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MAYS, 2012 Vol XLVII No 18

E con om ic& P olitica lw E E K L Y


EDITORIALS On the failu re of Bt Cotton7

■ Another Weapon for Mass Destruction What do the available field studies that have addressed
■ 'Ask Not for Whom the Bell Tolls' agro-economic questions of Bt cotton cultivation in
COMMENT India have to say? page 45
■ Euro's Salvation

■ Media Follies and Supreme Infallibility Revolutionary Movements
■ Myanmar: Is the Age of Military Juntas Over? How should a new generation of post-Marxian
■ Why Did Mayawati Lose? revolutionaries invigorate the ongoing progressive
■ Koodankulam's Reserve Water Requirements movements with a coordinated programme of
■ The Right-to-Public-Services Laws socialist change? page 55
■ Kick-starting Bengal's Green Revolution
■ Environmental Burden from Pharmaceuticals


■ Selected Writings ofAnuradha Ghandy The Supreme Court's restraint on the media in the
form of a code for reporting is a dangerous move with
precedent from authoritarian polities, page 10
■ Dealing with a Deteriorating Statistical Base

■ On the 'Failure of Bt Cotton'
■ Revolutionary Movements
in a Post-Marxian Era What has occasioned the change in Myanmar that
■ Policy Reforms in the Pharmaceutical Sector marks the entry of Aung San Suu Kyi in parliament? Are
the generals ready to change the constitution? page 14
■ Government-led Microcredit

Deteriorating Statistical Base
■ On Publicly-Financed Health Insurance
What ails India's statistical data collection system? What
CURRENT STATISTICS kind of pressure may be exerted upon the government
■ Assets and Liabilities of Government of India to fix this structure? page 41

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MAY 5, 2012 I VOL x l v ii NO 18
Media Follies and Supreme Infallibility ED ITO R IA L S

10 The judiciary seem s unable to curb censorship through criminal prosecution Another Weapon for Mass Destruction........... 7
o f public-spirited journalism but is showing inordinate concern over its own ‘
Ask Not for Whom the Bell Tolls’
................. 8
im age as projected through the media.

Myanmar: Is the Age of Military Juntas Over? Euro’

s Salvation
— Avinash Persaud .................................9
14 More than Suu Kyi, the hope for a new Myanmar rests largely on the
shoulders o f President Thein Sein who has w on the support o f the moderates FROM 50 YEARS A G O .......... 9
within the military faction.
Why Did Mayawati Lose? Media Follies and Supreme Infallibility
17 The u p voter is m oving away from a “marriage m odel”o f voting behaviour —Sukumar Muralidharan ....................... 10
to a “
share market m odel”w illing to vote for a party that may provide Myanmar: Is the Age of Military Juntas Over?
greater returns. — Marwaan Macan-Markar...................... 14
Why Did Mayawati Lose?
Koodankulam's Reserve Water Requirements
—AKVerma ....................................... 17
20 There is not enough reserve water inside the Koodankulam nuclear pow er
Koodankulam’s Reserve Water Requirements
plants com plex for cooling the reactor cores and the spent fuel pools.
—V T Padmanabhan, R Ramesh,
The Right-to-Public-Services Laws VPugazhendi....................... 20
23 Eleven states have enacted Right-to-Public-Services laws without any The Right-to-Public-Services Laws
pressure from the centre perhaps in an attempt to regain the faith o f the —Ashok Kumar Sircar........ .................. 23
m iddle class in the political and bureaucratic system. Kick-starting a Second Green Revolution
in Bengal —Aditi Mukherji, Tushaar Shah,
Kick-starting a Second Green Revolution in Bengal Partha Sarathi Banerjee ..........................27
27 Two initiatives o f the West Bengal government w ill give concrete shape to the The Emerging Environmental Burden
central governm ent’ s policy directive o f encouraging food production in from Pharmaceuticals
eastern India without com prom ising groundwater resource sustainability. — Geetha Mathew, M X Unnikrishnan........... 31

The Emerging Environmental Burden from Pharmaceuticals R EV IEW ARTICLE

31 Around 31% o f drugs in the Swedish drug market originate from India but the Scripting the Change: Selected Writings
high growth in volumes o f pharmaceuticals has brought in its wake concerns ofAnuradha Ghandy- Towards a Revival
about the environmental burden o f pharmaceutical waste. of Revolutionary Ideas
—Hiren Gohain ...................................35
Dealing with a Deteriorating Statistical Base
41 As a first step, academics and public intellectuals should com e together to
Dealing with a Deteriorating Statistical Base
form an India Database Forum which could discuss and highlight what ails
— SLShetty........................................ 41
the statistical system.
On the failu re of Bt Cotton': Analysing a Decade of Experience On the ‘
Failure of Bt Cotton’
45 Why has there been so much controversy over the success and failure o f Bt Analysing a Decade of Experience
technology given its virtual universal adoption in cotton? A look at the —Ronald J Herring,
experience o f farmers before and after grow ing Bt. N Chandrasekhara Rao ........................... 45
Revolutionary Movements in a Post-Marxian Era
Revolutionary Movements in a Post-Marxian Era
— Sumanta Banerjee ........ .................... 55
55 The key to revolutionary change in today’ s world boils dow n to the problem
o f humanising the strategy and tactics o f revolutionary change, and Policy Reforms in the Indian Pharmaceutical
Sector since 1994: Impact on Exports and Imports
dem ocratising the post-revolutionary reconstruction o f society.
—RejiK Joseph ........................... 62
Policy Reforms in the Indian Pharmaceutical Sector since 1994
62 The change in the export orientation has resulted in a change in the production
Assessing the Role of Government-led Microcredit
structure and to maintain their price competitiveness in the international
—Jordi de la Torre, Xavier Gine,
market, Indian pharma firms have had to look at options for reducing cost.
Tara Vishwanath................................. 73
Assessing the Role of Government-led Microcredit D IS C U S S IO N
73 Using survey data collected in 2007 from three districts in Andhra Pradesh* On Publicly-Financed Health Insurance Schemes:
this paper assesses the performance o f 72 primary agricultural Is the Analysis Premature?
credit cooperatives. — T R Dilip ........................................ 79

On Publicly-Financed Health Insurance Schemes: CU R R EN T ST A TIST IC S..................................... 8 l

Is the Analysis Premature?

L E TT ER S..................................... 4
79 A response to Sakthivel Selvaraj and Anup K Karan’
s article “
Why Publicly-
Financed Health Insurance Schemes Are Ineffective in Providing Financial SU B SCR IPTIO N RATES AND
Risk Protection”(epw , 17 March 2012). N OTES FO R C O N T R IB U T O R S ..................... 6

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Econom ic& Politicalw EEK LY
is s n 0012-9976

Ever since the first issue in 1966,

e p w has been India’
s premier journal for Turmoil in South Bastar of Panchayats (Extension to the Sched­
comment on current affairs uled Areas) Act, 1996, a senior police
and research in the social sciences.

