Veronika Decides to Die- Book Review

Veronika, a young girl in her twenties takes sleeping pills bored to live the routine life and since she felt life is not worth living since things turn out to be the same with no much difference. But in her suicide note she writes that she has taken the decision to die since her country Slovenia was not known to many. Unfortunately she   survives the attempt and gets landed in a mental asylum called Villete.

The chief Doctor says that she will survive only for two more weeks since her heart got damaged and irreparable and she might have a stroke anytime.  She was not bothered about her state initially, but later on she decides to leave the rest of her days by doing whatever she likes and enjoys by playing Piano, masturbating openly in front of schizophrenic male etc.

The story asks you live as you wish not being controlled by mad rules of the society. The entire world is a mad world and we are living in it. A short story told by another psychiatric patient Zedka reveals this clearly

“Once upon a time, powerful wizard, who wanted to destroy an entire kingdom, placed a magic potion in the well from which the inhabitants drank. Whoever drank that water would go mad.

The following morning, the whole population drank from the well and they all went mad, apart from the king and his family, who had a well set aside for them alone, which the magician had not managed to poison. The king was worried and tried to control the population by issuing a series of edicts governing security and public health. The policemen and the inspectors, however, had also drunk the poisoned water, and they thought the king’s decisions were absurd and resolved to take notice of them.

When the inhabitants of the kingdom heard these decrees, they became convinced that the king had gone mad and was now giving nonsensical orders. The marched on the castle and called for his abdication.

In despair the king prepared to step down from the throne, but the queen stopped him, saying: ‘Let us go and drink from the communal well. Then we will be the same as them.’

And that was what they did: The king and queen drank the water of madness and immediately began talking nonsense. Their subjects repented at once; now that the king was displaying such ‘wisdom’, why not allow him to rule the country?

The country continued to live in peace, although its inhabitants behaved very differently from those of its neighbors. And the king was able to govern until the end of his days.”

That’s what is happening in todays world.

Paulo Coelho also makes a mock at the todays laws and rules, and even blames God for creating a situation that Adam and Eve commit the mistake of eating the forbidden fruit.

Another patient Maria decides to live in the asylum itself even after cure since she feels the world outside to be even mad.

Veronika decides to die is a wonderful novel that one should read. Veronika after living as per her wish finds life to be worth living and later longs for living.

The following are some of the quotes from the book. Read ,feel and understand that life is worth living but we are living in  a wrong way

Below are the few quotes from the book      

 “The two hardest tests on the spiritual road are the patience to wait for the right moment and the courage not to be disappointed with what we encounter.”

“People never learn anything by being told, they have to find out for themselves.”

 “If one day I could get out of here, I would allow myself to be crazy. Everyone is indeed crazy, but the craziest are the ones who don't know they're crazy; they just keep repeating what others tell them to.”

 “Be crazy! But learn how to be crazy without being the center of attention. Be brave enough to live different.”

 “You are someone who is different, but who wants to be the same as everyone else. And that in my view is a serious illness. God chose you to be different. Why are you disappointing God with this kind of attitude?”

 “Love fills everything. It cannot be desired because it is an end in itself. It cannot betray because it has nothing to do with possession. It cannot be held prisoner because it is a river and will overflow its banks. Anyone who tries to imprison love will cut off the spring that feeds it, and the trapped water will grow stagnant.”

 “Haven't you learned anything, not even with the approach of death? Stop thinking all the time that you're in the way, that you're bothering the person next to you. If people don't like it, they can complain. And if they don't have the courage to complain, that's their problem”

 “Be like the fountain that overflows, not like the cistern that merely contains.”

 “Faith is not Desire. Faith is Will. Desires are things that need to be satisfied, whereas Will is a force. Will changes the space around us,...”

 “Nothing in this world happens by chance”

 “People learn twenty-five percent from their teacher, twenty-five percent from listening to themselves, twenty-five percent from their friends, and twenty-five percent from time.”

 “You have two choices, to control your mind or to let your mind control you.”

 “They say that extroverts are unhappier than introverts and have to compensate for this by constantly proving to themselves how happy and contented and at ease with life they are.”

“Everything, absolutely everything on this earth makes sense, and even the smallest things are worthy of our consideration.”

“I wanted to...feel hatred and love, despair and tedium-- all those simple, yet foolish things that make up everyday life but that give pleasure to your existence. If one day I could get out of here, I would allow myself to be crazy, Everyone is indeed crazy, but the craziest are the ones who don't know they are crazy; they just keep repeating what others tell them to.”

“Anyone who lives in her own world is crazy. Like schizophrenics, psychopaths, maniacs. I mean people who are different from others.'

Like you?'

“But time, as well as healing all wounds, taught me something strange too: that it's possible to love more than one person in a lifetime. I remarried. I'm very happy with my new wife, and I can't imagine living without her. This, however, doesn't mean that I have to renounce all my past experiences, as long as I'm careful not to compare my two lives. You can't measure love the way you can the length of a road or the height of a building.”

 “She would consider each day a miracle - which indeed it is, when you consider the number of unexpected things that could happen in each second of our fragile existences.”

 “How many of us will be saved the pain of seeing the most important things in our lives disappearing from one moment to the next? I don't just mean people, but our ideas and dreams too: we might survive a day, a week, a few years, but we're all condemned to lose. Our body remains alive, yet sooner or later our soul will receive the mortal blow. The perfect crime - for we don't know who murdered our joy, what their motives were, or where the guilty parties are to be found...they too are the victims of the reality they created.”

