Eco (Agriculture Project)

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MEANING OF GLOBALIZATION.

The term was first employed in a publication entitled Towards New Education in1930, to denote a holistic view of human experience in education. In the 1960s the

term began to be used by economists and other social scientists. The term reachedthe mainstream press in the later half of the 1980s. Since its inception, the conceptof globalization has inspired competing definitions and interpretations, withantecedents dating back to the great movements of trade and empire across Asiaand the Indian Ocean from the 15th century onwards.

Charles Taze Russell coined the related term 'corporate giants' in 1897 to describethe largely national trusts and other large enterprises of the time.

The United Nations ESCWA says globalization is:

"a widely-used term that can be defined in a number of different ways. When usedin an economic context, it refers to the reduction and removal of barriers betweennational borders in order to facilitate the flow of goods, capital, services andlabour... although considerable barriers remain to the flow of labour...Globalization is not a new phenomenon. It began towards the end of the nineteenth

century, but it slowed down during the period from the start of the first World Waruntil the third quarter of the twentieth century. This slowdown can be attributed tothe inward-looking policies pursued by a number of countries in order to protecttheir respective industries... however, the pace of globalization picked up rapidly

during the fourth quarter of the twentieth century..."

HSBC, one of the world's largest banks, operates across the globe. Shown here isthe HSBC Global Technology Centre in Pune, India which develops software forthe entire HSBC group.

Tom G. Palmer of the Cato Institute defines globalization as "the diminution or

elimination of state-enforced restrictions on exchanges across borders and theincreasingly integrated and complex global system of production and exchange

that has emerged as a result."

Thomas L. Friedman popularized the term "flat world", arguing that globalizedtrade, outsourcing, supply-chaining, and political forces had permanently changedthe world, for better and worse. He asserted that the pace of globalization wasquickening and that its impact on business organization and practice wouldcontinue to grow.

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Takis Fotopoulos defined "economic globalization" as the opening andderegulation of commodity, capital and labour markets which led to the presentneoliberal globalization. "Political globalization" named the emergence of atransnational elite and the phasing out of the nation-state. "Cultural globalization"was the worldwide homogenization of culture. Other elements included"ideological globalization", "technological globalization" and "socialglobalization".

Trade, investment, migration and expertise

In 2000 the IMF identified four basic aspects of globalization.

y Trade and transactions: Developing countries increased their share of worldtrade, from 19 percent in 1971 to 29 percent in 1999. But there is great

variation among the major regions. For instance, the newly industrializedeconomies (NIEs) of Asia prospered, while African countries as a whole performed poorly. The makeup of a country's exports are an importantindicator for success. Manufactured goods exports soared, dominated bydeveloped countries and NIEs. Commodity exports, such as food and rawmaterials were often produced by developing countries: commodities' shareof total exports declined over the period.

y Capital and investment movements: Private capital flows to developingcountries soared during the 1990s, replacing "aid" or development assistance

which fell significantly after the early 1980s. Foreign Direct Investment(FDI) became the most important category. Both portfolio investment and

bank credit rose but they have been more volatile, falling sharply in thewake of the financial crisis of the late 1990s.

y Migration and movement of people: In the period between 196590, the proportion of the labor forces migrating approximately doubled. Mostmigration occurred between developing countries and Least DevelopedCountries (LDCs). The flow of migrants to advanced economic countrieswas claimed to provide a means through which global wages converge. Theynoted the potential for skills to be transferred back to developing countriesas wages in those a countries rise.

y Dissemination of knowledge (and technology): Information and technologyexchange is an integral aspect of globalization. Technological innovations

(or technological transfer) benefit most the developing and Least Developingcountries (LDCs), as for example the advent ofmobile phones


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Definition:

Globalised World - What does it mean?

Does it mean the fast movement of people which results in greater interaction?

Does it mean that because of IT revolution people can be in touch with each otherin any part of the world?

Does it mean trade and economy of each country is open in Non-Intrusive way sothat all varieties are available to consumer of his choice?

Does it mean that mankind has achieved emancipation to a level of where we can

say it means a social, economic and political globalisation?