It succeeded Economic Weekly (1949-1965), received a press handout issued by officer opined that we need not bother
which was launched and shepherded about police stations. There are hardly
southern Bastar division of the Com­
b y S a c h in C h a u d h u r i,
who was also the founder-editor of epw. munist Party of India (Maoist) on 24 April any cases registered in these areas, a n '
As editor for thirty-five years (1969-2004) average of one case in two years. My
in the evening. The news about district
Kr is h n a R a j
gave epw the reputation it n o w enjoys. collector Alex Paul Menon being “ kid­ worry was about the crack in the system
napped”had already become an issue of that forced concerned people to go to a
C R A M M A N OH A R REDDY deep concern. I readily agreed to be of police station. “ Move to the Barracks”is
any help in normalising the situation, people’ s natural response.
MELLO especially in the context of my long per­ Alleged Fake Cases:
sonal association with the people and The first question in these cases is:
SUBHASH RA I the area. I have so far received no re­ What is meant by fake? The written
SENIOR ASSISTANT EDITORS quest of any kind from the Government word is superior to oral presentation in
LINA MATHIAS ofChhattisgarh. Indian law. In this frame, therefore, the
SRINIVASAN RAM AN I The Maoist press release concludes people who know the law are always a
ASH IM A S O O D with a set of issues that must be attended privileged lot. Those who are unaware
to immediately. It also expresses its about the law are generally the losers
concern about the health of Menon, even though they may be telling the
JYOTI SHETTY supply of medicines to him and his early “truth, nothing but the truth” . How
recovery. The supply of medicine is being much time a case may take is nobody’ s
P S LEELA attended to by Manish Kunjam, resident business. The fact that the case may
PRODUCTION of Sukma and national president of the have merely a bundle of lies may be es­
U RAGHUNATHAN Adivasi Mahasabha. tablished after a long time.
SU N EETH I NAIR The Maoists’ demands: The tribal people are especially handi­
(1) There are basically three demands capped by the fact that they may be
GAURAANG PRADHAN MANAGER under item 1, namely, (i) stop Operation managing their affairs in accordance
Green Hunt, (ii) stop combing operation, with their customs and traditions as
ADVERTISEMENT MANAGER and (iii) move the police to the barracks, was in vogue in excluded and partially
and (2) All demands from items 2 to 9 excluded areas and even in the princely
concern “ Fake Cases”of different types states. With the adoption of the Consti­
in which countless categories of simple tution, all laws that were in vogue in
edit@epw.in p e op le are involved. British India got extended to these areas.
CIRCULATION A brief resume of these demands is And the governors who had powers to
given below: adapt and amend the laws took no
(i) Green Hunt: The idea of this term has action. All this led to “ criminalisation”
been borrowed from the “ hunting expedi­ of the concerned tribal territories. The
tions”of the Wild West in the us with the simple tribal and even their articulate
GANPATRAO KADAM MARG, LOWER PAREL little stigma for capturing resources and leaders are unaware of legal refinements
MUMBAI 4 0 0 013 eliminating indigenous people till about and the people suffer because no one
p h o n e : (022) 4063 8282
f a x : (022) 2493 4515
the beginning of the 20th century. “A good cared to look at the basic anomalies in
Indian is a dead Indian”was in common the functioning of the system. The sim­
E PW R E SE A R C H F O U N D A T IO N parlance. Today in our country, “ a good ple tribal either suffered quietly or re­
e p w Research Foundation, established in 1993, conducts
tribal is a displaced tribal who moves out volted against the system.
research on financial and macro-economic issues in India.
obediently at the wish of the State” . The following are the so-called “ fake”
K KANAGASABAPATHY (ii) Combing Operation: It is an unmixed cases that the Maoists have pointed out:
C 212, AKURLI INDUSTRIAL ESTATE horror to the simple tribal people especi­ (i) There are hundreds of fake cases that
ph on es: (022) 2887 3038/41
ally in the remote regions of our country, have been forced on the simple people
fax: (022) 2887 3038 (iii) “ Move to the Barracks” : The police without even their knowing what the
movement in areas like Bastar in recent charges were all about. They are impris­
Printed by K Vijayakumar at Modem Arts and Industries,
151, A-Z Industrial Estate, Ganpatrao Kadam Marg,
years has been massive which the simple oned in jails of Dantewada and Raipur
Lower Parel, Mumbai-400013 and tribal cannot endure. He is used to a frame without knowing what they have been
published by him on behalf of Sameeksha Thist
from 320-321, A-Z Industrial Estate,
where police is conspicuous by its absence. deemed guilty of.
Ganpatrao Kadam Marg, Lower Parel, Mumbai-400013. While rationalising the administrative (ii) A fake case has been launched against
Editor: C Rammanohar Reddy.
structure in the context of the Provisions a number of innocent people for allegedly

4 may 5, 2012 v o l x l v ii n o 18 (3322 Economic & Political weekly

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storming the house of a Congress leader the tribals and committing crimes against editions of the epw to be labelled, tied
in Dantewada district. All innocent people innocent officers and people's represent­ up and then, of course dispatched to the
must be released. atives attending to their call of duty. We post. That was the busiest day. If you
(iii) Nine Maoist Party workers, men­ wholeheartedly condemn these acts of asked Baburao for anything, for instance,
tioned by name, have been jailed under violence on the part of the Maoists. stuff to be photocopied, or for files full of
fake cases. They must be released. If the Maoists care for the tribals and newspaper clippings that we needed for
(iv) Cases launched against an elderly if they have any respect for human our editorials or even just for dispatch
journalist and Asit Sen must be revoked. rights, they should release both, Alex Paul work not related to the “ big”dispatch
It is important to note that the Maoists Menon and Jhina Hikaka immediately work, Baburao would brush you aside.
are not begging for some favours. They and unconditionally. Not now. In his brusque earthy way but
are openly alleging that fake cases have Ramachandra Guha, E A S Sarma, after a while, you got used to it. Just like
been launched against named people. It Nandini Sundar on other days, you would listen to
must be ensured that the simple tribal Baburao’ s stories and get to know his
people are not victims of the adage Baburao Ambadaskar: ways. The way he did not drink tea or
“ justice delayed is justice denied” .These On His Retirement coffee. Or his stories about the Shiv Sena,
people do not even know why they have and Baburao was an active functionary

been kept in jail. heard from a former colleague about of that party, campaigning for it, at
B D Sharma the prospective retirement of another times vociferous in the quiet morning,
Former Commissioner for s c / s t , former colleague: Baburao Ambadaskar. but strangely in that noiseless office with
Government of India In a long-living place such as the epw, its whirring old fans, stacks of old files,
someone’ s retiring is always occasion for and issues, tons of browning paper, rows
a remembrance, even if I happened to be and columns of articles for submission,
Maoist Intimidation in the epw for only eight years, which his voice was curiously reassuring. It
would but be a quarter of the time was not just like the humming, at times
e condemn the attack by the Maoists Baburao spent there. rushed clangorous traffic outside but
W on 21April near Kerlapal village in
Sukma district (in Chhattisgarh) in which
Baburao worked in the dispatch section that his voice was a reminder also of
of the epw, as I knew him in the time I what epw was about - tolerant, accept­
they killed two security guards and worked there, but he was there even ing and timelessly Mumbai.
abducted the Sukma district collector, longer. To place the man in a certain His voice could equally resonate
Alex Paul Menon. At the time of this section, accord him an office space, and when he told you all the old epw stories
attack, Menon, accompanied by security then detail the jobs he did, would be - of the then editor sleeping in the
guards, was in the process of conducting greatly diminishing all that Baburao office, on the table, the day the issue was
Gram Swaraj Abhiyaan across the district. really did, saw and talked about. But in a put to bed. Or of the many “ eminent”
A few hours prior to the attack, Menon way, he stood for, like all its former editors people who dropped by to the office, or
had to traverse the rough terrain on a and some long-timers too, epw itself. the time the printing had to be done
motorcycle to reach the interior villages I don’ t remember my first glimpse of fast, how crises were managed, how
near Badde Setti and Sam Setti. This Baburao, but he was always at the place occasions were celebrated.
shows his concern for the tribals residing where I would find him most mornings. He was, as another colleague once
in this remote area and his conscientious­ There was the epw in its old office at put it, a “ pillar”of the epw, for he was
ness in attending to their problems. By Fort, and you went up the elevator with indispensable in many ways and so the
killing the security guards who were on its shaking grilled cage doors; once remark was not made entirely in jest.
duty and kidnapping Menon, the Maoists through the door with the ubiquitous epw stood secure and firm in its ideals
have betrayed their lack of respect for red white logo of the epw, there would even as other magazines fell by. And
human rights and democratic processes. Baburao be, at his table on the extreme part of it was that its ideals and code of
This incident has come on the heels of left. He was the one, as he proudly said on honour embraced the every man, the
a series of similar acts of abductions and many an occasion, with the keys to the ordinary person, in whose name ideo­
killings on the part of the Maoists during office. He “ opened up”the office every logies are created, wars fought, govern­
the last few years in Chhattisgarh, Odisha morning at 8.30 sharp, without fail, like ments elected. The ordinary person always
and Jharkhand. The abduction of Jhina he had done for 35years and more. Yes, we forgotten, remembered at certain m o­
Hikaka, an mla on 24 March this year, knew this all right, for Baburao opened ments but indispensable. But the epw
the abduction of Vineel Krishna, the then the office up and R K Singh locked it for never forgot this, and this was so aptly
district collector of Malkangiri district the night. A ritual that lasted for years reflected by Baburao’ s place in it. He
last year, and the killing of the before retirement came calling, first for belonged to the office and in many
Jharkhand police officer, Francis Induwar rk and now for Baburao. ways, the office belonged to him.
in 2009 show that the Maoists have no On Mondays, the place would be a Anu Kumar
compunction in hurting the interests of veritable chaos; there were new weekly SINGAPORE

