – of the benediction the Nobel aura confers. This work will be press-ganged into the service of the new nutritionists..
23 – whose numbers are growing more rapidly than, a generation ago, did the numbers of the poverty experts. It is no longer..
24 – food and hunger and malnutrition but consumer choice, nutrition and the illusions of welfare. This is the masala mix..
25 – seized upon by those who direct the Nobel committee as they seek to control our 105 million tons of rice, 95 of wheat..
26 – our 43 million tons of coarse cereals, 20 of pulses, 170 of vegetables and 85 of fruit and turn this primary wealth..
27 – of our Bharat into a finance-capital manifesto outfitted with Nobel armoury that is intended to strip choice (not to..
28 – support it) from our kisans who labour on the 138 million farm holdings of our country (85% of them small and marginal)..
29 – and from our 258 million households (as they will be next year) towards whose thalis is destined the biofortified and..
30 – genetically modified menace of hyper-processed primary crop that is digitally retailed and cunningly marketed. This..
31 – is the deft and cunning manoeuvring that has picked on the microeconomist of post-poverty food study aka nutrition..
32 – as being deserving of Nobel recognition (when five years ago the Nobel family dissociated itself from this category).
33 – And so the coast has been duly cleared. The troublesome detritus of poverty macro-economics has been replaced by the..
34 – big data-friendliness of a rickety thought experiment which lends itself admirably to a high-fashion ‘development’..
35 – industry that basks in ‘sustainable’ hues and reflects the technology-finance tendencies of the SDGs. Food is no longer..
36 – in vogue but the atomisation of community crop and diet choice most certainly is. The pirate pennant of Western macro-
37 – economics is all aflutter again, thanks to the Nobel wind of 2015, but I will not allow it to fly over my Bharat. Never.
PS: The Western media has as usual waxed cluelessly eloquent on the selection of the award winner. This is the new York Times writing itself breathless about what this means for understanding the situation of the poor in the global economy. There is an account from Princeton [pdf] on the measuring of poverty, which has now become such a burgeoning industry. The statement of the committee which awarded this economist is here, with a more detailed version here [pdf].
The below average June to September monsoon season will lead to lower foodgrains production. What is the likely impact and how can society cope?
Context – For the last four years the numbers that describe India’s essential food security have become a common code: 105 million tons (mt) of rice, 95 mt of wheat, 41 to 43 mt of coarse cereals, 19 to 20 mt of pulses, 165 to 170 mt of vegetables and 80 to 90 mt of fruit.
With these quantities assured, our households feed themselves, army and factory canteens are supplied, the public distribution system is kept stocked and the processed and retail food industry secures its raw material.
Only provided there is such assurance, and that the allowance for plus or minus is as small as possible. Monsoon 2015 has removed that assurance for the agricultural year 2015-16. Our 36 states and union territories – and the 63 cities whose populations are more than a million – must begin to deal with the possible scenarios immediately.
Stock scenarios – In September 2015 the Department of Agriculture, Cooperation and Farmers Welfare, of the Ministry of Agriculture, Government of India, released the first of its usual four ‘advance estimates’ for the 2015-16 agricultural year. Each estimate sets the targets for the year for the foodgrain (and also commercial) crops, and provides with every estimate how likely it is that the annual target will be met.
This first advance estimate has issued a direct warning: rice production is estimated at 90.6 mt against a target of 106.1 mt. The wheat target is just under 95 mt but there is no estimate provided as yet. The target for coarse cereals is 43.2 mt whereas the advance estimate is just under 28 mt. The target for pulses is 20mt and the first estimate is 5.5mt.
What are the implications? The responsibility of the Department is to provide a provisional reading of the conditions that affect the production of our staple crops, and to inform and prepare state and central governments of the likelihood of shortfalls in foodgrain. The signal it has given for rice, estimated at 85% of the target, must be taken as a flashing red beacon which demands that our food stocks return to the foreground of the national agenda.
It is likely that the second and third advance estimates will see quantities revised upwards, but our planning must be based on this first estimate so that even the most adverse of natural contingencies can be met with suitable measures.
Using the first advance estimate as the basis, here are the likely annual production quantities, at 90% of the target and at 95% of the target: rice, between 95 and 101 mt; wheat, between 85 and 91 mt; coarse cereals, between 39 and 42 mt; pulses, between 16 and 17 mt; total foodgrains, between 236 and 250 mt of which cereals are between 220 and 232 mt.
To help answer this question, two sets of deductions must be accounted for. To begin with, for each main category of foodgrain, there are production quantities, imports, stock variations and exports. When these are added or subtracted, a gross domestic supply quantity remains.