Though the precise definition of globalisation is still unavailable a few definitionsworth viewing, Stephen Gill: defines globalisation as the reduction of transactioncost of transborder movements of capital and goods thus of factors of productionand goods. Guy Brainbant: says that the process of globalisation not only includesopening up of world trade, development of advanced means of communication,internationalisation of financial markets, growing importance of MNC's,

population migrations and more generally increased mobility of persons, goods,

capital, data and ideas but also infections, diseases and pollution

Impact on India:

India opened up the economy in the early nineties following a major crisis that led

by a foreign exchange crunch that dragged the economy close to defaulting onloans. The response was a slew of Domestic and external sector policy measures

partly prompted by the immediate needs and partly by the demand of themultilateral organisations. The new policy regime radically pushed forward infavour of amore open and market oriented economy.

Major measures initiated as a part of the liberalisation and globalisation strategy inthe early nineties included scrapping of the industrial licensing regime, reductionin the number of areas reserved for the public sector, amendment of the

monopolies and the restrictive trade practices act, start of the privatisation programme, reduction in tariff rates and change over to market determinedexchange rates.


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Over the years there has been a steady liberalisation of the current accounttransactions, more and more sectors opened up for foreign direct investments and

portfolio investments facilitating entry of foreign investors in telecom, roads, ports,airports, insurance and other major sectors.

The Indian tariff rates reduced sharply over the decade from a weightedaverage of 72.5% in 1991-92 to 24.6 in 1996-97.Though tariff rates went up slowlyin the late nineties it touched 35.1% in 2001-02. India is committed to reducedtariff rates. Peak tariff rates are to be reduced to be reduced to the minimum with a

peak rate of 20%, in another 2 years most non-tariff barriers have been dismantledby march 2002, including almost all quantitative restrictions.

India is Global:

The liberalisation of the domestic economy and the increasing integration of Indiawith the global economy have helped step up GDP growth rates, which picked upfrom 5.6% in 1990-91 to a peak level of 77.8% in 1996-97. Growth rates haveslowed down since the country has still bee able to achieve 5-6% growth rate inthree of the last six years. Though growth rates has slumped to the lowest level4.3% in 2002-03 mainly because of the worst droughts in two decades the growthrates are expected to go up close to 70% in 2003-04. A Global comparison showsthat India is now the fastest growing just after China.

This is major improvement given that India is growth rate in the 1970's was verylow at 3% and GDP growth in countries like Brazil, Indonesia, Korea, and Mexicowas more than twice that of India. Though India's average annual growth ratealmost doubled in the eighties to 5.9% it was still lower than the growth rate inChina, Korea and Indonesia. The pick up in GDP growth has helped improveIndia's global position. Consequently India's position in the global economy hasimproved from the 8

thposition in 1991 to 4

thplace in 2001. When GDP is

calculated on a purchasing power parity basis.

Globalisation and Poverty:

Globalisation in the form of increased integration though trade and investment isan important reason why much progress has been made in reducing poverty andglobal inequality over recent decades. But it is not the only reason for this oftenunrecognised progress, good national polices , sound institutions and domestic

political stability also matter.


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Despite this progress, poverty remains one of the most serious internationalchallenges we face up to 1.2 billion of the developing world 4.8 billion people stilllive in extreme poverty.

But the proportion of the world population living in poverty has been steadilydeclining and since 1980 the absolute number of poor people has stopped risingand appears to have fallen in recent years despite strong population growth in poorcountries. If the proportion living in poverty had not fallen since 1987 alone afurther 215million people would be living in extreme poverty today.

India has to concentrate on five important areas or things to follow to achieve thisgoal. The areas like technological entrepreneurship, new business openings forsmall and medium enterprises, importance of quality management, new prospects

in rural areas and privatisation of financial institutions. The manufacturing of

technology and management of technology are two different significant areas inthe country.

There will be new prospects in rural India. The growth of Indian economy verymuch depends upon rural participation in the global race. After implementing thenew economic policy the role of villages got its own significance because of itsunique outlook and branding methods. For example food processing and packagingare the one of the area where new entrepreneurs can enter into a big way. It may beorganised in a collective way with the help of co-operatives to meet the global

demand.

