Globalization and Its Impact on Indian Agriculture

Globalization and Its Impact on Indian Agriculture:

A Study of Farmers Suicides in the State of Andhra
Pradesh
B.V. Muralidhar
D.M. Mamatha
G. Stanley Jayakumar
Roseline Mary

Abstract
As a central concept in the present day international scenario, globalization is difficult to
define. Still, scholars have made attempts to provide a basic understanding of the
concept. The concept has become inextricably linked with the process of transformation
touching upon every aspect of social, political and economic development in the globe. It
can be seen as a process by which the population of the world is increasingly bonded into
a single society. In the social front, globalization signifies closer interaction of people
and homogenization of culture and value and the world being transformed into a global
village.
Scholars like Anthony (1990), a British sociologist, conceive globalization as the
intensification of worldwide social relations which link distant localities in such a way
happenings are shaped by events occurring many miles away and vice versa. Robert
Cox, an American political scientist (1994), visualizes globalization from a different
perspective. For him, The characteristics of globalization trend include the internalizing
of production, the new international division of labour, new migratory movements from
South to North, the new competitive environment that accelerates these processes, and
the internationalizing of state making states into agencies of the globalizing world.
This concept has assumed much significance in both developing and developed nationsmore so in the former as the people talk about dilution of state authority and interference
of supra national institutions. The present paper is a theoretical study which discusses
the impact of globalization on agriculture in India since two decades, the problems faced
by the farmers, measures to be taken to overcome these problems and negative influence
of globalization so as to improve the productivity, because 56% of the population still
depend on agriculture in India, and the process of globalization cannot be reversed now.
Hence, an attempt is made to highlight the positive and negative impacts of globalization
on this important sector.
depends on agriculture and related
occupations for their livelihood. Nearly
three-fourth of the population belongs to

India and Globalization

India has pre-dominantly an agrarian
economy. Over 56% of the population
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Nepalese Journal of Public Policy and Governance, Vol. xxix, No.2, December, 2011

example, the wholesale foodgrain index

increased from 179 points to 410 points,
whereas the average national income fell
from 193 points to 122 points. Thus, the
condition of the common man did not
improve as expected in the globalized
India.

the weaker sections, some of whom are

marginal and small farmers whereas
others belong to the working class. They
suffer from various forms of social
stigma. Thus, they are the most deprived
sections in India. Several development
and welfare programmes were launched
since India became a Sovereign
Republic to ameliorate their conditions,
as mandated by the Constitution. But, the
beneficial impact of this is only marginal.
With the introduction of economic
reforms since 1980s, the plight of the
weaker sections became worse as most of
them were small and poor farmers. Faced
with many structural constraints, they are
dangerously getting pushed out of the
system, as the entry of machines and
highly skilled workforce has resulted in
fewer number of man-days, wages and
irregularity in employment for the semiskilled and unskilled. The cumulative
effect of all these led to miserable
conditions for the people in India, in
general and for farmers in particular. An
analysis of the impact of globalisation on
the crucial agricultural sector is being
taken up.

Tariff levels are guided mostly by the

interest of the developed nations. For the
Indian farmer, who is already paralyzed
by low productivity and lack of postharvest storage facilities has resulted in
heavy loss of produce and revenue, low
tariff in imports (due to liberalized import
duties) came as a bolt from the blue. The
domestic farmer could not stand the
competitiveness of international market,
which has resulted in migration of labor
from agriculture to other industrial
activities. Further, the high prices of
seeds, fertilizers, and pesticides are
driving many a farmers in states like
Andhra Pradesh, Karnataka, Maharashtra
to commit suicides in desperation. Nature
too has not been kind to farmers in recent
years as only 50% of agricultural
production was seen in India, due to
deficient rainfall.