It is worth also noting that this gross quantity is still no more than a best assessment that is synthesised from the information provided by state governments. The first set of deductions is by way of feed, seed and waste (foodgrain that is used in animal feed, is harvested to use as seed for sowing, and which is damaged after harvest or rendered unusable because of pests and infection). Allowing for the lowest likely level of deductions, the combined deduction is about 7% for rice, 10.5% for wheat, 17% for coarse cereals, 15% for pulses, 5% for vegetables and 10% for fruits.
The available quantities are now revised further. Under a 95% of target scenario, we will have 93.5 mt of rice, 81 mt of wheat, 34.5 mt of coarse cereals and 14.5 mt of pulses. In the same way, a 95% of target scenario for vegetables is 153.5 mt and for fruits it is 72.5 mt. On the consumption side we have the households – in 2016 we will have 175 million rural and 83 million urban households.
These households will require a baseline minimum of 181 mt of cereals, 136 mt of vegetables, 45 mt of fruits and 41 mt of pulses. Under a 95% of production target scenario therefore, there will be enough cereals, enough vegetables and enough fruits. We have been falling short in pulses for several years.
But this apparent comfort is still without the second set of deductions. And these are: (1) buffer stocks of rice and wheat to be maintained, with 5-8 mt of rice during the year and 10-18 mt of wheat during the year (to fulfil the demands on the public distribution system and to fulfil the allocations for the food-based welfare programmes), and in addition the strategic reserve of 2 mt of rice and 3 mt of wheat to be maintained; (2) the use of foodgrains by the food processing and retail food industry; (3) exports of primary crops (such as rice and in particular basmati) and processed crops (vegetables and fruits); (4) the industrial use of foodgrain (including for biodiesel); (5) the diversion of cereals to alcohol distilleries.
Some amongst the second set of deductions are known – such as the withdrawals for buffer stocks and the food reserves, and the export quantities – but the others are either hidden, concealed or misreported. In a food production scenario that is less than 95% of targets (in the way that rice has already been estimated for 2015-16), the deductions from gross crop production will decrease available foodgrains, vegetables and fruits to levels that will compromise household food security, especially those households in the lower income brackets.
Recommendations – The climate variations that have led the Department of Agriculture to raise a red flag warning are no longer uncommon. The 2015 monsoon was affected by El Nino conditions, which are expected to continue into the first quarter of 2016. These changes in the pattern of the Indian summer monsoon are amplified by land use change in our districts, by deforestation, by rapid urbanisation, by inequitous water use, and by consumption behaviour. Some of these can be addressed through policy, education and incentives over the long term. What is needed immediately however are:
a) A review of the drivers of crop cultivation choice in our watersheds and agro-ecological zones so that, as far as possible, these settlements units begin the transition towards local food security in sustainable ways. This means that the income-led arguments which favour the cultivation of commercial crops for farming households must be critically re-examined – in a situation of primary crop scarcity an income buffer alone will not help these households.
b) The demands placed by export arrangements (including the export of meat, which represents fodder and feed) and by the food processing and retail food industry must be quantified and made public. Especially at the level of district administrations, the need to rationally incentivise land use towards the cultivation of food crop staples that suit agro-ecological conditions has become an urgent one. The decentralisation of planning that can make such an approach possible can take place only when hitherto hidden and concealed foodgrains use becomes public.
c) To reach self-reliance at the level of panchayat or block (tahsil, taluka), cooperative farming must be vigorously encouraged, villages must become self-reliant in the provisioning of their food staples (a consideration that must balance that of the ‘national market’), the bio-physical limits of the major food producing districts (the top 250 by quantity) have already been reached and this necessarily limits the demand urban India can exert upon rural districts, in terms not only of food quantities but also in terms of the population that must be fully engaged in foodgrains cultivation.
Update 11 July: The Greek parliament supported a so-called package of spending cuts, pension savings and tax increases with a majority of 251 votes in the 300-seat parliament. This is what the 61.3% ‘NO’ vote rejected six days ago! Naturally, this has set the stage for massive internal turmoil in Greece. Heavyweights of Syriza, parliament speaker Zoi Konstantopoulou and energy minister Panagiotis Lafazanis, and 15 other members either voted against the plan, abstained or were absent from the vote. Another 15 Syriza members of parliament said they also opposed the proposed measures and could reject them in future votes even though they supported prime minister Alexis Tsipras and his template of borrowed proposals. With breath-taking cynicism, the Syriza leader has presented this direct repudiation of the will of the Greek people as a “triumph of democracy”. Who is this man Tsipras working for?
Beyond the beggaring calculations made by the economists and financiers of the Troika and the ahistorical stubbornness of the Berlin-Paris ruling cliques who will still not deviate from their ‘austerity’ prescription, is the legitimacy of Greece’s claim to autonomy. “Autonomy, the willingness and capacity to question and change our collective laws, is a universal principle and one that should be at the heart of the European project,” writes Giorgos Kallis. “Greece’s disobedience to the rule of the markets is a universalistic call for reclaiming democracy for all Europe, not a particularist protection of its own backyard. This is not a demand for the rest of Europe to obey to Greece’s will, but a plea to listen, reflect and genuinely co-decide.” Ah but Berlin cannot abide any other will than its own.