 “I want to continue being crazy; living my life the way I dream it, and not the way the other people want it to be.”

 “Personal growth has its price, and she was paying it without complaint.”

 “Death frees from the fear of dying”

 “LIVE. If you live, god will live with you. If you refuse to run his risks, he'll retreat to that distant heaven and be merely a subject for philosophical speculation.”

 “What does learning mean: accumulating knowledge or transforming your life?”

 “Many people don't allow themselves to love...because there are a lot of things at risk a lot of future and a lot of past.”

 “We all live in our own world. But if you look up at the starry sky - you'll see that all the different worlds up there combine to form constellations, solar systems, galaxies.”

 “Collective madness is called sanity ..”

Some good books -1

I suggest here few books which can broaden your perspective.

1. The difficulty of being good- By Gurucharan das 


2. Thus spake Zarathustra-  Nietzche 


3. Beyond Good and Evil- Nietzche 


4. Veronica Decides to Die- Paulo Coelho 


5. The theory of Leisure class- Veblan 


6. Black Swan- Nassim Taleb 


7.Mans  Search  for  Meaning - Vicktor  Frankl 
Tamil Books 


1. இன்றைய காந்தி - ஜெயமோகன் 


2. ஒரு புளியமரத்தின் கதை - சுந்தரம் ராமசாமி.. 

Malnourished India- Given with wrong food?

The truth behind India’s economic policies

Scene-1

Indian economic crisis

From 1950 to 1980, while the Indian economy was growing at a relatively slow rate of 3.6 percent, domestic investment exceeded domestic savings by only a small margin. The gap could be bridged through foreign borrowing on a small scale. However, during the period 1979 to 1990, when the growth rate of GDP accelerated to 5.4 percent, the gap between savings and investment widened substantially. The need to finance large capital expenditures, imports of machinery and raw materials, including oil, necessitated heavy borrowing from abroad. The result was a cumulative increase in foreign debt and in repayment liability. Foreign debt increased from US$23.5 billion in 1980 to $63.40 billion in 1991. In 1991, nearly 28 percent of total export revenues went to service the debt. The most important reason for the internal savings rate falling increasingly short of investment requirements was the expanding fiscal deficit of the government which had risen from an average of 6.3 percent of GDP during the Seventh Five-Year Plan to 8.2 percent by 1990-91.

Political changes, unrest in parts of the country, and the 1990 Persian Gulf crisis compounded the already volatile situation. The crisis caused oil prices to rise, substantially increasing the cost of oil imports, and foreign exchange earnings to drop. India's creditworthiness, already under strain, became even more vulnerable as Indians from abroad withdrew their substantial foreign currency deposits and commercial banks reduced their exposure. Toward the end of 1990, India's creditworthiness was downgraded, effectively cutting its access to sources of commercial credit. By early 1991, India was on the brink of default.

India had no other option except to borrow additional loans from IMF and world bank.

Scene-2

IMF and World Bank- what they are interested in?

The IMF and World Bank’s policies are very different now from their original intent.

The International Monetary Fund and the World Bank were conceived by 44 nations at the Bretton Woods Conference in 1944 with the goal of creating a stable framework for post-war global economy. The IMF was originally envisioned to promote steady growth and full employment by offering unconditional loans to economies in crisis and establishing mechanisms to stabilize exchange rates and facilitate currency exchange. Much of that vision, however, was never born out. Instead, pressured by US representatives, the IMF took to offering loans based on strict conditions, later to be known as structural adjustment or austerity measures, dictated largely by the most powerful member nations.

The 80s will be remembered as the decade of global impoverishment linked to the Bank and the IMF's infamous medicine: the Structural Adjustment Program (SAP). These programs are being implemented in over 70 Third World and Eastern European countries with devastating results. The Bank-IMF sponsored SAP has two phases. The first phase is short-term macro-economic stabilization. It is followed by implementation of a necessary structural reforms phase. In the early 80s, most SAPs focused on a narrow range of policies aimed at reducing account deficits.

As the debt crisis deepened and it became obvious that the stabilization programs were not working, the US Treasury Secretary, Mr. James Baker came up with a strategy to solve the debt crisis. This was called the 'Baker Plan'. Under this plan, the WB was asked to impose more comprehensive conditions on the debtor countries. By 1990, majority of the countries that had received conditional loans from the IMF also received structural adjustment loans with harsh conditionalities from the Bank.

In 1992, the bank's lending for SAPs totaled 5847 million or 27% of its total commitments. More than 70 countries are subjected to 566 IMF and World Bank stabilization and SAPs in the last 14 years. These countries were told that the structural reforms were essential for sustaining growth and economic stability. Faced with the threat of a cut off of external funds Aid needed to service the mounting debts incurred from western private banks in the 1970s, these countries had no choice but to implement the painful measures demanded by the Bank.

Fourteen years after the World Bank issued its first structural adjustment loan, most countries are still waiting for the market to "work its magic". Despite global adjustment, the third world's debt burden rose from $785 billion at the beginning of the debt crisis in 1978 to $1.3 trillion in 1992. The structural adjustment loans from the Bank have enabled the third world countries to make interest payments to western commercial banks. Having done this, the Bank went on applying adjustment policies to assure a regular supply of repayments in the medium and long term. Thus, the structural adjustment has brought neither growth nor debt relief, it has certainly intensified poverty.