Globalization and Agriculture

Impact of Globalization on Indian

Agriculture

Globalization
combined
with
liberalization has led to the decline of
public investment in agriculture. In the
pre-globalization period, the country's
foodgrain production was 3.5% whereas
in the post-globalization period it fell to
1.7%. One factor for this fall is reduction
in subsidies given to farmers, which
resulted in higher prices of the foodgrains
in the market. On the other, in India the
average income of the common man did
not increase correspondingly. For

The liberalization of India's economy was

stunted by India in 1991. Facing a severe
economic crisis, India approached the
IMF for a loan, and was granted what is
called a structural adjustment loan, with
certain conditions attached which relate to
a structural change in the economy. The
government ushered in a new era of
economic reforms based on these
conditions. These reforms (broadly called
17

Globalization and Its Impact on Indian Agriculture

Liberalization) can be classified into three

areas: Liberalization, Privatization and
Globalization. Essentially, the reforms
sought to gradually phase out government
control of the market (liberalization),
privatize public sector organizations
(privatization), and reduce export
subsidies and import barriers to enable
free trade (globalization). There was a
considerable amount of debate in India at
the time of the introduction of the
reforms, as it was a dramatic departure
from the protectionist, socialist nature of
the Indian economy up until then.

a. The Crisis Facing Indian Agriculture

Debt: The biggest problem Indian
agriculture faces today, and the number
one cause for farmers committing
suicides is debt. Forcing farmers into a
debt trap is soaring input costs, the
plummeting price of produce, and a
lack of proper credit facilities, which
makes the farmers turn to private
moneylenders who charge exorbitant
rates of interest. In order to repay these
debts, the farmers borrow again and get
caught in a vicious debt trap. The need
is to examine each of the causes which
has led to the current crisis in Andhra
Pradesh, Kerala and Maharashtra, and
analyse the role that liberalization
policies have played. As mentioned
earlier, Andhra Pradeshs experience is
particularly relevant to this analysis
because of its leadership. Chandrababu
Naidu, Chief Minister of Andhra
Pradesh, from 1995-2004, was an IT
savvy, neo-liberalp and believed that
the way to lead Andhra Pradesh into
the future was through technology and
an IT revolution. His zeal led to the
first ever state level (as opposed to
national level) agreement with the
World Bank, which entailed a loan of
USD 830 million in exchange for a
series of reforms in his state industry
and government - Naidu envisaged
corporate style agriculture in AP, and
implemented
the
World
Bank
liberalization policies with great
enthusiasm and gusto. He drew severe
criticism from his opponents, saying he
was using AP as a laboratory for
extreme
neo-liberal
experiments.
Hence,
the
experience
with
liberalization is critical.

However, reforms in the agricultural

sector in particular came under severe
criticism in the late 1990s, when 221
farmers in the south Indian state of
Andhra Pradesh committed suicide in one
year. The trend was noticed in several
other states, and the figure today,
according to a leading journalist and
activist, P. Sainath, stands at more than
200,000 across the country. Coupled with
this was a sharp drop in agricultural
growth from 4.69% in 1991 to 2.06% in
1997. This paper seeks to look into these
and other similar negative trends in Indian
agriculture today, and in analyzing the
causes, will look at the extent to which
liberalization reforms have contributed to
its current condition. It will look at
supporting data from the Indian state
which is badly affected by the crisis:
Andhra Pradesh, as its experience is
particularly critical in this debate because
it was headed by Chandrababu Naidu, the
then Chief Minister who pursued
liberalization with enthusiasm. Hence,
liberalization in this state has been faster
than other states, and the extent of its
impact has been wider and deeper.

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Nepalese Journal of Public Policy and Governance, Vol. xxix, No.2, December, 2011

BT Cotton and other new seeds

guarantee a much lower germination
rate of 65% as opposed to a 90% rate
of state certified seeds. Hence, 35% of
the farmer's investment in seeds is a
waste. Output is not commensurate
with the heavy investment in seeds,
and the farmers are pushed into debt.
The abundant availability of spurious
seeds is another problem which leads
to crop failures. Either tempted by their
lower price, or unable to discern the
difference, farmers invest heavily in
these seeds, and again, low output
pushes them into debt. Earlier, farmers
could save a part of the harvest and use
the seeds for the next cultivation, but
some genetically modified seeds,
known
as
Terminator,
prevent
harvested seeds from germinating,
hence forcing the farmers to invest in
them every season.