It is finanzpolitik, or perhaps the political economy of occupation by austerity. Whatever it is called in Eurolingua it has proved politically effective for European elites in general to present the Greek problem as their own debt problem. Doing so has provided a powerful ideological and moral justification for the brutal austerity policies prescribed to the countries of the European ‘periphery’ (and especially Greece) in recent years. And so, as Thomas Fazi has narrated, Euro-leaders’ “deeply moral interpretation of the euro crisis – which pitted the profligate, debt-ridden wrongdoers of the periphery against the virtuous, responsible countries of the core – rapidly became conventional wisdom among European politicians, commentators and bureaucrats”.
On Sunday 5 July 2015 Europe was shown to be imprisoned by its institutions. But the people of Greece chose with dignity and in solidarity to expose the prison, and walk away.
The landslide ‘no’ (or OXI) vote in the 5 July referendum on austerity in Greece is an overwhelming repudiation of the European Union and the austerity agenda pursued all over Europe since the 2008 economic crisis. The weapon of austerity is the euro, and it works by wiping out genuine economic and social progress through productive systems composed largely of small and medium enterprises, because this weapon pries open these local ‘markets’ (a despised term) to raids by financial monopolies.
Such raids have the sanction of the International Monetary Fund, the European Commission, and the European Central Bank – together known as the troika which has waged war on the Greeks. The troika has waged such war as punishment (in the words of European politicians such as Angela Merkel, Francois Hollande, Martin Schulz, Wolfgang Schäuble and David Cameron) to the Greeks for their own failed design of the Euro in a system that is economically unsustainable and socially perverse.
“Shame on all those who have accepted the idea that the troika represents the European peoples,” wrote Samir Amin. “Shame on the governments that have installed in the presidency of ‘their Europe’ a Luxembourgian functionary in the service of a tax haven; installed in the management of ‘their central bank’ a character who made a career at Goldman Sachs, the bank associated with all the financial villainies of the century.”
The ‘OXI’ (no) in the referendum means the Greeks voted for a socially just distribution of the burdens for the sustainable reforms necessary in their country to fight corruption and nepotism. They voted for sustainable reconstruction and growth of their economic structures, to reduce military spending and for mandatory negotiations on debt restructuring. Those who so voted on 5 July were 61.3% of the Greek people, drawn largely from the working class and poorer layers of the population.
But what happens now?
There is not much belief that the Syriza government will fulfil the ‘no’ vote mandate and bring austerity to an end. Reportage via independent media say that most people fear there will be new austerity measures, which the mass of the population can no longer take.
Should the Greek Parliament approve talks on the new proposal (it may be acceptable to the Eurozone’s negotiators but has will still have to be approved by the European Parliament) there will be a short period during which the people of Greece will reflect on what is being done. They may decide to tolerate more ‘negotiation’, or not. They could rise up against a government that has gone back on its promises and disregarded their will as expressed in the referendum.
On the other hand Germany will balk at offering any debt relief. The European financial press (such as it is) is carrying reports that a section of German capitalist strategists are calculating that it is now cheaper to kick Greece out of the euro (provide a ‘humanitarian relief aid’ dollop) than continue to negotiate a formal bailout. A French publication reported that the Greek negotiation team was asked by Schäuble, “how much money do you want to leave the euro”, underlining how execrable the Euro political class has become.
These have been disastrous times for people in Greece. Salaries have been cut by half, taxes have increased eight times (not by 8% or 80% but eight times more), there are 1.5 million people unemployed and that is a full third of the working class, those who have jobs have often not been paid in weeks or months. There is misery and 60 euros as pension for those who can find 60 euros to draw out, but the Greeks want to their overthrow of austerity to be historic and permanent.
The Parliamentary Consultative Committee to the Ministry of Steel and Mines has just met. Its chairperson, the Union Minister of Steel and Mines, Narendra Singh Tomar, has following the meeting made an announcement which, if even partly pursued, will alter hugely India’s energy use, our energy mix and our emissions of CO2. Its ecological impact can barely be guessed at.
Tomar said that until 2014 India was the fourth largest producer of iron and steel in the world (after China, Japan and USA). The first five months of 2015, according to industry data, indicate that India will end the year one position higher. This possibility is seen as a triumphant landmark by the present government, for USA will then be relegated to fourth place.
As the table alongside shows, India produced 81.3 million tons of steel in 2013 and 86.5 million tons in 2014 (data from the World Steel Association). The achievement that the minister is so proud about is the data for January to May 2015, during which time India produced 37.6 mt compared with the USA which produced 33.1 mt. On this basis, Tomar and the ministry and the country’s iron and steel industry see a bright future.
