Poor India

Listener: 28 May, 2011.

Keywords: Political Economy & History;

India told those negotiating the Doha Round – the multilateral attempt to liberalise world trade – it had over 700 million people dependent on subsistence farming, more than the entire populations of the European Union and the United States combined. It was not willing to sacrifice them, India said, in the interests of a handful of American and European farmers. And so the Doha negotiations ground to a halt.

This was much to the disappointment of New Zealand farmers, because although Indian farmers do not compete with them – they mainly grow grain – the intricacies of the negotiation mean everything depends on everything else.

Two out of three Indians live in rural areas, often with a standard of living below the World Bank poverty line (less than NZ$2-3 a day). Although the proportion who are poor is falling – the poverty rate has halved in the past 20-odd years – a third of the world’s poor live in India.

When I was there, I saw beggars, amputees and the homeless, but I was struck that most rural dwellers seemed happy enough, although I was not in the most impoverished states. Even so, their young miss out on a childhood, their adolescents on opportunity, their adults on security; most miss a long healthy life. Their predicament is not just a lack of material resources. Perhaps they can cope if things are going well; otherwise the poor are in deep trouble.

So their material needs should not be ignored. The Indian Government proposes to provide virtually every citizen with a minimum income in the form of a daily rice allowance. It is a scheme better in aspiration than execution. Given the endemic corruption, delivery is not assured even if the Government can fund the scheme. (There is already a programme to provide free education to all India’s children, but not every child gets it. The adult literacy rate is 68%, up from 12% at the end of British rule in 1947.)

Ideally, farm productivity should be increased. The green revolution using higher-yielding seeds and fertiliser substantially increased production of food grains in some areas; some wistfully hope for a second revolution. A better prospect is that known technologies could double output. Unfortunately, land tenure and social institutions retard their introduction.

As milk production goes up, market supply goes down, because the farmers retain more for their own use. This is good news for our dairy farmers, as we are negotiating a free-trade agreement with India; other food products will target the thriving affluent. And high-quality hotels serve “mutton” – which can mean goat meat. All good for New Zealand, but sad that we benefit from the poverty, even if we alleviate it to some extent. We need to buy more from India.

The ability of the modern sector to absorb villagers is limited, and the poverty-ridden urban service sector is hardly a happy option. The alternative may be political revolution.

Naxalites do not loom large on our news screens, but these Maoists are endemic in the “red corridor” down the east coast from Bengal through Bihar, the poorest state by far, to Andhra Pradesh. (Kerala is not among them – their Marxists are democratic; nor is the Punjab, where the green revolution has been most effective.) The guerrillas are said to control an area a third of the size of New Zealand. Up to a thousand people die each year as a result of the fighting.

I did not see any Naxilites, but a number of Indians talked to me about their concerns. The failure to eliminate poverty fast enough provides a source of disaffection, which is exacerbated by the growing inequality. From the armchair it is easy to predict that one day rural living standards will rise, and the growth in inequality will reverse, as has happened elsewhere. But that day may be a long way off, and the rural insurgents are impatient. A lot could go wrong in the interim.

This is the fourth of a series of columns on India made possible by a travel grant from the Asia New Zealand Foundation.