b. The Debt Trap and the Role of Seeds:

The biggest input for farmers is seeds.
Before liberalization, farmers across
the country had access to seeds from
state government institutions For
example, Andhra Pradeshs APSSDC
produced its own seeds, was
responsible for their quality and price,
and had a statutory duty to ensure
seeds were supplied to all the regions
in the state, no matter how remote they
are. The seed market was well
regulated, and this ensured quality in
privately sold seeds too. With
liberalization, India's seed market was
opened to global agri-businesses like
Monsanto, Cargill and Syn Genta.
Also, following the deregulation
guidelines of the IMF, 14 of the 24
units of the APSSDCs seed processing
units were closed down in 2003, with
similar closures in other states. This hit
the farmers doubly, and in an
unregulated market, seed prices shot
up, and fake seeds made an appearance
in a big way. Seed cost per acre in
1991 was Rs.70, but in 2005, after the
dismantling of APSSDC and other
similar organizations, the price jumped
to Rs.1000, a hike of 142%; with the
cost of genetically modified pest
resistant seeds like Monsanto's BT
Cotton costing Rs.3200 or more per
acre, a hike of 355%. BT Cotton is
cotton seed that is genetically modified
to resist pests, the success of which is
disputed: farmers in Andhra Pradesh
and Maharashtra now claim that yields
are far lower than promised by
Monsanto, and there are fears that pests
are developing resistance to the seeds.
Expecting high yields, the farmers
invested heavily in such seeds. Also,

c. Fertilizers and Pesticides: One

measure of the liberalization policy,
which had an immediate adverse effect
on farmers, was the devaluation of the
Indian Rupee in 1991 by 25% (an
explicit condition of the IMF loan).
Indian crops became very cheap and
attractive in the global market, and led
to an export drive. Farmers were
encouraged to shift from growing a
mixture of traditional crops to exportoriented 'cash crops' like chilli, cotton
and tobacco. These need far more
inputs of pesticides, fertilizers and
water than the traditional crops require.
Liberalization policies reduced subsidy
on
pesticides
(another
explicit
condition of the IMF agreement) by
two-thirds in 2000. Farmers in
Maharashtra who had spent Rs.90 an
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Globalization and Its Impact on Indian Agriculture

acre earlier now spend between Rs.100

and Rs. 300, representing a hike of
1000% to 3333%. Fertilizer prices
have increased by 300%. Electricity
tariffs have also been increased: in
Andhra Pradesh tariff was increased 5
times between 1998 and 2003. Preliberalization, subsidized electricity
was a success, allowing farmers to
keep the costs of production low.
These costs increased dramatically
when farmers turned to the cultivation
of cash crops, which needed more
water, hence, more water pumps were
needed and there was higher
consumption of electricity. Andhra
Pradesh being traditionally drought
prone, the situation further worsened.
This caused huge, unsustainable losses
for the Andhra Pradesh State
Electricity Board, so it increased the
electricity tariff. The fact that only
39% of India's cultivable land is
irrigated makes cultivation of cash
crops largely unviable, but export
oriented liberalization policies and
seed companies looking for profits
continue to push farmers to the wall.

supply of cotton in the market led

cotton prices to crash more than 60%
since 1995. As a result, most of the
farmers committing suicides in
Maharashtra were concentrated in the
cotton belt till 2003 (after which paddy
farmers followed the suicide trend).
Similarly, Kerala, which is world
renowned for pepper, has suffered as a
result of 0% duty on imports of pepper
from SAARC countries. Pepper, which
sold at Rs.27,000 a quintal in 1998,
crashed to Rs.5000 in 2004, a decline
of 81%. As a result, Indian exports of
pepper fell 31% in 2003 from the
previous year. Combined with this,
drought and crop failures hit the pepper
farmers of Kerela hard, and have
forced them into a debt trap. Close to
50% of suicides among Kerelas
farmers have been in pepper producing
districts.
From the above discussion, it is evident
that globalization did not yield the desired
results in India. It has been of little help
in eliminating poverty, and eradication of
social inequalities.
The proclaimed
objectives of globalization, namely
increased employment and prosperity of
the people have not been achieved in
India. It has deepened the division in the
society between the rich and the poor. It
has marginalised and alienated a vast
majority of the common people on whose
sweat and toil the nation's pillars are built.

