Tag Archives | India

Farmers Suicide in West Bengal

Aditya Dash

Around 25 shrimp farmers committed suicide in West Bengal.

They did not end their lives due to a drought or other calamities leading to the destruction of their crops. Their calamity was that there was no one to sell to and the market price for shrimps had crashed. Most others are currently selling at 30 percent below their cost of production.

The reason for this market outcome is that there has been an increase in global supply compared to last year while the global demand has decreased. Last  year, global supplies were hit by various calamities such as floods in Thailand and Vietnam and disease outbreaks in Vietnam and Indonesia. This was the main reason why a lot of shrimp farmers in India made extra money, as more shrimp was sourced from India. This year, no such disaster occurred in any major shrimp producing area and hence there has been a steady increase in the supply of shrimp. As far as the demand is concerned, most developed markets have high inventories from last year so the demand has been fairly low possibly due to the global economic slowdown.

For West Bengal things have been particularly bad. Majority of the produce is meant for export and specifically to Japan. Shrimp processors in West Bengal did not think about hedging their exposure to a single country of origin. Some of you might have read about the rejection of Indian origin shrimps in Japan due to the presence of Ethoxyquin. Ethoxyquin apart from being an unappealing term to be found in a food item is a food preservative used as an anti-oxidant in fish meal and fish feed to prevent rancidity. We feel that this year the detection of Ethoxyquin might have been due to the usage of imported shrimp feed of Malayasian and/or Vietnam origin. What is curious about the Japanese regulations is that the tolerance level of Ethoxyquin for shrimp is 0.01 PPM while the tolerance level for fish is 1 PPM. So as per Japanese regulations, it is acceptable for fish to have 100 times the amount of Ethoxyquin as shrimp. All the containers that have been detained in Japan are in compliance with WHO’s CODEX standards.

Although shrimp is not an integral part of the Indian diet, at such low prices clearly an arbitrage opportunity exists. However arbitrageurs will be constrained by the availability of cold chain infrastructure. Most shrimp processors have already bought plenty of raw materials and have no space left. Maybe things would have been better if there was 100 percent FDI in retail. Walmart and other similar entities would have leaped at this opportunity and stocked up on frozen shrimp.

Apart from the demand constraints one should also focus on the West Bengal shrimp farmer. Their cost of production is higher compared to the farmers of Odisha and Andhra Pradesh. The primary reason for that is the lack of awareness and education amongst the farmers. They tend to indiscriminately use Probiotics and other chemicals for maintaining adequate water conditions. Feed is given in a non-scientific manner which leads to higher Feed Conversion Ratios (amount of feed required for 1Kg of growth). Part of the blame lies on feed and shrimp farming input manufacturers and their marketing tactics. We have mostly illiterate and ignorant farmers operating in a highly technical field without any knowledge about quality parameters and basic economics. State governments should invest in translating and disseminating freely available technical information amongst the farming community. Steps should also be taken so that technical knowledge could be imparted at the matriculate level. West Bengal’s infrastructure is not as good as Andhra Pradesh, which has produced a record high number this year. Better road connectivity combined with regular electricity supply would drastically reduce their cost of production and improve product quality too. Conditions in Andhra Pradesh and Odisha are not very good either, however since the cost of production was highest at West Bengal the first round of suicides took place there. Although the financial strain will be felt by Odisha and Andhra cultivators, due to their lower cost of production things should not get that desperate.

Maybe the trade diplomacy team of the Indian government will resolve this matter as soon as possible. Maybe a screening of Ikuru to Japanese health authorities might awaken them to rationalise such a norm which has had such far reaching consequences. In Ikuru a lifelong bureaucrat comes to know that he has a year to live and tries to give his life a sense of purpose. He does so by taking responsibility of a project to transform a malarial swamp into a children’s’ playground. A senior bureaucrat once explained to me that the following are given importance in descending order cereals, horticulture, diary, animal husbandry, poultry and finally aquaculture.

While the suicides have been tragic, a silver line amongst such dark clouds is that aquaculture might get some more attention from the government.

Aditya Dash is a shrimp exporter.

Comments { 0 }

The Indian story- What went wrong?

Pratham Jahoorkar 

Alright, India’ GDP grew at an applauding rate for few years now. They talk of Bangalore– the Indian Silicon Valley, the telecom revolution, BPOs and Slumdog millionaires. We started acquiring western companies almost boding reverse colonisation. “India Shining” had become a cliché. And then, something started working against it all. We now talk about – nine year low GDP growth (5.3 percent in Q1-2012), corruption scandals, stagflation, rupee touching new all time lows, policy shocks that make foreign companies run for cover and of course blackouts! What can explain this turnaround? I pen down few thoughts in the capacity of an active observer at best.

The tightening of the monetary policy focused on the demand side and failed to curb the inflation that was largely because of the supply side shortcomings. Prolonged interest rate hikes (13 times between 2010 and 2011) targeting inflationary concerns have increased the borrowing rates across the board. Home owners, corporates and infrastructure projects are forced to deal with higher domestic debt costs affecting both the demand and the supply side economics adversely. And yet, inflation today continues to be a concern. From a vote-bank perspective inflation remains a higher priority than growth to the ruling parties. Thus, a monetary policy rescue to boost growth seems questionable in the near future.

It is no coincidence that lower growth rates reflect in lower investor confidence in the country. S&P rates India at BBB-. Any further downgrade means India will be the first of the BRICs to lose investment grade status. This is bad news for Indian foreign currency borrowers. Investor unfriendly policies are not only threatening returns that attracted foreign money but are also throttling the much needed investments to fuel our growth. Retrospective tax and FDI policy failure amongst other things, exacerbate a euro zone triggered bearish sentiment amongst the investment community.