What is structural adjustment program?

SAPs are built on the fundamental condition that debtor countries have to repay their debt in hard currency.  This leads to a policy of ‘exports at all costs’ because exports are the only way for ‘developing’ countries to obtain such currencies.  A first feature of SAPs is therefore a switch in procuction from what local people eat, wear or use towardes goods that can be sold in the industrialised countries.  Since the 1980s dozens of countries have followed these policies simultaneously.  They often exported the same primary commodities, competed with each other and then suffered because of declining world market prizes for their commodities.  Between 1980 and 1992, ‘developing’ countries lost 52% of their export income due to deteriorating prizes. 

SAPs have 4 fundamental objectives according to which they are shaped:

1. Liberalization: promoting the free movement of capital; opening of national markets to international competition.

2.  Privatization of public services and companies.

3.  De-regulations of labor relations and cutting social safety nets.

4.   Improving competitiveness

Based on these objectives, SAPs prescribe nearly always the same measures as a condition for new loans.  These are:

·         reduction of  government deficit through cuts in public spending (cost recovery programmes);

·         higher interest rates

·         liberalisation of  foreign exchange rules and trade (deregulation);

·         rationalisation and privatisation of public and parastatal companies;

·         deregulation of the economy, for example:

                - liberalisation of foreign investment regulations

                - deregulation of the labour market, e.g. wage ‘flexibility’

                - abolishing price controls and food subsidies

·         shift from import substitution to export production  

These measures forced countries on a path of deregulated free market economies.  The IMF/World bank basically determine countries’ macro-economic policies, they take control over central bank policies and over public expenditure through the so-called ‘Public Expenditure Review’.  SAPs promote the principal of cost-recovery for social services and the gradual withdrawal of the state from basic health and educational services.  Under its ‘Public Investment Programme’ the IMF even decides what type of infrastructure should be built while an imposed system of international tender ensures that public-works projects are

Who make decisions in IMF and World Bank?

For decades, the IMF and World Bank have been largely controlled by the developed nations such as the USA, Germany, UK, Japan etc. (The IMF web site has a breakdown of the quotas and voting powers.) The US, for example, controls 17% of the voting power at the IMF. Until November 2010, an 85% majority was required for a decision, so the US effectively had veto power at the IMF. In addition, the World Bank is 51% funded by the U.S. Treasury.

The global financial crisis from 2008 onwards has resulted in some shifts in power, such that some leading developing countries have finally managed to break some of the control at the IMF and get more seats and votes. While some say that parts of Europe have resisted giving up some share which would be appropriate, the changes also mean the US no longer has veto power that it had for decades.

Scene-3

India’s much acclaimed economic reforms- Globalization, privatization and liberalization

Much acclaimed as Manmohan singh reforms, India implemented its economic reforms in 1991, which was projected in the media as the reforms are done in best of interest of the country and as if it where the brain child of well wishers of India’s growth i.e., the Indian economists.

The series of policy measures launched by the Indian government are part of structural adjustment program in India. Government has taken up following measures to implement SAP :

·         Devaluation of rupee by 23%

·         New Industrial Policy allowing more foreign investments

·         Opening up more areas for private domestic and foreign investment

·         Part disinvestment of government equity in profitable public sector enterprises

·         Sick public sector units to be closed down

·         Reforms of the financial sector by allowing in private banks

·         Liberal import and export policy

·         Cuts in social sector spending to reduce fiscal deficit

·         Amendments to the existing laws and regulations to support reforms

·         Market-friendly approach and less government intervention.

·         Liberalization of the banking system

·         Tax reforms leading to greater share of indirect taxes

The reforms were nothing but implementation of IMFs condition which India was forced to accept while borrowing $500 million from world bank

All the above men-tioned ingredients of SAP are based on the Anderson Memorandum titled "Trade Reforms in India" dated Nov. 30, 1990 submitted to Government of India by the World Bank. It is interesting to note that this memorandum was not disclosed to the then Prime Minister, Mr. Chandra Shekhar, the then Finance Minister and the Cabinet Secretary by a group of senior officials in the Finance Ministry. Incidentally, all these officials were ex-World Bank and ex-IMF employees

When these 'reforms' were initiated, the Government denied any pressure from the Bank or IMF but had few takers. But very few believed in it. The Government's claim that they had been independently decided to carried little weight. Later on the Finance Minister told Parliament that the loans of the Bank and IMF carry conditionality’s. In fact, the Finance Minister did not disclose about his correspondence with the IMF and the Bank, due to great public pressure, he presented to Parliament the terms of the IMF standby credit of $2.2 billion. But, the same consideration was not applied to reveal the policy conditions accepted under the Structural Adjustment Loan of $900 million by the World Bank. When news of the Bank having access to the 1992-93 budget and the Eighth Five Year Plan document prior to their presentation to Parliament,, the government was forced to make them public.