So bright indeed that Tomar (having duly consulted the mandarins who are in the know of such things in the ministry) announced that as India’s per capita steel consumption is “quite low, 60 kilograms as against the world average of 216 kilograms, this low consumption no doubt indicates huge growth potential for Indian steel industry”. It hasn’t occurred to any inside the ministry or outside it apparently to wonder whether we would get by quite nicely with 60 kg per person per year or even 50 kg, now that so much has already been built using iron and steel.
But no, Tomar has instead grandly announced to the members of the Parliamentary Consultative Committee that “India has fixed a target of 300 million tonnes production capacity by 2025 and steel ministry is working out action plan and strategies to achieve this target”!
Where did this absurd ‘target’ come from? Does the Union Minister of Steel and Mines simply make numbers up as he wanders about gawking at blast furnaces and iron ore mines or are there advisers in this ministry, in the Ministry of Power (which includes coal and renewable energy), in the Ministry of Environment, in the Ministry of Rural Development and in particular in that ministry’s Department of Land Resources, who has given him these numbers? Or has this monstrous and foolish number come from the world’s iron and steel industry and in particular its Indian private sector heavyweights?
The World Steel Association, which serves as the apex association of the metalmen, scarcely bothers to camouflauge what it wants – that the two big and neo-liberally growing Asian economies continue to feed their appetite for iron and steel. “Despite continued turbulence around the world in 2014, it has been another record year for the steel industry,” explained the Association in its 2014 statistical round-up. “Crude steel production totalled 1,665 million tonnes, an increase of 1% compared to 2013. 2014 also saw the emergence of a new phase in steel markets. For the past decade, the steel industry was dominated by events in China. The evidence is that the steel industry is now entering a period of pause before undoubtedly picking up again when markets other than China drive new demand.”
That phase concerns India, the pause is the building of new steel-making capacity in India (and the staking out of new areas, many under dense old forest, to dig for iron ore and for coal), we are the market other than China (whose steel plants are working at 70% of capacity, if that, and whose consumption growth has stopped), and it is India, in this metallic calculation, that will drive new demand. That is the reason for Tomar’s announcement of per capita kilo-consumption of steel and the 300 million ton figure.
It is scandalous that a minister in charge of a major ministry makes such an announcement without a moment’s thought given to what it means in terms of energy use and what it means in terms of raw material. It takes a great deal of energy to make a ton of steel. Industry engineers call it energy intensity and, including the wide range of methods used to make steel and the wide variety of raw materials used, this energy intensity varies from about 15 gigajoules (GJ) per ton to about 23 GJ per ton.
Put another way, it takes as much energy as 22 average urban households in India use in a month (at about 250 units, or kilowatt hours, per month each) to make a ton of steel. This is the equivalence that ought to have been discussed by the Parliamentary Consultative Committee so that choices can be made that lead us to decisions that do not bury us under kilograms of steel while we suffocate from pollution and have no trees left to provide shade. The equivalence begins with the 86.5 million tons of steel India produced in 2014. This is 237,000 tons per day. India also generated some 1.2 million gigawatt hours of electricity in 2014-15. The two measures are not operands in the same equation because steelmaking also uses coking coal directly.
What we do know is that the residential and industrial sectors consume about 40% and 30% respectively of energy generated, that the making of iron and steel is extremely energy-intensive (it is estimated to account for about 6.5% of India’s total emissions), and that this sector alone accounts for a quarter of India’s total industrial energy consumption. And this is at 86.5 million tons, whether we stand at third or fourth place on the world steelmaking victory podium.
To make these many tons (for our regulation 60 kilos per year ration) it takes a gigantic quantity of raw material. A ton of steel produced in a basic oxygen furnace (which is how 42% of our steel is made) requires 0.96 ton of liquid hot metal (this in turn comes from 1.6 ton of iron ore and 0.6 ton of coking coal) and 0.2 ton of steel scrap. A ton of steel produced in an electric-arc furnace (58% of steel is made this way in India) requires around 0.85 tons of steel scrap and supplementary material amounting to about 0.3 tons (the coal having been burnt in the thermal power plant elsewhere).
What justification can Minister Tomar and his associates provide for this mad project to enclose all Indians in choking suits of armour? it comes from the world’s foremost ironmongers, speaking through their association: “The impact of urbanisation will have a key role to play in the future. It is estimated that a little more than one billion people will move to towns and cities between now and 2030. This major flow will create substantial new demand for steel to be used in infrastructure developments such as water, energy and mass transit systems as well as major construction and housing programmes.” And there we have it – the urbanisation obsession of India translated into ever heavier per capita allotments of metal, and to hell with the trees and the hills.