Understanding the current status of globalisation is necessary for setting course forfuture. For all nations to reap the full benefits of globalisation it is essential tocreate a level playing field. President Bush's recent proposal to eliminate all tariffson all manufactured goods by 2015 will do it. In fact it may exacerbate the

prevalent inequalities. According to this proposal, tariffs of 5% or less on allmanufactured goods will be eliminated by 2005 and higher than 5% will belowered to 8%. Starting 2010 the 8% tariffs will be lowered each year until they

are eliminated by 2015.

GDP Growth rate:

The Indian economy is passing through a difficult phase caused by severalunfavourable domestic and external developments; Domestic output and Demandconditions were adversely affected by poor performance in agriculture in the past

two years. The global economy experienced an overall deceleration and recordedan output growth of 2.4% during the past year growth in real GDP in 2001-02 was


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5.4% as per the Economic Survey in 2000-01. The performance in the first quarterof the financial year is5.8% and second quarter is 6.1%.

Export and Import:

India's Export and Import in the year 2001-02 was to the extent of 32,572and 38,362 million respectively. Many Indian companies have started becomingrespectable players in the International scene. Agriculture exports account forabout 13 to 18% of total annual of annual export of the country. In 2000-01Agricultural products valued at more than US $ 6million were exported from thecountry 23% of which was contributed by the marine products alone. Marine

products in recent years have emerged as the single largest contributor to the totalagricultural export from the country accounting for over one fifth of the total

agricultural exports. Cereals (mostly basmati rice and non-basmati rice), oil seeds,

tea and coffee are the other prominent products each of which accounts fro nearly5 to 10% of the countries total agricultural exports.

Where does Indian stand in terms of Global Integration?

India clearly lags in globalisation. Number of countries have a clear lead among

them China, large part of east and far east Asia and eastern Europe. Lets look at afew indicators how much we lag.

*Over the past decade FDI flows into India have averaged around 0.5%

of GDP against 5% for China 5.5% for Brazil. Whereas FDI inflowsinto China now exceeds US $ 50 billion annually. It is only US $4billion in the case of India

*Consider global trade - India's share of world merchandise exportsincreased from .05% to .07% over the pat 20 years. Over the same

period China's share has tripled to almost 4%.

*India's share of global trade is similar to that of the Philippines aneconomy 6 times smaller according to IMF estimates. India under

trades by 70-80% given its size, proximity to markets and labour costadvantages.

*It is interesting to note the remark made last year by Mr. Bimal Jalan,Governor of RBI. Despite all the talk, we are now where ever close

being globalised in terms of any commonly used indicator of


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globalisation. In fact we are one of the least globalised among themajor countries - however we look at it.

*As Amartya Sen and many other have pointed out that India, as a

geographical, politico-cultural entity has been interacting with theoutside world throughout history and still continues to do so. It has toadapt, assimilate and contribute. This goes without saying even as wemove into what is called a globalised world which is distinguishedfrom previous eras from by faster travel and communication, greatertrade linkages, denting of political and economic sovereignty andgreater acceptance of democracy as a way of life.

Consequences:

The implications of globalisation for a national economy are many. Globalisationhas intensified interdependence and competition between economies in the worldmarket. This is reflected in Interdependence in regard to trading in goods andservices and in movement of capital. As a result domestic economic developmentsare not determined entirely by domestic policies and market conditions. Rather,they are influenced by both domestic and international policies and economicconditions. It is thus clear that a globalising economy, while formulating andevaluating its domestic policy cannot afford to ignore the possible actions andreactions of policies and developments in the rest of the world. This constrained

the policy option available to the government which implies loss of policy

autonomy to some extent, in decision-making at the national level.