Under SAP, WB is not supervising individual sectors of the Indian economy such as agriculture, social sector and energy sector. The Bank now monitors the entire macro-economy such as balance of payments, fiscal deficit, foreign investment, money supply, etc. The public expenditure reviews are a part of the Bank's conditionality’s. Under this review, the Bank not only asks for cuts in expenditure but also gives detailed instructions for cuts in specific sectors. The health budgets in recent years are an example of this. Health, far from being accepted as a basic right of the people, is now being shaped into a saleable commodity, thereby, excluding those with less or no purchasing power. The existing distortions of health services in India are getting accentuated with the Government following the Bank's agenda on healthcare. The  budget of 1994-95, of which health care forms just 0.58% is an indication of the government willingness to adopt Bank's policies. In India, the health care agenda is increasingly being set out by the Bank rather than by the people and the Indian state.

Scene-4

Impact of structural adjustment in other developing countries

Despite the IMF and World Bank claims of SAP successes, it is widely acknowledged that SAPs have failed to achieve their goals.  They have not created wealth and economic development as unregulated markets did not benefit the poor and failed to protect the delivery of social services.  The IMF/World Bank believe that the elimination of protective tariffs will make domestic industries more competitive.  In reality, domestic manufacturing often collapsed and imported consumer goods replaced domestic production.  Other  results of SAPs were:

·         Privatisation allows international capital to buy state enterprises at very low costs.

·        Tax  reforms under SAPs (like VAT) place a greater tax burden on middle and low-income groups while foreign capital receives generous tax holidays.

·   Deregulation of the banking system leads to very high interest rates which makes most goods unaffordable to the majority.

·      Elimination of subsidies and prize controls, covered with devaluation lead to price increases and reduce real earnings in the formal and informal sectors.

·      Free  movement of foreign exchange allows foreign companies to repatriate their profits.  It also allows the ‘laundering’ of ‘dirty money’ from offshore banking accounts.

·    Cost-recovery programmes in the health sector increased the inequality in health care delivery, reduced health coverage and increased the number of people without access to health care.  Diseases like cholera, malaria and yellow fever are on the increase again.

·  Various NGOs funded by international aid agencies have gradually taken over government functions in the social sector.

·    Cuts in public sector employment (for example 300 000 civil servants were retrenched in Zaire - now DRC - in 1995), coupled with bankruptcies of local companies has led to large increases in unemployment.

·  Liberalisation of the labour market leads to the elimination of cost of living adjustment clauses in collective agreements and to the phasing out of minimum wage legislation.

·  Export orientation in agriculture is eliminating subsistence crops and accelerates the exodus of the unemployed towards the cities. (See Touissant and Comanne 1995: 9; Chossudovsky 1995:58-64)

Even in those countries that are singled out as success stories, SAPs imposed severe hardships on the poor.  In Uganda, for example, the government obediently followed the World Bank/IMF policies and implemented far-reaching liberalisation such as

·   Privatisation of government institutions

·   Reducing the size of the civil service and the army

·   Liberalisation of foreign exchange

·   Decentralisation of services to local authorities

·   Cuts in government spending on social services

Despite some (statistical) economic growth, these policies resulted in:

·         Drop in formal sector employment to less than 14% of the economically active population

·         Retrenchment of more than half the civil service (170 000)

·         Lack of equipment and medication in government health facilities

·         Collapse of small enterprises

·         Declining co-operative movement

·         Trade Unions lost 60% of their members since 1990

SAPs had a detrimental effect on social services.  In the education sector, for example, they led to:

·         Increasing class size (student-teacher ratios)

·         Increasing school fees as part of cost-recovery programmes

·         Reduction in the number of teachers and/or wage freezes

·         Introduction of  ‘double shifts’

·         Drop in the standard of public education due to deteriorating facilities

·         Increase in private schools for the wealthy

·         Increasing inequalities in the standard of education between poor and rich communities

·         Lower enrolment at schools as the poor have to choose between feeding their children and paying for school uniforms, stationery and school fees.

·         Finance-driven education reforms under SAPs often reversed the gains made by African countries after independence.

SAPs meant that most countries had to make major cuts in their education budgets and the world-wide rate of illiteracy began to grow again after a long period of decline (see Bournay 1995: 51).  The poor and vulnerable groups in society are always the hardest hit by the SAP measures.  SAPs have had a particularly negative effect on women because:

·   Privatisation of social services like health and education makes these services unaffordable for the poor.  As a result, women are often forced to take on these responsibilities, for example tacking care of the sick.

·   Cuts in education services lead to an increase in illiteracy among women and girls.  Under SAPs, the drop-out rate for girls is increasing.

·    Reduced spending on health leads to an increase in maternal deaths.

·    The elimination of food subsidies coupled with falling (real) wages reduces women’s buying power.

·     Unemployment is increasing as a result of public sector ‘restructuring’

·     Labour flexibility’ may result in more jobs for women at the expense of men.  These jobs, however, are usually poorly paid and insecure.

·     The reduction of formal sector jobs drives women into the informal sector.

·   In Zambia, the hardships caused by SAPs led to an increase in divorces.  Men left their homes because they were unable to look after their families.  As a result, more women were forced to look after their children on their own.

