Unfortunately, the statement that should have come from the Indian government is being said by an EU official. India could have romped the entire Third World on this agenda and got reversed the heavy pro-West pro MNC tilt of the world trade body but it has once again lost the chance, to the EU that has rallied India to settle scores with the US. While the First World nations are discussing ways and means to protect their interest, Indian government, like the reseachers funded by the Western foundations are thinking that the Indian peasants are fit enough to compete with the MNCs. Nothing is being done to protect the interests of the agricultural community.
The cotton growers are suffering due to price depression ever since the import of cotton was put on the OGL list. Similarly, it would be difficult for India to retain self sufficiency in edible oils with the opening up of the economy. With the opening up of imports of most of the edible oils under OGL (with a notable exception of coconut oil) and reducing the import duty to 20 percent in 1996-97, imports of edible oils have touched about 1.5 million tonne in 1996-97. It reflects a four-to-five-fold increase in imports of edible oils since 1993-94. The traditional rivals NDDB and the private solvent extraction plant owners in a joint petition submitted to the government have urged the government to save the domestic edible oil industry. As said above, due to decrease in import duty cheap palmolein oil is being imported in massive quantity from Malaysia based multinationals.
Fears are being expressed, on the effect this edible oil import would have on the oil seeds farmers in the vast stretch of Karnataka, Maharastra, Gujrat and M P due to abnormally low prices their prodcut would fetch.
The sugar industry, like the edible oil industry has also started feeling the pinch of liberalisation. In spite of increase in the country’s sugar output to 15.4 million tonnes in 1998-1999 (October-December) the domestic industry is having a tough time competing with cheap imports. The country spent Rs 1,500 crore on the import of sugar in spite of having 6.5 million tonnes of stock.
In 1997-98, India produced 12.8 million tonnes of sugar while consumption was at 14.4 million tonnes. In 1999-2000, India is expected to produce 16.5 million tonnes and consumption is expected to be 15 million tonnes. About 7-8 lakh tonnes of sugar have been imported in the current financial year in spite of bumper crop. In June 99, the government had announced that the controls that were applied to the domestic producers on sugar sale the amended sugar control order would be extended to importers also but it was never implemented. This industry is being throttled at the cost of promoting imports just like what had been done in the edible oil sector.
The domestic sugar mills are required to sell 40 percent of their output to the government as levy sugar at state determined prices for sale to the poor through the Public Distribution System (PDS). The rest is sold at free market prices. The government also releases quotas every month for free market sales from its own stocks.
The free import of sugar was first allowed in March 1994. Following this, the import competition led to crash in dometic prices to the point where import profitablility turned negative. Even the reexport of imported sugar was banned. The zero duty policy of the government for import continued till March 1998 when the then government imposed a five-percent import duty. Importers were subject to countervailing duty totalling 85 paise per kg on account of excise, which was imposed in lieu of state sales tax and cess. In January 1999 the duty was hiked to 20 percent and again in March 1999 it was increased to 27.5 percent in response from growing discontent.
According to a study the market for Indian sugar is likely to shrink even further, because of globalisation, the import of sugar, and with tariff exemption at that even while excise and purchase tax are received on every bag of indigenous sugar. As for the export market, it is worth noting that after 1997, the US, one of the major importers of Indian sugar does not have to import as it is producing cane through genetic farming.
Apart from the external forces, even the government (both of centre and state) is trying to decimate the industry. It is the latter more than the former that is more dangerous. Finding it difficult to go whole hog on the issue of privatisation of sugar cooperatives where it faces militant resistance from factory workers and sugar cane cultivators Maharashtra has chosen to adopt indirect method of going on with privatisation. The government of this state then led by Shiv Sena and BJP made several (that is unlikely to be reversed) backdoor attempts to bring about privatisation of the industry.
It adopted several strategies. First tried to privatise water resources in the state particularly medium and smal dams. The government also moved towards abolition of the cane zoning system. Under this the government reserved a certain cane area for each sugar factory. It became mandatory for a grower to sell his produce to the factory that controls the zone. By this zoning, unhealthy competition and monopolisation of cane by powerful sugar factories were prevented to a large extent.