IMPACT OF GLOBALIZATION ON AGRICULTURE SECTOR

The liberalisation of Indias economy was adopted by India in 1991. Facing a

severe economic crisis, India approached the IMF for a loan, and the IMF grantedwhat is called a structural adjustment loan, which is a loan with certainconditions attached which relate to a structural change in the economy. Thegovernment ushered in a new era of economic reforms based on these conditions.These reforms (broadly called Liberalisation by the Indian media) can be broadlyclassified into three areas: Liberalisation, privatization and globalization.Essentially, the reforms sought to gradually phase out government control of themarket (liberalisation), privatize public sector organizations (privatization), andreduce export subsidies and import barriers to enable free trade (globalization).There was a considerable amount of debate in India at the time of the introductionof the reforms, it being a dramatic departure from the protectionist, socialist nature


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of the Indian economy up until then. However, reforms in the agricultural sector inparticular came under severe criticism in the late 1990s, when 221 farmers in thesouth 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 aleading journalist and activist, P. Sainath1, stands at 100,000 across the country.(Sainath, 2006) Coupled with this was a sharp drop in agricultural growth from4.69% 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 Indianagriculture today, and in analyzing the causes, will look at the extent to whichliberalisation reforms have contributed to its current condition. It will look atsupporting data from three Indian states which have been badly affected by thecrisis: Andhra Pradesh, Maharashtra and Kerala. Andhra Pradeshs (APs)experience is particularly critical in this debate because it was headed by ChiefMinister 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 Indias history. Agricultural growthslowed 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 incontrast 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 Indias history. (Unofficial estimates put them ashigh as 100,000 across the country, while government estimates are much lower at25,000. This is largely because only those who hold the title of land in their namesare considered farmers, and this ignores women farmers who rarely hold land

titles, and other family members who run the farms.) (Sainath, P) Agriculturalwages 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% amonth. (Sainath, 2005) An NSSO2 survey in 2005 found that 66% of all farmhouseholds own less than one hectare of land. It also found that 48.6% of all


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farmer households are in debt. The same year, a report by the Commission ofFarmers welfare in Andhra Pradesh concluded that agriculture in the state was inan advanced stage of crisis, the most extreme manifestation of which was the risein suicides among farmers. Given the performance of agriculture and figures offarmer suicides across the country, this can be said to apply to Indian agriculture asa whole.

The Crisis facing Indian Agriculture

The biggest problem Indian agriculture faces today and the number one cause offarmer 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 makesfarmers 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 AndhraPradesh, Kerala and Maharashtra, and analyse the role that liberalisation policieshave played.

As was mentioned earlier, APs experience is particularly relevant in this analysis because of its leadership. Let me explain in detail. Chandrababu Naidu, ChiefMinister 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 throughtechnology 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 APsindustry and government. Naidu envisaged corporate style agriculture in AP, andimplemented World Bank liberalisation policies with great enthusiasm and gusto.He drew severe criticism from opponents, saying he was using AP as a laboratoryfor extreme neo-liberal experiments. Hence, APs experience with liberalization iscritical.

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 thecountry had access to seeds from state government institutions. For example, APsAPSSDC3 produced its own seeds, was responsible for their quality and price, andhad a statutory duty to ensure seeds were supplied to all regions in the state, no


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matter how remote. The seed market was well regulated, and this ensured qualityin privately sold seeds too. (The damage done, 2005) With liberalization, Indiasseed market was opened up to global agribusinesses like Monsanto, Cargill andSyn Genta. Also, following the deregulation guidelines of the IMF, 14 of the 24units of the APSSDCs seed processing units were closed down in 2003, withsimilar closures in other states. This hit farmers doubly hard: in an unregulatedmarket, 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 ofAPSSDC 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 likeMonsantos BT Cotton costing Rs. 3200 or more per acre, (AUD 91) a hike of3555%. (Sainath, 2005) BT Cotton is cotton seed that is genetically modified toresist pests, the success of which is disputed: farmers in Andhra Pradesh andMaharashtra 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. AlsoBT 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 farmersinvestment in seeds is a waste. (Sainath, 2004) Output is not commensurate withthe 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, farmersinvest 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 harvestedseeds 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 onfarmers was the devaluation of the Indian Rupee in 1991 by 25% (an explicitcondition of the IMF loan). Indian crops became very cheap and attractive in theglobal 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 reducedpesticide subsidy (another explicit condition of the IMF agreement) by two thirdsby 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


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have also been increased: in Andhra Pradesh tariff was increased 5 times between1998 and 2003. (Seeds of ruin, 2005) Pre-liberalisation, subsidised electricity wasa success, allowing farmers to keep costs of production low. These costs increaseddramatically 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 withBritains DFID4 and the World Bank.) Also, the fact that only 39% of Indiascultivable land is irrigated makes cultivation of cash crops largely unviable, butexport oriented liberalisation policies and seed companies looking for profitscontinue to push farmers in that direction. (Isaac, 2005)