Scene-5

Growth in Indian economy- post liberalization and its impact on agriculture

The total geographical area of India is 328.7 million hectares of which 140.3 million ha is the net sown area while 193.7 million ha is the gross cropped area, according to the annual report 2009-10 of the Ministry of agriculture. The growth rate of India GDP is 9.4% in 2006- 2007. The agricultural sector has always been an important contributor to the India GDP. This is due to the fact the rural economy of the country is agriculture driven and employs around 60% of the total workforce in India. The agricultural sector contributed around 18.6% to India GDP in 2005. The economic liberalization policy, has caused a reduction in this GDP to 14.6 % in 2009-2010 (by 4 %) and the employment potential to 55 % (5 % reduction than in 2006-2007). As per 2008 estimate, the sector wise GDP shows that, the share of GDP by agriculture was 17.2 %, Industry was 29.1 % and Services was 53.7 %. In 2009, this share was 15 % in agriculture, 28 % in Industry and 57 % in Service sector. However with respect to labor employed 14 % are employed in industry sector and another 34 % in service sector. It go’s unsaid, that the growth is not uniform and the benefits of this economic growth is enjoyed by meager section of the society.

There is steady decline in GDP in agriculture which has the direct effect on rural economy. This widens the gap between the rich and poor, needless to say the rural poor who depend on agriculture are the most affected.

Scene-6

Downward trend in Overall economic growth

After a fast growth, which is unbalanced the real tooth of economic reforms are now showing off. The country’s overall GDP is in very bad shape. As it has become clearer that Indian economy will not be able to achieve its GDP growth forecast of 8% or thereabouts for 2012, it might have to possibly settle for a figure slower than the government’s revised estimate of 7.5%. This has been clearly visible on the performance of the domestic stock markets, which has been one of the world’s worst performers, worse than the stock markets of other BRIC economies. We are not expecting the sentiments to improve in a flash, ie within the next few months and see a rally thereafter, even though we are a structurally strong economy with good fundamentals, India as a country in the present economic scenario cannot isolate itself from the risk posed by the global economic turmoil.

Factors hurting the domestic economy Inflation and Capital Runaway has been the 2 main factors hurting the economy. Inflation has so far remained above 9% and RBI had done around 13 interest rate hike decision since December 2010 to curb inflation. Country’s economic momentum has been dragging due to the monetary tightening and inflation issues.

Capital outflows, domestic corruption and policy paralysis (lack of policy developments) have also given a massive blow to the economic sentiments here. Foreign investors have also pulled out massive amounts of fund from India in order to cut their risk exposure to India. Foreign investors have only $530 million in Indian equities this year, compared with $28.9 billion a year ago, according to the Securities and Exchange Board of India (SEBI). India is a country with trade deficit, unlike China which is mainly an export driven economy India is a relatively smaller player with its exports account to only 10% of GDP and it needs a strong Rupee to make the imports cheaper and attract more foreign investments. A slowdown in FII inflows will severely affect India, which is structurally a current account deficit economy where the current account deficit is usually financed by the steady FII inflows, which actually helped to offset the capital deficit.

The rupee downfall

Towards the end of 2011, sustained demand for the dollar, worsening domestic economic scenario and persistent capital outflows pushed the rupee to historic lows against the US dollar. The Indian local currency fell to its all-time low of to 54.30 per dollar on 15 December, elevating concerns of policy makers. On the last day of the year (30 December) the rupee closed at 53.10 to the greenback, down over 18% from the first day of the year.

Is there a Solution?

It is more clear that the economic decisions of our country is not in our hands, but in the hands of world bank and IMF and the countries influencing it. It is a natural phenomena, that when we borrow we lose our personal decision making power.  The influence by foreign hands extends to the appointment of Finance minister for our country. When P. Chidambaram resigned as FM and took over the portfolio of home ministry, Mrs.Hilary Clinton was interested in the selection of new FM and whether he will be favorable towards U.S. Her preference was for Mr. Montek Singh Alluwaliah and since Mr. Pranab Muharjee too was found nonthreatening he had a chance to become FM ( wikileak cables)

India is basically a agricultural country and the growth should have been planned using its inherent strength. Agricultural growth is on back foot since introduction of liberalization concept and the cost of cultivation has increased many folds, not in proportion with the price of the outputs. The agricultural productivity has also slow down and there are no good efforts or research on part of the government to increase agricultural productivity. The schemes and plans to support farmers, as usual did not meet the need. We have a very serious implementation problem with schemes due to politicization and corruption and due to implementation of schemes without building the knowledge regarding them to the intended beneficiaries.

Whichever government comes into force, it has no other go but dance to the tune of world bank and IMF since the loan was sanctioned only after signing the structural adjustment agreement.

Can we say that our country is Independent? The MLAs and MPs we select cannot act in our nation’s interest even if they wish to do so.

 This is a compilation of different observations on India's economic policies with my own additions here and there.Thanks to the different websites and authors for the information provided

Impact of Globalization on agriculture

Impact of Globalization on Indian Agriculture

The liberalisation of India's economy was adopted by India in 1991. Facing a severe economic crisis, India approached the IMF for a loan, and the IMF granted what is called a 'structural adjustment' loan, which is a 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 Liberalisation by the Indian media) can be broadly classified into three areas: Liberalisation, privatization and globalization. Essentially, the reforms sought to gradually phase out government control of the market (liberalisation), 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, it being a dramatic departure from the protectionist, socialist nature of the Indian economy up until then. 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. (The damage done, 2005) The trend was noticed in several other states, and the figure today, according to a leading journalist and activist, P. Sainath1, stands at 100,000 across the country. (Sainath, 2006) Coupled with this was a sharp drop in agricultural growth from 4.69% in 1991 to 2.06% in 1997. (Agriculture Statistics at a Glance, 2006) 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 liberalisation reforms have contributed to its current condition. It will look at supporting data from three Indian states which have been badly affected by the crisis: Andhra Pradesh, Maharashtra and Kerala. Andhra Pradesh's (AP's) experience is particularly critical in this debate because it was headed by Chief Minister Chandrababu Naidu, who pursued liberalization with enthusiasm. Hence liberalization in AP has been faster than other states, and the extent of its impact has been wider and deeper. (Sainath, 2005)