The move by the state government to privatise the electric supply would render the sugar factories vulnerable to harassment by the powerful private owners of power utilities, particularly the MNCs, Several MNCs may be interested in acquiring a stake in the sugar industry itself.
The invasions on sugar industry by the MNCs have already begun. Gay & Turbo Co. based in London has bought half the shares of a private unit in Uttar Pradesh. It was also alleged that the Sena-BJP tried continuously to create financial problems for co-operative factoreis by withholding or delaying the pre-season loans made available to them by the earlier regime. The pertinent question is that if water, finance and power would be controlled by private parties including MNCs, will the cooperative sugar sector or even the private mills survive?
The prime reason mooted by the import sugar lobby is that it helps contain consumer price. The inflow from countries like Brazil, Thailand, China etc, help keep the price of sugar in the range of Rs. 16 a kg, that would shoot up to Rs 20 a kg, if imports were to stop completely.
The government cannot impose fresh quota restrictions (QR) on sugar import since India has committed itself to a standstill arrangement on free improbability at the WTO. In fact, all quota restrictions may have to be dismantled by March 2003 deadline.
According to Shishir Bajaj, President of Indian Sugar Mills Association (ISMA): ‘‘We are signators to the WTO whereby we can impose a 150 percent duty on import of sugar which is the bound rate. Even developed countreies like the US have an import duty of 300 percent on imported sugar.’’
Sugar is Rs 20,000 crore turnover industry. The government policy of import is benefiting neither the farmers nor the mill owners. Only the MNCs and politician involved in sugar business are likely to get benefit from this decision.
That the sugar industry is not functioning properly for several years is well known for delays in payment. In many areas the cane cultivators were not given the fair price for their produce. They were also subjected to illegitimate deduction from their cane bills, and the fact of cheating in weighing is an open secret. The farmers bills are never paid in time or at one go.
The inefficiency in the sugar co-operatives all over the country has much to do with the problem of monopoly and interference from the dominant political families who resist with all their might any move to democratise the power structure.
The top 10 percent of the shareholders, most of them are from dominant political families who control the co-operatives in Maharashtra. While the largest shareholder tends to control sugar factories in Karnataka and Tamil Nadu as well in Maharashtra it is the rule of the single family’s over the sugar co-operatives.
The condition in U P is even more pathetic. The government instead of looking into the problem has found an ingenious way– privatise the entire industry (that would go to the MNCs) or let it die by going for cheap imports giving a damn to the future of hundreds of thousands of workers who would be displaced or find out of work due to massive mechanisation that the new owners could bring with them.
Resistance against the government’s bid to close the industry is growing. Both the workers and the cane cultivators are in a militant mood. They are yet to forge unity between them but both are worried about their own future. The sugar workers have in many cooperatives started to come out vehemently opposing the privatisation plan and also the move to close factories.
The peasants, who seem to be concentrating on the local issue, have till now failed to perceive the effect fo globalisation on them. A section of peasantry however, has mobilised itself, thought it is still on local level, mostly concerning immediate problems.
Closing down of a manufacturing industry affects only the immediate workers and a few other anciallary units, but liquidating an agro-sector means affecting not only the immediate factory workers but hundreds of thousands of people in the country like India.
Agro industry, includes not only employees, workers and technicians working in the factory but the effect percolates down to the farmers, the agriculture workers, the ancillary farming industries like pesticides and the list is unending. The cycle goes on and on. The closure might benefit the government whereby it could save few thousand worth of foreign exchange but it means deprivation, starvation, and death to innumerable helpless workers, peasants and their family members. This aspect cannot be viewed from the prism of economics only. It has to be judged by keeping the eternal Gandhian talisman in mind. The prime duty of the state whatever the modernist pundits or development garrulously proclaim, as in the past so, in future would remain the wellbeing of its citizen. the common man, the man on the street may not understand the machinations of the global capital or the jargons of economics but he is competent enough to understand what is good for him and what is detrimental.