Part 1 of a series that briefly traces the post-independence evolution of India’s agrarian economy to reveal the structural causes behind the contemporary crisis.
Undoubtedly, demonetization was a brutal attack on the already precarious peasant economy, and ecological factors, such as pests and poor rainfall, have haunted farmers since the beginning of agriculture. But the refusal to see beyond these factors to enquire into the deeper roots of India’s agrarian crisis, found in the very structure of our economy, limits our understanding of the nature of the current crisis, and thereby limits our willingness to undertake the necessary radical measures – reaching far beyond loan waivers and announcement of a few more yojanas – without which the severity of the crisis can at best be alleviated for short periods from time to time, but the crisis itself can never be overcome.
221 farmers had already committed suicide in the first two and a half months of this year, in the Marathwada region of the state alone. In the first two years of the Modi-government taking reins, the rate of farmers’ suicide rose by 40%. While the crisis has exacerbated since the current government coming to power, it must be noted that the origin of the crisis goes decades before. Over 300,000 farmers have committed suicide over the last two decades, the build-up for which began with the neoliberal reforms in the 1990s. This agrarian crisis is marked not only by increasing numbers of farmers’ suicide, but a general decline in per-capita foodgrain availability, increase in malnutrition, and contrary to what the official figures suggest, by an increase in absolute poverty.
Origin of the crisis lies in the neoliberal reforms
The per capita foodgrain availability, which was raised from the abysmal 155 kilos per capita to 177 in four decades between the end of colonial rule and the beginning reforms, had plummeted back to 155 kilos per head per year by 2002-03, which was higher only to sub-saharan Africa and some Least Developed Countries, as Utsa Patnaik pointed out in one of her papers . Consequently, the percentage of rural households that are undernourished rose sharply after liberalization from 48% in 1988-89 to 67% in 2001-02.
In 2013, World Bank’s report noted that malnutrition rate among Indian children is twice that in children of sub-saharan Africa. Three years later, in 2016, FAO’s data on per capita foodgrain absorption indicated that hunger in India continued to be worse than that in Sub-saharan Africa and LDCs.
The statistical trickery, employing which the government has arrived figures suggesting that poverty in India has been consistently reducing since liberalization, is debunked by Utsa Patnaik, by pointing out the change in method of measuring poverty since the reforms. The minimum calorific intake defined for ‘poverty’ was 2400 Kcal (as recommended by ICMR). This was reduced to 1,970 Kcal by 1993-94 and further to 1870 Kcal by 1999-2000, with consequent reduction in people falling below this.
Using the 2400 Kcal cut-off, Patnaik measures that, as on 2005, 74.5% of the rural population and 44% of the urban population lived below the poverty-line, while official figures, delinked from this nutritional standard, was 27% and 23.5% respectively
However, to develop a careful understanding of the structural causes for contemporary rise in poverty, decline in foodgrain availability and increase in hunger, it is not sufficient to analyse India’s political economy in the context of neoliberal policies, introduced in 1991 under the structural adjustments programme carried out to meet the conditions imposed on the grant of a (relatively small) loan of $2.2 billion by IMF, to bail India out of the economic crisis when the country was on the verge of defaulting on the Balance of Payment obligations .
To say that a study of neoliberal policies in isolation is insufficient to explain the structural causes of the agrarian crisis is not to underplay the devastating impacts these policies have had in terms of immiserating the condition of the masses, triggering an agrarian crisis the country continues to suffer even today and sharply increasing inequality by aiding the well-to-do minority to amass fortunes comparable to that of those in the developed West. It is rather to point out that an understanding of agrarian context in which the reforms were introduced, developed through a careful analysis of the evolution of the agrarian economy up until liberalization, must necessarily precede an analysis of the effects post-reform policies have had.
In-built depressor in Indian agriculture
At the time India became independent, 70% of arable land was under the monopoly of non-cultivating proprietors who made up no more than 10-15% of rural households.On the other hand, due to deindustrialization under the British rule, dependence of the workforce on land to make a living had increased.
Such high demand for land in a situation where its supply was under monopoly control, resulted in very high ground-rents, allowing the non-cultivating proprietors, who neither contributed capital nor labour for cultivation, to extract an average rent of 50% from the cultivating tenants. Also, given that the surpluses in agriculture was mostly in command of the same proprietors who held most of the land, most of the tenant cultivators often needed loans to cultivate the land they rented. As a result, the interest rates that could be charged by landlords were also very high.
These circumstances, characterized by high rent on agricultural land and high profit margin on non-productive use of capital for activities such as usury, created a situation where the landlords had no incentive to use their wealth for agricultural production, for the profits they could reap by doing so was less than the money they could earn by renting out their land to tenants and using the rent money for usury and other such non-productive activities.