Indian Agriculture today: A Snapshot

Agriculture employs 60% of the Indian population today, yet it contributes only 20.6% to the GDP. (Isaac, 2005) Agricultural production fell by 12.6% in 2003, one of the sharpest drops in independent India's history. Agricultural growth slowed from 4.69% in 1991 to 2.6% in 1997-1998 and to 1.1% in 2002-2003. (Agricultural Statistics at a Glance, 2006) This slowdown in agriculture is in contrast to the 6% growth rate of the Indian economy for almost the whole of the past decade. Farmer suicides were 12% of the total suicides in the country in 2000, the highest ever in independent India's history. (Unofficial estimates put them as high as 100,000 across the country, while government estimates are much lower at 25,000. This is largely because only those who hold the title of land in their names are considered farmers, and this ignores women farmers who rarely hold land titles, and other family members who run the farms.) (Sainath, P) Agricultural wages even today are $1.5 - $2.0 a day, some of the lowest in the world. (Issac, 2005) Institutional credit (or regulated credit) accounts for only 20% of credit taken among small and marginal farmers in rural areas, with the remaining being provided by private moneylenders who charge interest rates as high as 24% a month. (Sainath, 2005) An NSSO2 survey in 2005 found that 66% of all farm households own less than one hectare of land. It also found that 48.6% of all farmer households are in debt. The same year, a report by the Commission of Farmer's welfare in Andhra Pradesh concluded that agriculture in the state was in 'an advanced stage of crisis', the most extreme manifestation of which was the rise in suicides among farmers. Given the performance of agriculture and figures of farmer suicides across the country, this can be said to apply to Indian agriculture as a whole.

The Crisis facing Indian Agriculture

The biggest problem Indian agriculture faces today and the number one cause of farmer suicides is debt. Forcing farmers into a debt trap are soaring input costs, the plummeting price of produce and a lack of proper credit facilities, which makes farmers turn to private moneylenders who charge exorbitant rates of interest. In order to repay these debts, farmers borrow again and get caught in a debt trap. I will examine each one these causes which led to the current crisis in Andhra Pradesh, Kerala and Maharashtra, and analyse the role that liberalisation policies have played.

As was mentioned earlier, AP's experience is particularly relevant in this analysis because of its leadership. Let me explain in detail. Chandrababu Naidu, Chief Minister of Andhra Pradesh from 1995-2004, was an IT savvy neo-liberal, 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 (AUD 1 billion) in exchange to a series of reforms in AP's industry and government. Naidu envisaged corporate style agriculture in AP, and implemented World Bank liberalisation policies with great enthusiasm and gusto. He drew severe criticism from opponents, saying he was using AP as a laboratory for extreme neo-liberal experiments. Hence, AP's experience with liberalization is critical.

The Debt Trap and the Role of Liberalisation

The Debt trap: High Input Costs

Seeds:

The biggest input for farmers is seeds. Before liberalisation, farmers across the country had access to seeds from state government institutions. For example, AP's APSSDC3 produced its own seeds, was responsible for their quality and price, and had a statutory duty to ensure seeds were supplied to all regions in the state, no matter how remote. The seed market was well regulated, and this ensured quality in privately sold seeds too. (The damage done, 2005) With liberalization, India's seed market was opened up to global agribusinesses like Monsanto, Cargill and Syn Genta. Also, following the deregulation guidelines of the IMF, 14 of the 24 units of the APSSDC's seed processing units were closed down in 2003, with similar closures in other states. This hit farmers doubly hard: 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 (AUD 2) but in 2005, after the dismantling of APSSDC and other similar organizations, the price jumped to Rs. 1000 (AUD 28), a hike of 1428%, with the cost of genetically modified pest resistant seeds like Monsanto's BT Cotton costing Rs. 3200 or more per acre, (AUD 91) a hike of 3555%. (Sainath, 2005) 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. (Menon & Jayaraman, 2002) Expecting high yields, farmers invest heavily in such seeds. Also 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. (Sainath, 2004) Output is not commensurate with the heavy investment in the seeds, and 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.