The Debt Trap: Low price of Output

With a view to open Indias markets, the liberalization reforms also withdrewtariffs and duties on imports, which protect and encourage domestic industry. By2001, India completely removed restrictions on imports of almost 1,500 itemsincluding food. (The damage done, 2005) As a result, cheap imports flooded themarket, pushing prices of crops like cotton and pepper down. Import tariffs oncotton now stand between 0 10%, encouraging imports into the country. Thisexcess 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 wereconcentrated in the cotton belt till 2003 (after which paddy farmers followed the

suicide trend). (Hardikar, 2006). Similarly, Kerala, which is world renowned forpepper, 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, crashedto 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 withthis, drought and crop failure has hit the pepper farmers of Kerala hard, and haveforced them into a debt trap. Close to 50% of suicides among Keralas farmershave been in pepper producing districts. (Mohankumar & Sharma, 2006)

TheD

ebt Trap: Lack of credit facilities and dependence on private moneylenders.

In 1969, major Indian banks were nationalized, and priority was given to agrariancredit 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,


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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 reducedrural spending as a result of its liberalisation policies. Rural developmentexpenditure, which averaged 14.5% of GDP during 1985 1990 was reduced to8% by 1998, and further to 6% since then. This at a time when agriculture wasgoing 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 isimpossible to repay. 12 out of Indias 28 states have 50% and higher indebtednessamong farm households. Andhra Pradesh has the highest percentage of indebtedfarm households 82%. 64.4% of Keralas farm households and 54.8% ofMaharashtras farm households are indebted (NSSO, 2003) Indebtedness has been

identified as the single major cause of suicides in both Andhra Pradesh, Kerala andMaharashtra. (Analysis of Farmer Suicides in Kerala, 2006, Whos suicide is itanyway, 2005, Saving small farmers, 2005)

Liberalisation and how it Failed

Branco Milanovic, a World Bank economist describes how he believesliberalisation helps developing countries achieve growth: when a country lowerstrade barriers, reduces government intervention in the market in order to allowmarket forces to operate freely, increases competition and attracts foreign

investment, it will increase productivity and reduce inefficiency, which will lead toeconomic 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. (Thedamage done, 2005) This argument is an economic rationalist one, which viewsgovernment intervention with profound suspicion, and has equally profound faithin unfettered market forces. (Whitwell quoting Robert Manne, 1998) What Mr.Milanovic neglects to mention, though, is that rich countries which now preachliberalisation protected their infant industries at the time they began toindustrialize, till they were strong enough to compete globally. The US

government, for example, had a protectionist trade policy in the late nineteenthcentury to help US companies become competitive in the world. Besides, apartfrom wool, the US, Germany, Britain and France were all almost self-sufficient inthe 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


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we have seen above) is clearly not the case. (Issac, 2005) In fact, it is this veryreason 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 noeducation system, credit facilities, access to alternative employment, or efficienttechnology. Their only support was government subsidy and regulation.Liberalisation policies came in and dismantled their only support structure. Ithalted 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 than34% 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 ofliberalisation is that competition will weed out the inefficient, and in the growththat 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 willbe able to take advantage of the opportunities presented to them. As Robert Issacsays in The Globalization Gap, Globalization encourages the well positioned to

use tools of economics and politics to exploit market opportunities, boost technicalproductivity, and maximize short-term material interests. This is compounded inIndia, 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 employmentare 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 nosystem which helps agricultural workers find alternate employment, or developalternate skills. (Chossudovskly, 1997) In the face of such obstacles, it is nearlyimpossible to expect agricultural workers to shift to alternate fields. Coming backto AP, the IT Revolution spearheaded by Chandrababu Naidu attracted companieslike 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 thistranslated 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 tohow many people consume less than the nutritional minimum prescribed. (2400calories for rural areas, and 2100 for urban areas) Major changes in survey designin 1999-2000 not only made the resultant estimates incomparable to previousyears estimates, but an over-estimation of consumption (meaning people were

getting enough food, hence were not considered poor) meant a sharp reduction in


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poverty figures. After experts challenged it, the Planning Commission of Indiaaccepted that the figure was inaccurate, and could not be compared to previousyears 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 thenumber of poor increased by nine million in 2002 as compared to 1999.