Economic & Political w e e k ly D3Q m ay 5, 2012 v o l x l v i i n o 18 5

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E con om ic& P oliticalw E E K L Y
M AY 5, 2012

A nother W eapon for M ass D estru ction

Agni-v is no cause fo r celebration; a caring society would instead be worried about where India is heading.

ow and then the strategic affairs establishment and a “Cry for India” , 26 September 2009). It is unfortunate that there

N nationalistic media find an occasion to indulge in much

chest-thumping and celebration over India’ s nuclear might
and the Indian state silently encourages such short-sighted expres­
are few organised or individual voices in the country that are
willing to question this journey of madness.
The hawks in India say that nuclear bombs and their instru­
sion of military jingoism. There was aggressive flag-waving ments of delivery are only political weapons whose value lies in
nationalism in late 2009, when India’ s first (substantially) the threat of their use, and not its actual deployment. The grow­
domestically designed nuclear-powered submarine, the in s ing Agni missile programme has established the seriousness of
Arihant, was launched for sea trials. There has been a similar India’ s desire to play the 21st century version of the Great Game.
such unthinking applause with the successful test of the Agni-v, Over the past two decades, there has been a slow but steady pro­
India’ s first intercontinental ballistic missile (ic b m ). jection of India’ s military might that began with the Maldives
With the trials/tests of the Arihant and Agni-v, a process that operation in the 1980s and the (disastrous) intervention in Sri
began in the mid-1980s and received official blessings in 1999 Lanka in the late 1980s has now intensified. The navy is slowly
with the formulation of the (Draft) Indian Nuclear Doctrine in building its hardware and doctrines to make the Indian Ocean
1999 is complete. The Indian state now has all legs of the nuclear truly its own and marking its presence from Aden to the South
triad it has yearned for - an air, sea and land-based nuclear China Sea, while the air force has been building capacities for
weapon deterrent vis-a-vis China. Trials and tests do not mean long distance operations. Newsletters of the Defence Research
India’ s“ triad”is operational; but, make no mistake, India has and Development Organisation indicate that the ultimate ic b m
taken yet another step to the abyss of a nuclear catastrophe in with a range of up to 10,000 km and which can reach the us - the
Asia. This is something our commentators and cheerleaders long rumoured Surya/Agni-vi - is on the drawing board.
have chosen to ignore. It is significant that the international response to Agni-v has
The hawks in the strategic affairs establishment will quibble been one of “ noting”the test - a far cry from the pressures and
that the Agni-v is really an intermediate range ballistic missile condemnation of the late i98os/early 1990s. A us official under­
(ir b m ) and not an ic b m (since it has a range of 5,000 km and not lined India’ s“ responsible record in non-proliferation”and chose
5,500/6,000 km which is the usual minimum benchmark for not to utter a word of criticism. When the spokesperson of the
such missiles), that its mobile launch and movement on rail us government effectively becomes your public relations agent,
lines will never succeed operationally. And that the Arihant does it indicates that perhaps Agni-v has already acquired the ability
not as yet have submarine-launched ballistic missiles. But these to hit multiple targets, at least politically, even though ostensi­
are really trivial objections. What matters is the path India has bly its only viable target is China.
set out on and the milestones it has progressively crossed in the The promoters of this fire-strewn path of increasing India’ s
development of the triad - delayed, expensive and ultimately nuclear military might argue that expanding the range of the
dangerous. With the development of the Agni-m (an ir b m with country’ s nuclear reach will help break what they call a “strategic
a range of up to 3,500 km) in 2006 India already has missiles gridlock”with Pakistan. But in what must be an embarrassment
that can “ hit”southern China. But holding an ic b m - and being for them - not the first of its kind - within a week of the test of
only the sixth nation to do so - is an important currency of power Agni-v, Pakistan tested its Hatf-iv that can cover almost all of
in strategic affairs-speak and the successful test of the Agni-v India. Whatever India’ s global power ambitions, the prospects for
(whose range includes eastern and central Europe) is therefore peace (or war) will forever be tied to its relations with Pakistan.
an important milestone on this self-destructive journey. This We can never forget that settling disputes with Pakistan across
journal has consistently argued that India’ s acquisition of nuclear the table is more important than building a nuclear arsenal.
weapons and delivery systems is strategically disastrous, politi­ The latest development in the Agni-missile programme will
cally dangerous and morally indefensible (Agni-m: “ Fuelling a draw to India all those Asian countries which feel threatened by
Fire” , 12 May 2007, “ Destroyer of Peace” , 8 August 2009 and the economic and military power of China, while also making

Economic & Political w e e k ly QSS3 m ay 5, 2012 v o l x l v i i n o 18 7

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itself useful to that old Pacific alliance of the us, Japan and states which are blighted by an almost total absence of any
Australia. It remains an open question whether this will help domestic questioning and opposition to its nuclear, military and
“stabilise”the Asia-Pacific region, as many strategists argue. It strategic policies. The monochrome domestic response to Agni-v
surely does not bear repeating that military power does not lead shows that the supposed distinction between support for civil
to stability but rather its opposite. and military nuclear power and between civil and military uses
It also needs to be said again and again that the expansion of of the space programme is a charade. This absence of domestic
India’ s nuclear military programme cannot contribute to peace. critique, forgotten now in the glow of success, will cost the
The inability of nuclear deterrence to end disputes, build stability republic dear as history shows that no polity with such unques­
and peace is well known but India is locking itself into a game tioning support for its military expansion has managed to keep
that has no winners. Sadly, India remains among those nation its democratic and civic liberties safe for long.