Fertilizer and Pesticide:

One measure of the liberalisation 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 export oriented 'cash crops' like chilli, cotton and tobacco. (The damage done, 2005) These need far more inputs of pesticide, fertilizer and water than traditional crops. Liberalisation policies reduced pesticide subsidy (another explicit condition of the IMF agreement) by two thirds by 2000. Farmers in Maharashtra who spent Rs. 90 an acre (AUD 2.5) now spend between Rs. 1000 and 3000 (AUD 28.5 - 85) representing a hike of 1000% to 3333%. Fertilizer prices have increased 300% (Sainath, 2005) Electricity tariffs have also been increased: in Andhra Pradesh tariff was increased 5 times between 1998 and 2003. (Seeds of ruin, 2005) Pre-liberalisation, subsidised electricity was a success, allowing farmers to keep costs of production low. These costs increased dramatically when farmers turned to cultivation of cash crops, needing more water, hence more water pumps and higher consumption of electricity. Andhra Pradesh being traditionally drought prone worsened the situation. This caused huge, unsustainable losses for the Andhra Pradesh State Electricity Board, which increased tariffs. (This was initiated by Chandrababu Naidu in partnership with Britain's DFID4 and the World Bank.) Also, the fact that only 39% of India's cultivable land is irrigated makes cultivation of cash crops largely unviable, but export oriented liberalisation policies and seed companies looking for profits continue to push farmers in that direction. (Isaac, 2005)

The Debt Trap: Low price of Output

With a view to open India's markets, the liberalization reforms also withdrew tariffs and duties on imports, which protect and encourage domestic industry. By 2001, India completely removed restrictions on imports of almost 1,500 items including food. (The damage done, 2005) As a result, cheap imports flooded the market, pushing prices of crops like cotton and pepper down. Import tariffs on cotton now stand between 0 - 10%, encouraging imports into the country. This excess supply of cotton in the market led cotton prices to crash more than 60% since 1995. As a result, most of the farmer suicides in Maharashtra were concentrated in the cotton belt till 2003 (after which paddy farmers followed the suicide trend). (Hardikar, 2006). Similarly, Kerala, which is world renowned for pepper, has suffered as a result of 0% duty on imports of pepper from SAARC5 countries. Pepper, which sold at Rs. 27,000 a quintal (AUD 771) in 1998, crashed to Rs. 5000 (AUD 142) in 2004, a decline of 81%. As a result, Indian exports of pepper fell 31% in 2003 from the previous year. (Sainath, 2005) Combined with this, drought and crop failure has hit the pepper farmers of Kerala hard, and have forced them into a debt trap. Close to 50% of suicides among Kerala's farmers have been in pepper producing districts. (Mohankumar & Sharma, 2006)

The Debt Trap: Lack of credit facilities and dependence on private money lenders.

In 1969, major Indian banks were nationalized, and priority was given to agrarian credit which was hitherto severely neglected. However, with liberalisation, efficiency being of utmost importance, such lending was deemed as being low-profit and inefficient, and credit extended to farmers was reduced dramatically, falling to 10.3% in 2001 against a recommended target of 18%. (Seeds of ruin, 2005) A lack of rural infrastructure deters private banks from setting up rural branches, with the responsibility falling on the government, which has reduced rural spending as a result of its liberalisation policies. Rural development expenditure, which averaged 14.5% of GDP during 1985 - 1990 was reduced to 8% by 1998, and further to 6% since then. This at a time when agriculture was going through a crisis proved disastrous for farmers, who turned to private money lenders who charge exorbitant rates of interest, sometimes up to 24% a month. (Seeds of Suicide, 2005) With input costs and output prices being what they are, coupled with crop failures and drought, they are pushed into debt which is impossible to repay. 12 out of India's 28 states have 50% and higher indebtedness among farm households. Andhra Pradesh has the highest percentage of indebted farm households - 82%. 64.4% of Kerala's farm households and 54.8% of Maharashtra's farm households are indebted (NSSO, 2003) Indebtedness has been identified as the single major cause of suicides in both Andhra Pradesh, Kerala and Maharashtra. (Analysis of Farmer Suicides in Kerala, 2006, Who's suicide is it anyway, 2005, Saving small farmers, 2005)

Liberalisation and how it Failed

Branco Milanovic, a World Bank economist describes how he believes liberalisation helps developing countries achieve growth: 'when a country lowers trade barriers, reduces government intervention in the market in order to allow market forces to operate freely, increases competition and attracts foreign investment, it will increase productivity and reduce inefficiency, which will lead to economic growth, and in a few generations, if not less, the poor will become rich, illiteracy will disappear, and poor countries will catch up with the rich.' (The damage done, 2005) This argument is an economic rationalist one, which views government intervention with profound suspicion, and has equally profound faith in unfettered market forces. (Whitwell quoting Robert Manne, 1998) What Mr. Milanovic neglects to mention, though, is that rich countries which now preach liberalisation protected their 'infant industries' at the time they began to industrialize, till they were strong enough to compete globally. The US government, for example, had a protectionist trade policy in the late nineteenth century to help US companies become competitive in the world. Besides, apart from wool, the US, Germany, Britain and France were all almost self-sufficient in the raw materials that they needed for industrialization, and took off from that platform, a luxury that India and other developing countries do not have. (Issac, 2005) As German economist Friedrich List says, the adoption of these values (of liberalisation) assumes that all countries are at the same starting place, which (as we have seen above) is clearly not the case. (Issac, 2005) In fact, it is this very reason that has brought about the crisis that Indian agriculture is facing today. Most farmers in India were already in a position of minimum security, with no education system, credit facilities, access to alternative employment, or efficient technology. Their only support was government subsidy and regulation. Liberalisation policies came in and dismantled their only support structure. It halted the sharp reduction in rural poverty from 55% in the 1970s to 34% in the 1980s. Not only has the incidence of poverty in rural areas not gone lower than 34% in the 1990s, it has gone to higher levels of 42% in individual years. (Ghosh, 2000)