The Twin deficits (current account and fiscal deficit) that were last seen in 1991 are back. Massive populist schemes like NREGA, food security bills and fuel/fertiliser subsidies contribute to a larger than expected fiscal deficit of 5.75 percent (as on March 2012). State Electricity Boards are severely buckling under subsidy burden curbing the power required to catch up with the industrial growth – partly causing the half-country blackout this late July. Oil and gold imports coupled with falling service sector exports widened our trade deficit. These deficits alongside grim foreign investment outlook percolate into the forex markets as severe downward pressure on the rupee. No surprise, it is the worst performing currency in Asia at the moment leaving us to deal with the costly imports.

The demographic political dynamics, coalition compulsions, rent seeking loopholes inherent to our democratic system forbid an expeditious counter to these quagmires. The majority poor vote-bank is bound to electorally prefer the populist schemes. While the power perpetuating efforts from the polity pander to such demand at the expense of long term growth. While the populist schemes fail repeatedly due to the implementation deficit, the announcing parties might get re-elected at the expense of massive splurge of tax payer money. It is this cost of imperfect democracy that squarely falls on the religious tax payer- “the middle class”. Other classes either earn too small to pay or are too wealthy to be bothered.

Coalition governments formed by identity politics and forged with disconnected agendas have become a recent reality. The resultant political instability means procrastinated policy making with myopic vision and regional focus. Lack of a clear national leader is now felt more than ever. Further, the license raj hangover still persists in several areas and most prominently in the allocation of resources. The massive scale corruption scandals unearthed in 2G scam and coal resource allocation bear testimonial for it. This is now being coined as the “Resource Raj” by the economists.

The world outlook does not help either. Economists like Nouriel Roubini have long been warning about an economic ‘storm’ in 2013. The shift in trajectory of Indian growth rate from 5.7 percent in the 1990s to 8.6 percent during 2005-2010 was largely due to the service sector growth shift from 7.5 percent to 10.3 percent in the same time period. Global economic doom puts India’s service led export growth story in jeopardy.

There is a glimmer of hope that reassures there is light at the end of the tunnel. That’s an impending 1991 like ‘Crisis’ (“twin-deficits”?) that will shake the governments out of their stupor to reform. Second generation reforms are long overdue that will set to finish the job we have started in the 1990s. These should eliminate all rent seeking avenues, increase investor confidence, facilitate infrastructure build-up, make resource allocation transparent, make subsidies work, revive labor laws and much more. Further, our middle class awakening witnessed during Anna Hazare’s protests is encouraging as well. Will this convert into active political participation by this class is arguable, albeit, is strongly desired.

Amidst this deafening noise of narratives and rhetoric it takes a deliberate effort to do wishful thinking. Hope is not collective action but it will surely lead to one someday when enough people talk and write about it. I try to do my part.

Pratham Jahoorkar is an entrepreneur in financial services industry and is based out of Mumbai.

Comments { 1 }

Counterinsurgency lessons

What are the lessons to be drawn from Kashmir to Punjab to the North-Eastern states?

Priya Ravichandran

Two of the most critical elements in almost all the COIN operations in India have been

  • Strengthening the police and security force
  • Creating an environment for free fair elections and rebuilding institutions to instill voter confidence.

The best examples of both these points are the campaigns in Punjab and in Mizoram. In both the cases, the police forces were strengthened, equipment modernised and a coordinated strategy built to enable intelligence to be gathered and dispersed systematically. Routing out of insurgents by use of force or intelligence was done and an environment created for the government to step in and establish itself. As documented counter-insurgency operations should contain three stages “Clear – Hold – Build”. It is a politico-military procedure. A successful campaign ensures the establishment of a government to remove anti-state elements and it also ensures that the legitimacy and accountability of its institutions are in place. The presence of these factors ensured the relative success of COIN operations from Kashmir to Punjab.

The biggest drawback in all the operations has been the make-it-up-as-we-go-along idea. This has resulted in the loss of manpower, resources and the opportunity cost from redrawing a plan from the ground up each time. Lessons were not learnt from any of these campaigns because of the lack of institutionalisation of the ideas in a comprehensive manner. There is also the notion that each situation differed according to its historical, geographical and social differences and campaigns cannot be seen to overlap one another. However, As Walter Ladwig says “analysis of successful counterinsurgency campaigns, in their proper context, can lead to the identification of common patterns that have remained consistent over time.” Another major issue has been the differing political ideologies and ground level politics resulting in the need to demonstrate a difference in policy whether the situation warrants it or not.

Except for the relatively unknown Counterinsurgency and Jungle Warfare School in Mizoram and Assam, there is very little effort at the national level to train forces specifically for counterinsurgency operations. Almost no scholarship exists. There has to be a comprehensive study of counter insurgency campaigns around the world and a detailed national level strategy implemented. The first level of defence against any terrorist activity is the constabulary and the local police stations. They have to be strengthened through requisite reforms.

The Naxalite campaign, unlike other operations involves multiple states. Extensive security campaign in one state only flushes the militants to another. The states should come together to agree on a national campaign and enable the central command to direct the operations and enable them to move in when stronger political action is required. To succeed in counterinsurgency, a state must bring all the elements of its national power—political, military, economic and social—to bear on the problem. Using the lessons as a blueprint and developing on them to build a stronger armed force and political institution is the only way forward and the surest way to counter the rising Maoist threat.

The author is programme officer at the Takshashila Institution.

Comments { 0 }