Farmers Subsidise, Pushed To Suicide, By Devinder Sharma

Despite their contribution to the textile industry and the nation's economy, cotton farmers have been betrayed.

It is turning out to be as unreliable as the marriage vow: Till death do us apart. The new buzz on the economic horizon - public-private partnership - too is a marriage of convenience. The moment the dominant partner - private sector, in this case - finds the going tough, it leaves the public in a lurch.

Genuine public-private partnership is not a new phenomenon. It actually began when the Commission for Agricultural Costs and Prices (CACP), then known as Agricultural Prices Commission (APC), drew up a unique model to enable the domestic textile industry to turn competitive. For an industry, which was in the doldrums ever since the British left shores, the only way to create a new level of thrust and growth was to subsidise the price of cotton for the textile mills.

Under pressure to bail out the textile industry, and not knowing what else to do, the APC did exactly what it is known for. It reduced cotton prices. This quiet and little-known manoeuvring succeeded because policy makers and economists have always treated farmers as a national burden, ready to be offloaded at any given time. I still remember a CACP report in the late 1980s that clearly stated that cotton farmers were being deliberately paid 20 per cent less than the market price. The pricing system continues.

For 40 years, cotton farmers have actually been subsidising the textile industry. I had thought this was a classic case of public-private partnership. The textile industry would remain eternally grateful to the toiling cotton farmers. They would always ensure that cotton farmers were a happy lot. But I was completely wrong. None of the textile majors have even made a cursory move or effort to share even a fraction of their booty with the struggling cotton farmers. The textile industry has very conveniently dumped the cotton farmers.

The textile industry knew that farmers lived in penury and hardship for its sake. But the moment an opportunity arose to payback its gratitude to crisis-ridden farming community, the industry fled seeking greener pastures elsewhere.

Since 1993, nearly 75 per cent of the 1,50,000 farmers who have committed suicide unable to face the humiliation that comes along with growing indebtedness, were cotton growers. These farmers died because they were unable to bear the brunt of rising cost of cultivation and the static output prices. They didn't even know that they were victims of an economic policy that was aimed at benefiting the textile industry. They are the unsung heroes of India's textile revolution, which claims to be the second biggest employer in the country.

If only these farmers had got the right price for the cotton they produced, the number of suicides would have been far less. In fact, cotton prices have been on a steady decline thereby acerbating the prevailing farm crisis. The industry is clamouring for still lower prices.

Unmindful of the serial death dance being enacted in the cotton belt, the textile industry instead forced the government to allow cheaper imports. During the period 1990-2005, the import of cotton lint increased at a compound growth rate of over 75 per cent. This was despite the customs duty being increased from zero to 5 per cent in 2000. The industry was therefore visibly happy at the availability of low-cost cotton, even if it meant biking cotton farmers.

The industry continued to grow. With a turnover of Rs 1,50,000 crore, including export earnings, the textile industry is now poised to take advantage of the phase out of the multi-fibre agreement under WTO. It grew not only at the cost of farmers' sweat and blood, but also the state exchequer. Just to give you an example, the Cabinet Committee on Economic Affairs, under the chairmanship of Prime Minister Manmohan Singh, recently cleared four more textile parks bringing the total to 30.

Some say that it was only before 1991 that infrastructure was the headache of the state. But the clearance for the textile parks came only on Jan 18. Development of textile parks is aimed at facilitating additional investment, generate employment and increase textile production. To make this possible, it is the textile ministry that is expected to provide infrastructure facilities, such as roads, electricity supply - including captive power plants - and telecom lines to firms willing to set up textile units. The private share in the "development" is missing.

Despite all the talk of creating models of public-private partnership based on transparency and commitment, the cotton debacle provides an important lesson in economic exploitation. Cotton farmers were duped for four decades. They still are being fleeced by crony capitalism. What could have turned public-private partnership between the textile industry and the cotton growers into a replicable global model has in reality turned out to be a national shame. It demonstrates clearly the insensitivity the industry has towards its lesser and deprived partners in growth.

Social inclusiveness does not only mean setting up village schools and hospitals to demonstrate corporate responsibility. Public-private partnership can only turn into a "win-win" situation when both partners measure up at the time of need. Textile industry must take responsibility for farmer's suicides in the cotton belt. The government must step in and ensure that farmers get their legitimate dues. After all, it is the cotton farmers, who continue to subsidise the textile industry.




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