Liberalization and Growth

Many economists now concede that the relationship between liberalisation andgrowth are uncertain at best. According to the Center for Economic and Policyresearch, which studied impact of liberalisation reforms on the developing world,key economic and social indicators such as increases in life expectancy, infant andchild 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 economicrationalist argument of free trade eliminating poverty, since the 20 years leading upto 1980 witnessed high protectionist policies and trade barriers. Following thesuicides in 2000, the World Bank and Britains DFID abandoned power reforms inAndhra Pradesh four years before schedule. It admitted that it had substantiallyunderestimated the complexity of the process and that there must be increasedconsultation with the farmers to get their acceptance of any further reform. (Thedamage done, 2005).

The Andhra Pradesh government sponsored report by the Commission of Farmers

Welfare squarely laid the blame for its agrarian crisis on the state and centralgovernments 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 hassystematically reduced the protection afforded to farmers and exposed them tomarket volatility and private profiteering without adequate regulation; has reducedcritical forms of public expenditure; has destroyed important public institutions,and has not adequately generated other non-agricultural economic activities. Areport 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 playeda dominant role in the agrarian crisis that is now being played out. However, this isnot to say that privatisation, liberalisation and globalization are per say bad, or


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inherently inimical to an economy. It is the one size fits all brand of liberalisationadopted by the IMF and the World Bank which forces countries to privatize,liberalise and globalize without exception which has failed. Without taking intoaccount the state of an economy, and in this case, the state and nature of theagricultural sector in India, the IMF and the World Bank, with the cooperation ofthe Indian government, embarked on mismatched reforms, which have causedmisery 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 appliedfor the IMF loan and accepted its conditionsperhaps the course of economicreform in India would have taken a very different course if there was no urgentneed 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 APs power reforms) the Blair government of Britain announced in2004 that it will no longer make liberalisation and privatization conditions of aid.In another blow to the neo-liberal lobby, Chandrababu Naidu suffered the worstever defeat in the 2004 state elections in his partys history, with rural AP clearlyrejecting 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 Britains

example in order to influence World Bank and IMF policy towards India to ensureblind liberalization is not pursued, and so that countries like India can adopt tailor-made reforms to suit their economy.


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IMPACT OF GLOBALISATION ON INDIAN

INDUSTRY WITH SPECIAL REFERENCE TO

AGRICULTURE SECTOR

SUBMITTED TO : PROF MAHESH TEJANI.


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THE SYDENHAM COLLEGE OF COMMERCE

AND ECONOMICS

SUBJECT: BUSINESS ECONOMICS

TOPIC :IMPACT OF GLOBALIZATION ON

INDIAN INDUSTRY WITH SPECIAL REFERENCETO AGRICULTURE SECTOR

SUBMITTED BY: YASAR MANIYAR

CLASS :SYBBA ROLL NO :06

SUBMITTED TO:PROF MAHESH TEJANI


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INDEX

SR NO TOPIC

1 MEANING OF GLOBALIZATION2 DEFINATION3 IMPACT ON INDIA4 GLOBALIZATION AND POVERTY5 GDP GROWTH RATE6 IMPORT AND EXPORT7 CONSEQUENCES8 IMPACT OF GLOBALIZATION ON

AGRICULTURE SECTOR

9 INDIAN AGRICULTURE TODAY10 THE CRISIS OF FACES INDIAN AGRICULTURE11 SEEDS,FERTILIZER AND PESTICIDES12 LIBERALIZATION AND GROWTH13 CONCLUSION14 BIBLOGRAPHY


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BIBLOGRAPHY

WWW.WIKIPEDIA.ORG

WWW.EAC.GOV.IN

WWW.EUROGENERALS.COM

WWW.GLOBALIZATIONANDHEALTH.COM

WWW.FOREIGNAFFAIRS.COM

WWW.GLOBALIZATION101.ORG

Eco (Agriculture Project)

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