Ask Not for Whom the Bell Tolls’
The draconian Essential Services Maintenance Act is being increasingly used against mass protests.

he Essential Services Maintenance Act (esma), which has earlier this year. In Maharashtra, the director of secondary and

T gone through a number of amendments since 1952, is

meant for “ maintenance of certain essential services and
normal life of the community”and thus forbids strikes by workers
higher education threatened to invoke it against 21,000 teachers
from “ permanently unaided”schools who, finding themselves in
an official limbo, threatened to boycott exam assessment work.
in the essential services. Despite protests about its anti­ The point to be noted in all these cases is that those going on
democratic nature - that it violates the right of mass action for strike had threatened to do so after they found that their long
collective bargaining by workers - almost all state governments pending demands and protests were being ignored. It is almost
have enacted their own versions of this central draconian law an axiom that unless some sort of strong or dramatic public pro­
with slight variations. In the past few years, the law (it overrides test is resorted to, neither the administration nor the mainstream
the Code of Criminal Procedure - the crpc - allowing for arrest media will pay attention to genuine grievances and injustice.
without warrant and a summary trial while also overruling the Generally, the mainstream media too tends to focus on legitimate
Industrial Disputes Act, 1947) is being invoked as a political tool demands only when a large number of protesters stage some form
of convenience by the various state governments to deal with of mass action or individuals resort to extreme acts like attempts
imbroglios created by their own corrupt and inept handling of at self-immolation to draw public attention. In the recent ongoing
issues. Over the years, the number of essential services brought agitation by Mumbai’ s autorickshaw drivers for increase in fares,
under the state Acts have also increased in an atmosphere where the media tended to focus more on the inconvenience to passen­
the cry on all sides is for “ reform”of labour laws (in essence, gers, the bogu s tariff cards carried by the drivers and the “ fixing”
withdrawal of the protective provisions given to “ pampered” of meters to show higher rates. There was no coverage of the
workers) to find our place in the global market. “other side”in this sorry mess - the corrupt regional transport of­
Recently, the Maharashtra Essential Services Maintenance fice (r t o ) personnel who are as much part of the rackets and ex­
Act, 2011 (the earlier one had expired in 2010) was passed in the tort their “ share”, the ignoring of passenger complaints in lieu of
state’s upper house with a wider ambit. The government can a bribe, the state govemmenf s skewed transport policy and turn­
prohibit strikes, lay-offs and lockouts in any services for which ing a blind eye to the city’ s nightmarish traffic situation.
the state has the power to make laws and which it considers In 2003, following the Tamil Nadu governm ent’ s dismissal of
essential to the community. A six-month jail term and Rs 2,000 3,50,000 striking government employees, the Supreme Court
awaits striking employees from these services while a one-year ruled that the latter had no right to strike. It went on to say that
jail term and a similar fine will be imposed on persons instigat­ when there is so much unemployment and qualified people are
ing or funding such strikes. The government can also widen the eagerly waiting for government employment, “ strikes cannot be
ambit of the Act to include other services. justified on any equitable ground” . Whether it is the garment
A look at how the different states have used it is illustrative. industry, the automobile factories, the call centres or shopping
In February, the Delhi government invoked it on all power com­ malls, young employees on contract are working long hours for
panies in view of the nationwide strike by central unions against miserable wages and without any of the protective provisions of
price rise, disinvestment of public sector units and anti-labour the labour laws. Unionisation is difficult due to the peculiar work
policies. Late last year, 1,000 schoolteachers were herded into jail conditions and any attempt is met with summary dismissal in a
by the Chhattisgarh government which invoked the law against situation where informalisation of labour is growing rapidly.
2,00,000 contract teachers demanding regularisation and bet­ The curbing of the democratic rights of one section of society is
ter pay. In Andhra Pradesh, truck and lorry owners supplying hardly ever an isolated act. It is symptomatic of how the ruling
petrol, diesel and l p g were brought under the Act when they class views the right to protest and how it deals with dissension.
threatened to strike against imposition of value added tax (vat ), It is a warning that we ignore at our own peril.
8 may 5, 2012 v o l x l v ii n o 18 I33S3 Economic & Political weekly

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s Salvation
The eu ro’
s salvation lies in a little less Europe in fiscal and regulatory policy, not more.

Avinash Persaud writes:

he European credit crisis is as political as it is complicated. the exchange rate arrangements. Wouldn’ t a fiscal compact make

T This breeds solutions in search of the problem. One of

these is the ubiquitous idea that the euro’ s woes can only
be settled by fiscal union; the more rigid the better. This idea
that problem worse? In danger of oversimplification, where national
asset bubbles arise, an international interest rate is pro-cyclical.
As long as there is national taxpayer responsibility for banks,
appeals to those who have a preference for whips and chains there will need to be space for national regulators to exercise
and both, europhiles and europhobes. Europhiles see fiscal union discretion within a common regulatory framework. This frame­
as part of a wider project in which monetary union is merely a part work can set out the grounds and instruments for this regulatory
and not an end in itself. Problems with monetary union are self- space. Triggered by an above-average rise in house prices in Dublin,
evidently the result of the project being unfinished. Europhiles are Irish regulators could require lower loan to value ratios and in
on a journey to get as far away as possible from the trauma of two Germany higher ratios may be acceptable. Contracts that sought
devastating wars. Europhobes pray that fiscal union is a necessary to get round those national requirements could be unenforceable
condition for the survival of the euro, so the self-evident impos­ across Europe limiting avoidance and evasion. It is important
sibility of fiscal union will accelerate the project’ s abandonment. that we pause for a moment to assess where we have reached in
The founding fathers worried about the moral hazards of cre­ Europe before we keep on digging. Although borrowers and
ating a currency without a country. Which is why, in 1997, they creditors complain that the other has been bailed out, both have
agreed to the “ no bailout clause”and the Stability and Growth suffered and are nursing wounds not easily forgotten. Credit
Pact. Many feared then that these messy compromises were not spreads have risen and fiscal restructuring has gone on, without
credible to the financial markets. the value of euro currency being undermined. In terms of market
Moreover, there were apprehensions that without market discipline and separating out national credit risks from currency
discipline, governments would succumb to fiscal largesse. The risk, we have finally got today much of what was always wanted.
logic was faultless. Credit spreads stayed low. But eurozone There should be better coordination of fiscal policy and bond
governments did not embark on a spending splurge. Eurozone issuance and maybe more convergence of tax codes and instru­
debt as a proportion of gross domestic product (g d p ) was 72% in ments, but there must be space for counter-cyclical fiscal policy.
the year of the euro’ s birth, and it slipped to 66% in 2007, in the There must be a facility to address the dislocation of sudden
last year before the crisis. Declines were even more pronounced stops - a stabilisation fund for governments that can be accessed
in those countries where long-term interest rates had fallen fur­ for a time long enough to deal with liquidity issues but short enough
thest - and hence where fiscal discipline slacked off the most - to avoid procrastination, perhaps 12 months, during which time
such as Spain, where public debt to g d p fell from 63% to 36%. the cost of funds should rise to indicate that this is not a long-term
Far less fiscal discipline was observed outside the zone. solution. It would need to be sized to cover the rollover of debt
The problem in the eurozone was not indiscipline in the public of half of the eurozone over this period and some additional
sector, butindisciplineintheprivate sector. InSpain, non-government borrowing, and so should be around $2 trillion, or twice of what
debt as a proportion of g d p rose from 80% to 270%. In Germany we currently have. But defaults should be countenanced. Those
where there was least impact on interest rates, German private countries recovering quickest from the recession are the ones where
sector debt as a per cent of g d p hardly budged in comparison. there have been extensive debt restructuring and write-offs. Above
The real problem we need to solve is excessive debt-financed all else, we need to appreciate that the way to help a drowning
private consumption in some countries, the unwinding of which man is not to put him in a straitjacket. The euro’ s salvation lies in
would always have had severe economic repercussions whatever a little less Europe in fiscal and regulatory policy, not more.