The second most popular argument of the economic rationalists in favour of liberalisation is that competition will weed out the inefficient, and in the growth that ensues, employment will be provided in other areas of the economy, thus lifting the poor out of poverty. This argument however assumes that the poor will be able to take advantage of the opportunities presented to them. As Robert Issac says in 'The Globalization Gap', "Globalization encourages the well positioned to use tools of economics and politics to exploit market opportunities, boost technical productivity, and maximize short-term material interests." This is compounded in India, where the gap between one who is 'well positioned' and one who is not can be extreme. With a lack of investment, chances of generation of rural employment are slim. Unemployment and underemployment are chronic problems in India, with the rate of unemployment being close to 10% in 2004. (Sainath, 2005) Primary education in rural areas is mismanaged and bad quality, and there is no system which helps agricultural workers find alternate employment, or develop alternate skills. (Chossudovskly, 1997) In the face of such obstacles, it is nearly impossible to expect agricultural workers to shift to alternate fields. Coming back to AP, the IT Revolution spearheaded by Chandrababu Naidu attracted companies like Google, Amazon, Microsoft and Dell and created thousands of jobs. However, given the skills and education of most farmers, it is obvious that none of this translated into job opportunities for them.

The final argument that supporters of globalization have is the much touted 10% reduction in poverty (60 million decline in poor) in India in the year 2000. However, this figure was challenged by experts. Poverty is defined according to how many people consume less than the nutritional minimum prescribed. (2400 calories for rural areas, and 2100 for urban areas) Major changes in survey design in 1999-2000 not only made the resultant estimates incomparable to previous years' estimates, but an over-estimation of consumption (meaning people were getting enough food, hence were not considered poor) meant a sharp reduction in poverty figures. After experts challenged it, the Planning Commission of India accepted that the figure was inaccurate, and could not be compared to previous years' estimates, hence the 10% drop in poverty is incorrect. With adjusted figures, experts have determined that the decrease in poverty was a mere 2.3%, and that the number of poor increased by nine million in 2002 as compared to 1999.

Liberalization and 'Growth'

Many economists now concede that the relationship between liberalisation and growth are 'uncertain at best'. According to the Center for Economic and Policy research, which studied impact of liberalisation reforms on the developing world, key economic and social indicators such as increases in life expectancy, infant and child mortality, education and literacy levels slowed down in the 20 years between 1980 and 2000 when liberalisation policies were implemented, compared to the 20 years leading to 1980. (The damage done, 2005) This defeats the economic rationalist argument of free trade eliminating poverty, since the 20 years leading up to 1980 witnessed high protectionist policies and trade barriers. Following the suicides in 2000, the World Bank and Britain's DFID abandoned power reforms in Andhra Pradesh four years before schedule. It admitted that it had 'substantially underestimated' the 'complexity of the process' and that there must be 'increased consultation with the farmers to get their acceptance' of any further reform. (The damage done, 2005).

The Andhra Pradesh government sponsored report by the Commission of Farmer's Welfare squarely laid the blame for its agrarian crisis on the state and central government's policies: "While the causes of this crisis are complex and manifold, they are they are dominantly related to public policy. The economic strategy of the past decade at both central government and state government levels has systematically reduced the protection afforded to farmers and exposed them to market volatility and private profiteering without adequate regulation; has reduced critical forms of public expenditure; has destroyed important public institutions, and has not adequately generated other non-agricultural economic activities." A report on suicides in Kerala similarly held the liberalization policies of the government responsible. (Mohankumar & Sharma, 2006)

Conclusion

It is clear that the liberalisation policies adopted by the government of India played a dominant role in the agrarian crisis that is now being played out. However, this is not to say that privatisation, liberalisation and globalization are per say bad, or inherently inimical to an economy. It is the 'one size fits all' brand of liberalisation adopted by the IMF and the World Bank which forces countries to privatize, liberalise and globalize without exception which has failed. Without taking into account the state of an economy, and in this case, the state and nature of the agricultural sector in India, the IMF and the World Bank, with the cooperation of the Indian government, embarked on mismatched reforms, which have caused misery and despair among millions of Indian farmers, driving large numbers of them to suicide. It is also essential to break the link between aid and liberalisation, which caused India in the first place to accept the conditions of the IMF. Remember that India was on the brink of a financial crisis in 1991 when it applied for the IMF loan and accepted its conditions-perhaps the course of economic reform in India would have taken a very different course if there was no urgent need to borrow from the IMF. The start to this process may have already occurred: recognizing the failure of its liberalisation policies, (and perhaps also the failure of DFID with AP's power reforms) the Blair government of Britain announced in 2004 that it will no longer make liberalisation and privatization conditions of aid. In another blow to the neo-liberal lobby, Chandrababu Naidu suffered the worst ever defeat in the 2004 state elections in his party's history, with rural AP clearly rejecting his brand of World Bank sponsored liberalisation. The battle, however, has not yet been won. It is essential for the rest of the G8 to follow Britain's example in order to influence World Bank and IMF policy towards India to ensure blind liberalization is not pursued, and so that countries like India can adopt tailor-made reforms to suit their economy.

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Source: http://wiki.answers.com/Q/Globalisation_impact_on_indian_agricultural_sector#ixzz1EDKOxJOa