This rent barrier in the way of investing on land for direct cultivation by landowners, erected as a result of the land-monopoly created and perpetuated by centuries of traditional social hierarchies and legal codes governing land tenures under the Mughal rule, followed by the British rule, constituted what Daniel Thorner called the “built-in depressor” which was “uniquely typical of the Indian countryside”.
In order to dismantle this barrier, Utsa Patnaik argued , it was necessary to do away with “absolute rent as a social category, as in an agrarian reform where the landlords’ monopoly is broken through seizure without compensation of their land and redistribution to the cultivating peasantry.”
Land reform: the successes and failures
The peasantry, who having suffered the most under British rule, had naturally become an important class to be mobilized in support of Indian National Congress (INC) in their struggle against British Rule. Further, the INC, which understood “the landlord class to be the major class force that was aligned against them, in support of colonial rule… developed an anti-landlord rhetoric and were committed to radical policies vis-a-vis rural society, especially to carrying out land reform,” Hamza Alvi argued . This laid the political groundwork to pursue land-reforms post-independence.
The two main objectives of land reforms, as stated by the Indian government, were abolition of intermediaries – through whom the revenue from the peasants flowed to the state previously, numbering up to 40 in some cases under British Rule – and redistribution of land held above the ceiling and tenancy reforms. While the first objective was relatively successful, the success of land redistribution and tenancy reforms was limited.
The main reason for failure (or limited success) in breaking landlords’ monopoly by redistributing ceiling surplus land was that the ceiling was applicable to individual holdings, and not to holdings by a family or the landlord class as a whole. This allowed the landlord class to continue their monopoly, by reducing individual holdings below the ceiling levels by partitioning the land within family and by selling it to other confidants. Also, owners of those estates that were taken over by the government were generously compensated, thus failing to challenge the landlords’ position on the top rungs of the economic ladder.
The other reason can be found in the content of the reform guidelines given by the central government to the states, which made a provision for “resumption for personal cultivation”. Ignoring the recommendation of the official Panel on Land Reforms that “personal cultivation” must mean performing of manual work on the field, the term was instead defined as cultivation either by the landlord’s own labour or that of his family members, or through servants paid for in cash or kind, or through casual hired labour under the direct supervision of the landowner or his family members.
Further, taking advantage of a provision in the tenancy legislation that allowed termination of tenancy under a number of circumstances, including resumption of land by the owner for personal cultivation, many landlords evicted tenants en masse and hired – in many cases the same tenants who were evicted, as – wage labourers.
Although tenancy reforms conferred permanent heritable rights of possession on certain categories of tenants, most leases were unrecorded and oral. In Bihar, attempt by the state-government to record tenancy agreement in 1963 was thwarted by armed resistance by landlords’ private armies. Thus, the provisions put in place to secure the rights of the tenants could not be exercised by most of them to resist eviction.This is reflected in the sharp rise in proportion of landless labourers from 28% to 35% in the two decades spanning from 1951 to 1971.
Therefore, two decades after the beginning of reforms, concentration of land, measured by Gini coefficients, remained virtually unchanged. The “value of the Gini co- efficient was 0.676 (in 1953-54) and 0.675 two decades and many Reform Acts later,” Utsa Patnaik wrote .
However, it would be incorrect to assume that no tenants benefited from enactment of land reforms. The “thin rich peasant stratum.. who owned land in addition to the plots they rented and already cultivated, mainly with hired labour”, not only succeeded in resisting eviction, but also purchased the ceiling surplus land that was acquired by the government.
This redistribution of land occurred within the “top two, at most three deciles of owners ranked by area”. Assuming all the tenants into one homogenous category, without considering the existence of multiple sub-classes within them, each with different socio-economic capacities, the tenancy legislation “promoted a sharp differentiation: the poorest, being evicted and joining the ranks of landless labour, the best-off tenants, on the contrary, purchasing ownership and enlarging their holdings.”
Thus, although the land reforms failed to deal a strong blow against the landlords’ stranglehold on agriculture, three important processes it triggered must be noted:
- A shift from leasing land to direct cultivation, undertaken by landlords to retain ceiling surplus land, provided an impetus towards a development of capitalist mode of agriculture, prompting the emergence of Landlord capitalism, which nudged the agrarian economy towards overcoming the depressor. However, the failure in breaking land-monopoly meant that the structural causes of the rent barrier which constituted the depressor remained undisturbed.
- Along with landlord capitalists also emerged a class of rich peasants, who provided a further impetus to the on-going shift towards a capitalist mode of production.
- The rise in landlessness among the majority of the peasantry, while those in the top rungs of this class prospered, triggered a sharpening of class differentiation.
“New Agrarian strategy – of which the “green revolution” was a part – which furthered the shift towards a capitalist mode of agriculture by decisively overcoming the rent barrier, before collapsing under the weight of its own contradictions, is the subject of the next part of in this series.
(To be continued)
Courtesy: Newsclick.in