FROM 50 YEARS AGO to accept, in fact if not in law, some solution ...A settlement of the Kashmir question

3 Journal of Current economic anti ftalftical SffaltO
based on the existing position, and second, to
make the maximum propaganda capital out
of India’s well known stand against third
along the lines of the U N CIP Resolutions is not,
therefore, a practical proposition in the condi­
tions of today. The Indian stand in this respect
party intervention in the dispute. This is is supported by the official observations... In the
VOL XIV, NO 18, MAY 5, 1962
apparent from the two “ alternative”proposals first place, the insistence on the presence of a
WEEKLY N OTES made by Mr Zafrulla Khan. If any doubt existed third party is an attempt to bring in mediation,
that Pakistan’ s real purpose in raising the to which India is opposed, by the back door.
s Propaganda Gambit Kashmir issue in the UN Security Council Secondly, the talks are to be directed at ulti­
The objective of all Pakistani diplomatic once again was to try and score off India in mately dealing the way for a plebisrite to which
manoeuvres on the Kashmir issue has been propaganda rather than to sincerely seek a Pakistan dings as the only acceptable solution.
two-fold: first, to keep the issue alive and pre­ solution of the long-standing dispute, it dis­ The outcome of the present discussions
vent a situation from arising where a stale­ appeared with the speech of Pakistan’ s chief in the Security Council is therefore, readily
mate might leave her with no alternative but delegate at the UN. predictable...

Economic & Political w e e k l y Q 3Q m a y 5, 2012 v o l x l v i i n o 18 9

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Media Follies then gone on - with its boisterous and

bumptious conduct - to irk the highest

and Supreme Infallibility judicial bench in the country. For rea­

sons that still remain to be studied in
depth, the media has been much more
deferential towards the authority of the
SUKUMAR MURALIDHARAN robed eminences in the judiciary than
those who muddy themselves seeking to
The Supreme Court has taken erhaps because the media touches win popular endorsement through the
steps to lay down a code for
media reporting. This attempt at
prior restraint on the media is a
P several lives, everybody feels
entitled to express an opinion on
it and offer attentive and solicitous
electoral process. In part, this is a reflec­
tion of the power to punish for contempt,
a weapon that the judiciary holds in re­
counsel. Or perhaps it is because of all serve, much like legislative privilege re­
dangerous move with precedent the signs it displays of arrested develop­ mains uncodified and susceptible at all
from authoritarian polities. In a ment, of a failure to grow out of impetu­ times to arbitrary interpretation.
ous adolescence into mature adulthood. Despite the deference it has always
context where the judiciary has
For these among diverse other reasons, enjoyed, the Supreme Court decided at
been lax in defending the media the Indian media has had a surfeit of some point, that it had just about had
from attacks which seek to curb counsel in recent times on how it should enough. This fervour for reforming me­
its freedom, such unilateral conduct itself, some indulgent, some dia practices was provoked by the com­
stern, some acerbic and scolding. plaint lodged by a senior advocate, over
moves will not remedy bad
These informal lessons in fidelity to reports in February which gave out
reporting but rather make fact and moral rectitude never seemed details of a plan that the finance and real
conditions worse for the media to likely to threaten the relative autonomy of estate conglomerate, Sahara, had sub­
play its role. The way to cure the the Indian media. There have been occa­ mitted to the market regulator - the
sions when the social dialogue through Securities and Exchange Board of India
ills of a media corralled within
the media has led to the perilous possi­ (s e b i ) - on how it intended to secure
corporate and political interests bility of a withdrawal of citizen consent investor interest on a bunch of public de­
is to give it greater freedom to the State - as with how the media posits. The matter was in appeal before
from curbs. brought home to the news consumer, the Supreme Court, following a June 2011
images of the terrorist siege of southern order by s e b i , upheld by the Securities
Mumbai in November 2008 and the Appellate Tribunal (s a t ) in October, or­
Anna Hazare movement of 2011. dering Sahara to refund some Rs 17,400
Unsurprisingly, in both instances, there crore to the public after evidence emerged
were loud murmurs in official circles of the deposits being unauthorised and
that statutory regulation over the media since being diverted to undeclared uses.
was long overdue. Yet the threats were As it began hearing the appeal, the
held in abeyance: in the former case, be­ Supreme Court was told by the counsel
cause the media industry brought in what for s e b i that Sahara had floated a newly
seemed a comprehensive self-regulatory minted financial instrument - which it
code and mechanisms to enforce it; in called the optional fully convertible de­
the latter, because the ire of elected rep­ benture (o f c d ) - through two group
resentatives was easily diverted to the companies that did not have adequate
injudicious and intemperate language capital to service liabilities incurred. On
Anna H azare’ s acolytes had used. The 20 January, the Supreme Court directed
principal offenders were easily identifia­ the Sahara group to explain within
ble and the role of the media in transmit­ three weeks how it intended to ensure
ting and amplifying their message was the security of the funds mobilised. Two
forgotten because the political establish­ options were given: to either furnish a
ment seemed disinclined to open two bank guarantee for the sum involved, or
fronts in the battle to salvage a badly set aside a sufficient quantum of other­
Sukumar Muralidharan (sukumar.md@gmail bruised image. wise unencumbered assets. Evidently,
com) is a freelance journalist based in
Matters may have remained at this the Sahara group chose the latter option
New Delhi.
uneasy stalemate had not the media and set out a list of its assets together
10 m ay 5, 2012 v o l x l v ii n o 18 13329 Economic & Political weekly