d. The Debt Trap, Low Price of Output:

With a view to open Indias markets,
as per the liberalization reforms tariffs
and duties on imports were withdrawn,
which protect and encourage the
domestic industry. By 2001, India
completely removed restrictions on
imports of almost 1,500 items
including food. As a result, cheap
imports flooded the market, pushing
prices of crops like cotton and pepper
down. Import tariffs on cotton now
stood between 0 - 10%, encouraging
imports into the country. This excess

The overall impact of reforms on Indian

society, especially among the weaker
sections, has been of great concern. In the
words of Gamani Corea,
former
SecretaryGeneral,
UNCTAD,
Globalization instead of being an
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Nepalese Journal of Public Policy and Governance, Vol. xxix, No.2, December, 2011

equalising process, has only widened the

gap between the two in terms of
monopoly in science and technology, flow
of capital, access to natural resources,
communication and nuclear armament

5.

Globalization with a Human Face

That the process of globalisalion is
affecting the well-being of the poor in the
poorest countries is not surprising. No
nation at present can escape globalization.
India has gone too far into the reform
regime and cannot reverse the process.
The
government
has
onerous
responsibility, and has to take corrective
measures to sec that the reforms arc
implemented with a human face, so that
they give the desired results to the
common man. If not, India and its
majority population may face dangerous
consequences in the future.

6.

7.

Some safety nets had to be evolved with

the implementation of SAP. These could
be identified as the following.

8.

1. Protection and development of home

market which would be subverted if
liberalization of export-import trade
were effected.
2. Indigenous research and development
has to be encouraged which is
subverted
by
imposition
on
intellectual property and patent rights.
3. The poor farmers should be protected
with subsidies and loans, at least to
the subsistence level. Supply of food
grains at subsidized prices through
PDS is to be continued and further
streamlined.
4. The government must take up mass
public employment programs through

the public sector, where the interests

of the farmers and weaker sections
can be protected.
The poor who are mostly uneducated
and low-skilled must be educated and
skills imparted to them so that they
can face the competition from skilled
and well-educated workers, and also
become partners in development. One
nation which has used their human
resources to its advantage is China.
The fiscal crunch, which affected
public expenditure on social sector,
has to be readjusted in favour of
services which benefit the poor
farmers in agriculture.
The economic reforms implemented
should be transparent. There has to be
accountability and responsiveness.
Peoples' involvement would be total if
it is from the initial stage of planning,
through
implementation
and
monitoring, to the final stage of
evaluation.
There has to be a shift from token
welfarism
to
effective
empowerment. Welfarism merely
makes the people dependent and look
to the State help. Effective
empowerment will make people
enthusiastic so that they will gel
involved in the development process
with devotion.

The implementation of safety nets is

fraught with severe constraints of
resources, inability to properly target the
beneficiary groups, lack of properly
conceived public works programs and
half-hearted efforts to provide health and
education facilities to the poorest sections.
The consequences of all these effects has
been one of growing deprivation of the
21

Globalization and Its Impact on Indian Agriculture

poorest of the poor whose very right to

life with dignity stands seriously
jeopardized. A focus on the human rights
implications of market-driven growth is
necessary to challenge the current trend in
industrialized countries to undermine the
role of the UN in human development,
while conceding greater power and
authority to the World Bank and IMF.

groups and farmers appear to suffer the

worst deprivations of their basic rights
like secure employment and stable
income. The withdrawal of the State from
the responsibility of promoting inclusive
growth results in severe hardships to the
poor wherever they are. There must be
proper safety mechanisms and measures
to take care of them. Development of the
poor and the deprived must be a part of
any development strategy and not
Development Vs the Poor as it is
understood in the Third World context.

SAP by emphasizing market-induced

growth excludes vulnerable groups like
women, weaker sections and the poor, in
general, from the benefits of growth. In
fact, often these marginalised nations and

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