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with their valuations in a communication slow-moving judicial process which attributed to the news agency, the Press
to s e b i , which would in the normal course could ultimately be relied on to do the Trust of India (p t i ), as “
tax evasion”
have found its way to the Supreme Court right thing, but could not secure against The agency in question responded to
registry, to be placed before the bench potential damage to investor interests in the judicial stricture by issuing a retrac­
hearing the case. the interim. tion and an apology. Informally, the p t i
Sahara felt aggrieved when some management also sent word that the re­
details of this supposedly privileged Beyond SC Jurisdiction porter who had bungled his rendering of
communication were broadcast by a Clearly, every glimmer of light let into the fundamentals of taxation, had been
news channel. Petitioned for redress, the obscure world of high finance would taken off the Supreme Court beat.
the Supreme Court sternly reprimanded serve a purpose in raising public aware­ Another matter that the Supreme
s e b i for its breach of propriety without ness. The putative damage that the Court chose to resurrect involved senior
really seeking the identity of the offend­ Sahara cause suffers in the judicial counsel K K Venugopal’ s complaint to
ing official. It then went on - without a forum is to be offset against the public the bench in January 2010, that his argu­
clear warrant - to seek a written com­ interest served. Unsurprisingly, while ments on behalf of a senior bureaucrat
plaint which it intended to use as basis eager to seek restitution for his client, whose appointment as chief vigilance
for evolving norms on media reporting the senior counsel representing Sahara, commissioner was under judicial re­
of matters under judicial consideration. Fali S Nariman proved amply sceptical view, had been characterised as “ ab­
From a public interest point of view, of the judicial ambition to leverage his surd”by the Times Now channel. The
the reaction of the Supreme Court was specific and purely contingent complaint Supreme Court had asked for a written
strange and mystifying. Considered in its into an overarching set of rules govern­ complaint which was reportedly not sub­
bare essentials, the Sahara-SEBi matter ing the rights of the press. The argument mitted following an apology from the
was one rife with several asymmetries. was very simple: press freedom was a news channel.
On the one side was a regulator distracted guarantee under the fundamental rights
by a multitude of cases in an environment and any abridgement proposed in the Prior Restraint on Media
of extreme market volatility and lax principle would involve a conflict with In resuming its consideration of these
standards of corporate accountability. On the “basic structure”of the Constitution. seemingly settled matters, the Supreme
the other was a corporate entity with a Enacting a specific law for the press, Court has clearly signalled that ex post
large advertising budget and ample re­ moreover, was not within the jurisdic­ remedies - apology, retraction and ad­
course to other forms of “ hidden persua­ tion of the Supreme Court. To the argu­ ministrative correction by impugned
sion” : such as a long-term sponsorship ment from the bench that the Supreme media organisations - are of little use
deal for the Indian cricket team. At stake Court was not embarking upon the path when media freedom becomes a poten­
were the savings of an estimated 24 mil­ of legislation, but merely laying out a tial hazard to the administration of jus­
lion investors who had, on the basis of comprehensive set of rules, the riposte tice. What is required, in the perception
media reports and the efforts of Sahara’ s was very clear: rules involving punitive of the highest judicial bench, is a set of
sales force, chosen to put funds into a sav­ sanctions against the press would be rules that would impose prior conditions
ings instrument of uncertain provenance. equivalent to laws, which were beyond the on modes of media reporting.
When the media narrative is itself, in powers of the Supreme Court to lay down. In part because of the expansive scope
ever increasing part, constructed under By this time, a Supreme Court bench of the agenda the Supreme Court had
the stimulus of the advertising outlays headed by the Chief Justice of India, taken on, its hearings stepped very
provided by the corporate sector - and S H Kapadia, had swept up all com­ rapidly beyond the narrow confines of the
by the undeniable allure of cricket as plaints received about media practice grievances of senior lawyers and wealthy
an environment within which to frame over recent, remembered history and as­ corporate litigants. Another family of
the most lucrative advertisements - sembled them into a common docket. In cases was drawn into the orbit, related
there is reason to believe that it may not August 2011, senior counsel Harish Salve explicitly to the rights of individuals fac­
afford sufficient protection to investor had protested before the Supreme Court ing criminal trials. These included media
interests. The larger context is of a vola­ about reports appearing over two suc­ coverage of the Aarushi Talwar double
tile market where fortunes are made cessive days, which grossly misrepre­ murder of May 2008, which was seen to
and unmade in days and savings multi­ sented his arguments in a matter under have prejudged the guilt of the parents of
plied or wiped out. And within this con­ active judicial consideration. Appearing a murdered child. Also brought within
text, the principal sponsor of Indian for Vodafone in a matter involving pot­ the hearings was a petition moved against
cricket had also introduced a financial ential tax liability after its takeover of the weekly newsmagazine India Today,
instrument of rather befuddling com­ the Indian assets of another global tele­ for publishing a purported interview with
plexity, and insisted that it was outside com player, Hutchison Whampoa, Salve one of the accused in the string of urban
s jurisdiction in not being a “
s e b i’ security” argued that his client had done no more terrorist strikes of 2008. The person con­
in any defined sense. The only redress than prudent tax planning or “ avoid­ cerned - who fought the recent munici­
available in the circumstances was a ance” . This had been rendered in reports pal elections in Delhi from jail - had been

Economic & Political w e e k l y B 3QI m a y 5, 2012 v o l x l v i i n o 18 11

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picked up by the police after the Septem­ Court’ s effort to narrowly define and cir­ democratic system, where liberty is exer­
ber 2008 “ encounter”at Batla House in cumscribe Article 19, which guaranteed cised with responsibility.
Delhi, in which two others from his puta­ the right to free speech.
tive “terrorist cell”were eliminated. India Senior advocates P P Rao and K KVenu- Gagging Public Debate
Today’ s story, which appeared at a time gopal provided qualified endorsements Unfortunately, just as the Supreme Court
when the arrested person was being of the Supreme Court endeavour. Rao was hearing arguments about its intent
denied family access and legal counsel, pointed out that the mandate of the Press to introduce a media code, the Lucknow
was seen to be doctored in accordance Council of India (p c i) established the Bench of the Allahabad High Court issued
with the diktat of the police force and principle of self-regulation by the print a decree which seemed suspiciously like
to seriously undermine his chance of a media, which needed to be extended to a prior restriction. Hearing a petition
fair trial. the electronic media. Venugopal offered from ironically enough, a “ right to infor­
The logic of the judicial quest for a the opinion that the rights assured by Ar­ mation”activist based in Lucknow, the
media domain free of error impelled a ticle 19 could conceivably be regarded as bench banned any form of media cover­
further expansion of the hearings, into a less than absolute when there was a per­ age on the 16 January military exercises
consideration of a civil society organisa­ ceived conflict with the rights to life and conducted by units of the Indian army
tion’s petition seeking restraints on the liberty, guaranteed under Article 21. The based in Hisar in Haryana and Mathura
telecast of content with explicit images p c i, in an institutional intervention, af­ in Uttar Pradesh. These had been reported
of sex and violence. Having assembled firmed that the positive value of a code of in an overblown and highly colourable
this unwieldy docket, the Supreme conduct would stem from its moral rath­ fashion by the Indian Express on 4 April
Court was told by a galaxy of senior law­ er than punitive force. 2012, as evidence of serious strife bet­
yers that it was engaged in a futile quest. A crucial element that was missed out ween the military command and the
Shanti Bhushan suggested that the most in this ensemble of legal wisdom is the civilian political leadership.
constructive course for the chief justice distinction between prior restraint and In the furore that ensued after the
would be to dissolve the bench, as a post facto correction. Prior restraint of Indian Express report, the newspaper was
predecessor, A N Ray, had done when his any sort on the right to free speech is held guilty at worst, of extreme gullibility
effort to write the doctrine of the “ basic considered to be the indispensable prop and poor editorial judgment. The source
structure”out of the constitutional scheme of an authoritarian political dispensation of the alarmist report was identified -
floundered in 1975. Other senior lawyers - indeed as the first step towards censor­ accurately by all accounts - in elements
- Anil Divan and Rajeev Dhavan - were ship. Post facto correction in accordance within the intelligence services, which
emphatic in underlining the lack of a with clearly defined legal norms, in con­ had established a dubious alliance with
constitutional mandate for the Supreme trast, is an indispensable element in any sections of the higher military command

Economic Reforms and Growth in India

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12 m ay 5, 2012 v o l x l v i i n o 18 13253 Economic & Political w e e k ly

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to bring down a serving chief of staff of Court to silence legitimate debate. That Shahina’ s story cited several of the wit­
the Indian army. In decreeing its ban on matter though, will not swim within the nesses named by the Karnataka police as
any further reporting on the matter, the span of attention of the highest bench, saying that their testimony has been mis­
Allahabad High Court held that the “ is­ till it is forcibly introduced. And in this interpreted or distorted in making out
sue of movement of Army troops is not a legal vacuum, several other modes of the charges against Madani. An example
matter of the kind which requires public silencing legitimate public debate have of investigative reporting in short, was
discussion at the cost of official secrecy flourished, which have utilised archaic transformed into the basis for criminal
and the security of the country” . provisions of the law, such as “ official prosecution against the journalist who
The immediate impact of the order secrets” ,“ sedition”and various others. had done the hard work to bring this
was to prohibit considered analysis or “Reasonable restrictions”on the right abuse of power to light.
reporting on the public spat in the higher to free speech were introduced under In May 2011, Tarakant Dwivedi, alias
military command and its possible rami­ the first amendment to the Indian Con­ Akela, then a reporter with Mumbai
fications for the integrity of defence pro­ stitution. Yet till date, there is no clear or city’s morning tabloid, Mid Day, was
curement decisions. A matter of legiti­ consistent norm laid down by the judici­ arrested under India’ s Official Secrets
mate public concern, was through a pan­ ary on how “ reasonableness”is to be Act, after he reported on poor security
icky and hypersensitive judicial order, assessed. In this conceptual vacuum, a conditions in the metropolis’main rail­
rendered into a state secret. variety of abuses have flourished against way terminus. The Chhatrapati Shivaji
Reactions to the Allahabad High legitimate press reporting and exercises Terminus (referred to in common local
Court order have not rendered the sce­ of the right to free speech. parlance as v t ), a hub of both suburban
nario any clearer, p c i Chairman Justice In June 2008, the commissioner of and long-distance railway traffic, was
Markandey Katju, resolved to challenge police in the city of Ahmedabad, brought among the first targets to be hit in the
the order in the Supreme Court, but in a charges of sedition and criminal con­ terrorist attack on Mumbai that began
talk show on primetime news - where he spiracy against two journalists and the on 26 November 2008. Soon afterwards,
frontally challenged a former army Times of India. This followed a series of the Government Railway Police (g r p ),
chief, V P Malik, to “ grow up”- conced­ reports in the newspaper, noting serious tasked with maintaining security at all
ed that it may have merit, even in peace­ complaints against the newly appointed major facilities of the Indian Railways,
time, when involving troop movements police official and indicating that the in­ procured an array of sophisticated
in border regions. conclusive inquiries that had followed, weaponry to deal with extreme future
This picture of what is right and wrong, made him ineligible for the top post in the contingencies. On 28 June 2010, the daily
rendered by the p c i chairman, is rather city. The two journalists and the pub­ Mumbai Mirror published a report under
vacuous because it is innocent of fact. lisher were granted bail pending the full Akela’ s byline, headlined “ Leaks in c s t
Under a protocol agreed in 1988 to ensure hearing of the case. Evidently, the purpose Armoury Put New Anti-terror Arms under
that mutual misconstrual does not end in of the aggrieved police official was not to Threat” . The report documented how
an outright shooting war, the first agency punish, but to silence the public discourse. newly procured equipment was being
to be notified of peacetime Indian troop It was a form of censorship through legal stored in a room with a leaky roof, mak­
movements on the border would be the injunction, which the Gujarat High Court, ing their efficacy in an emergency situa­
Directorate of Military Operations of the as this article goes to press, has quashed, tion highly questionable. Akela’ s arrest,
Pakistan army. Further, all media reports though the longer term implications itself conducted under highly suspicious
on troop movements and peacetime mil­ remain to be determined. circumstances, was believed to be direct
itary exercises are based on attributable K K Shahina, then a reporter with retribution for this reporting.
briefings by spokesmen of the defence the weekly newsmagazine Tehelka, was Silencing the media discourse is not
forces. The Indian Express report of 4 April charged with criminal conspiracy to in­ so much the issue here, as allowing it
was a conspicuous exception because of timidate witnesses, after a story she pub­ more freedom and space. When the judi­
its origin in an unsavoury contest be­ lished cast doubt at the prosecution of a ciary proves unable to curb censorship
tween rival factions seeking to control prominent Islamic cleric and political fig­ through criminal prosecution of public-
defence procurement procedures. To ure on terrorism charges in December spirited journalism, but shows inordi­
ban media content on the matter is to 2010. Shahina’ s story was based on inter­ nate concern over its own image as pro­
ban legitimate citizen engagement with views with key witnesses cited in the jected through the media, it ceases being
decisions on defence procurement, case made by Karnataka state police an institution acting for the larger good.
made on the backs of loyal taxpayers. against Abdul Nasar Madani, an Islamic And it could well take into account the
cleric who heads the People’ s Democratic dictum that the only remedy for the
Reasonableness of Restrictions Party, active mainly in neighbouring abuse of free speech is to allow even freer
To retain any level of public support for Kerala. Madani has been arrested and speech. There is no better antidote to the
its project to enact a media code, the charged by Karnataka police for conspir­ irresponsible exercise of free speech by
Supreme Court would need to firmly put acy to detonate a series of low-intensity the corporate media than to accord the
down this effort by the Allahabad High bombs in Bangalore city in July 2008. right to those who are denied it.

Economic & Political w e e k ly DECS m ay 5, 2012 v o l x l v i i n o 18 13

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Myanmar Suu Kyi and her n l d colleagues as law­

makers says much about where this
south-east Asian nation has arrived since
Is the Age o f Military Juntas Over? 1990. That year saw the military rulers in
Burma, as the country was then called,
take an unprecedented political gamble:
MARWAAN MACAN-MARKAR_______________ hold the country’ s first general election
since a 1962 coup. It came in the wake of
What has occasioned the change yanmar has reached a moment a pro-democracy uprising led by univer­
in Myanmar that has led to Aung
San Suu Kyi participating in
elections and entering
M in its history that has given
rise to a rare burst of hope. It is
about time, one may say, after the suf­
sity students in 1988, which was brutally
crushed by government troops, resulting
in the deaths of 3,000 protesters. The
fering its people have endured under 50 prospect of parliamentary democracy
parliament? Are the generals who years of military dictatorship. And the returning to a Burma that once had a
have wielded power for half a signs of reform unfolding in this south­ thriving political culture gave rise to
east Asian nation are quite unlike the many new parties, including the n l d .
century ready to change the
change the world witnessed during last And Suu Kyi, who had returned home in
constitution? An analysis. year’ s Arab Spring, where street protests 1988 after being away for decades,
and days of public rage saw long­ emerged as its natural leader.
standing dictatorships in Tunisia and But Suu Kyi’ s first foray into formal
Egypt topple. What is happening in this politics proved too much for the mili­
corner of Asia is more orderly, top-down, tary. The n l d shocked the generals and
and led by a former military man him­ the pro-military National Unity Party
self. And that this Myanmar story of (n u p ) that contested the polls with the
change has been embraced by the figure outcome. It won a staggering 392 seats
who has become a barometer to under­ out of the 485 that were up for grabs.
stand the extent of oppression is hard to The n u p secured a mere 10 seats. And
ignore. Yes: Aung San Suu Kyi, the coun­ Suu Kyi, who had by then been placed
try’ s most prominent dissident, has under house arrest, was soon to learn
given her blessings. that political reform and a transfer of
Just what it means for the Nobel Peace power to civilian rule was furthest from
laureate is amply evident. The 66-year- the minds of the generals. They refused
old is finally enjoying her first political to ease their iron grip. And so began a
honeymoon after a more than 20-year bitter chapter in the country’ s history
life of sacrifice in a struggle to restore that saw Suu Kyi, the daughter of Bur­
democracy. It follows a thumping victory ma’ s independence hero Aung San,
at landmark by-elections on 1 April for spend 15 years under house arrest. Her
Suu Kyi and the party she leads, the Na­ supporters were not spared; hundreds
tional League for Democracy (n l d ). The were thrown into jail in the years that
43 seats the n l d won out of the 45 seats followed. The victims ranged from par­
contested in the 664-member bicameral liamentarians to Buddhist monks and
assembly affirmed the solid support journalists to political activists. Their
Myanmar’ s famous political prisoner nemesis was the reclusive “ Senior Gen” .
still enjoys. She was the ubiquitous face Than Shwe, the strongman of Myan­
of the party during the weeks of cam­ mar’ s last junta.
paigning. It was to hear “ Mother Suu”
that tens of thousands of voters were Them Sein’
s Presidency
drawn to n l d rallies. The n l d is now No wonder many expected a continua­
poised to take its place as the largest tion of Than Shwe’ s oppressive rule
opposition party in the 440-member when Thein Sein, a former general, was
Pyithu Hluttaw (Lower House), which is elected by the country’ s parliament last
dominated by the pro-military Union March as the first civilian head of state
Marwaan Macan-Markar (marwaan@ips.org) Solidarity and Development Party (u s d p ) in five decades. After all, President
is a Bangkok-based Sri Lankan journalist who that was vanquished at the April poll. Thein Sein had served as a prime minis­
has been reporting from south-east Asia for the It is a scenario that appeared improb­ ter in the Than Shwe junta. He had also
Inter Press Service news agency since 2001.
able a year ago. And the presence of been a leading member of the u s d p ,

14 MAY 5, 2012 VOL XLVII NO 18 13353 Economic & Political w e e k ly

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which won 219 seats for the Lower of the Thein Sein administration, but and rebel groups from Myanmar’ s eth­
House in a fraud-plagued 2010 general there was also a private dinner she had nic minorities who have been waging
elections that the n l d boycotted. And he been invited to. It was hosted by the separatist wars for decades. “ Over the
did stand to benefit from another peculi­ president in his residence. The tone at course of the past year, rapid progress
arity of Mynamar’ s 2008 constitution: that dinner and the assurances that has been made in reaching preliminary
the bloc of 110 non-elected military Thein Sein had promised are said to ceasefire agreements with nearly all
offices guaranteed seats in parliament, have convinced Suu Kyi to deliver the ethnic armed groups in the country” ,
ensuring the pro-military faction having line to her supporters that Myanmar noted the Brussels-based think tank, the
329 seats. So when the bespectacled was moving beyond the age of juntas. International Crisis Group, in a mid-
Thein Sein began his term last March as But it was not a sea change that was April report, titled “ Reform in Myanmar
the head of a quasi-civilian administra­ easily accepted. There were sceptics - One Year On” .
tion, Burmese political activists were among Suu Kyi’ s followers. Commentar­ It is inevitable that questions would be
quick to refer to him as a “ puppet”of ies in the media outlets run by Myanmar posed to understand a man being com­
Than Shwe. His inaugural speech was exiles expressed concern. Is “ The Lady” , pared with Mikhail Gorbachev, Is Thein
similarly derided despite its progressive as Suu Kyi is also called, being fooled Sein the principle architect of Myan­
tone that hinted at the politics of inclu­ into an embarrassing political compro­ mar’ s reforms? What motivated him?
sion and the spirit of reform. mise? Some western analysts even dis­ Were there signs of his moderate outlook
Yet six months into Thein Sein’ s ad­ missed Suu Kyi and her knowledge of even during the years he served under
ministration, the tone of reform was her countrymen. These views often the last junta? Not all questions have
hard to ignore. It challenged the conven­ touched on benchmarks to gauge the been properly answered; there are gaps
tional wisdom that had prevailed for sincerity of the Thein Sein administra­ that remain beyond the reach of some of
decades in describing the politics of tion. Amnesty for the nearly 2,000 polit­ Myanmar’ s most informed analysts. But
Myanmar - one of absolutes, a clear ical prisoners languishing in the 44 jails of what has seeped out from military
black vs white scenario, a tussle bet­ and labour camps was one of them. The records from his past and the decisions
ween the evil generals and a living saint ending of the country’ s crippling media made while serving the strongman Than
fighting for democracy. While the presi­ censorship was another. And then there Shwe, Thein Sein cuts a figure driven
dent’ s assurances could have been dis­ were the freedoms for the n l d : to be more by propriety than power. “ He had a
missed as cosmetic, how could the words able to function openly as a party, in­ reputation for being obedient, a good
of Suu Kyi be avoided? Who better than cluding Suu Kyi being eligible to contest manager, modest and less ambitious and
her could judge the sincerity of Thein Sein the April by-elections along with other less corrupt than other officers in the
as a reformer? And she certainly ap­ n l d candidates. army” , says Win Min, a Myanmar aca­
peared convinced when, in mid-Septem­ demic specialising in the country’ s mili­
ber, she told journalists: “The past situa­ Support from Dissidents tary affairs. Of his army experience, less
tion is the past. The current situation is By March, Thein Sein had fortified Suu is known. Yet he had demonstrated a
the current one and there has been some Kyi’s faith in him by delivering on a streak of assertiveness later in life when,
progress.”They are lines that have come raft of pledges. Over 1,000 political as the prime minister for the recalcitrant
to define the role she has assumed as an prisoners had been released, media Than Shwe, he pressed for international
ally to the quiet spoken Thein Sein as he were given more freedom and the assistance to be permitted into Myan­
presses ahead with change. formal return of the n l d was evident in mar to aid the victims of the devastating
The picture that has subsequently the presence of its ubiquitous symbol, cyclone Nargis, which struck in May
emerged to explain the country’ s jour­ the party’ s flag - a fighting yellow 2008, killing over 1,50,000 people. This
ney towards openness is one that should peacock with a white star on a red back­ move was not lost on the likes of the late
be familiar to Asians. It is shaped more ground. The reactions of prominent Nay Win Maung, a prominent figure in
by personalities than institutions; it is dissidents released from prison - known an emerging civil society movement in
based on faith, trust and confidence as the 88 Generation Students Group - the country. He had described Thein
shared by the leading lights in the politi­ described the new Myanmar they were Sein as “ smart”and “ pragmatic”in an
cal firmament - in this case Suu Kyi and returning to after years in isolation. exchange with us embassy officials in
Thein Sein. And political insiders point to At a press conference, they declared in a Yangon. The contents of that discussion,
a day last year, 19 August which is pivotal statement: “ (The 88 Generation) will which made it to a confidential cable
to understand the beginnings of this participate to the fullest extent with the that the diplomats sent to Washington in
alliance. For not only had Suu Kyi been government led by the president, parlia­ June 2008, was subsequently revealed
extended a rare invitation to participate ment, military, political parties and ethnic in the WikiLeaks exposures. It stated:
in an economic seminar in Naypidaw, the minority groups for the emergence of de­ “Nay Win Maung said it was Prime
new capital, on that date. Not only did she mocracy, peace and development” . A Minister Thein Sein who had appealed to
accept to travel to Naypidaw to mingle similar spirit of reconciliation emerged Than Shwe to secure the Senior General’ s
for the first time in public with members following talks between the government permission to allow international and

E con om ic & P olitical w e e k ly BBSS m ay 5, 2012 v o l x l v i i n o 18 15

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humanitarian staff to travel to (Nargis) proverbial elephant in the room. There constitution recognising an even more
affected areas”
. are powerful former military officers and powerful body - the national defence
serving ones who refuse to fade away. and security council. The latter’ s 11
Behind the Change Vice President Tin Aung Myint Oo, a members - including the president, two
But those familiar with countries that former general, is a hawk, as is Htay Oo, a vice presidents, commander-in-chief of
made transitions from military rule to former major general, who as the general the armed forces, the vice commander
democracy are bound to ask what local secretary of the u s d p has been disgrun­ and four ministers, three of whom are
currents in Myanmar made Thein Sein’ s tled at the pace of change. And then there appointed by the armed forces’chief -
role as a catalyst possible. A place to ex­ is general Min Aung Hlaing, the com­ have been given legitimacy to suspend
plore this line of inquiry would be the mander-in-chief of the country’ s over parliament and take over power in the
state of the country’ s economy. It is in a 4,00,000 strong armed forces. During a event of a national emergency. In other
shambles. This collapse of a nation that speech in late March, he fired a broad­ words, a junta waiting to step in.
was once the w orld’ s leading rice export­ side at Suu Kyi, who has pledged to use It explains why, more than Suu Kyi,
er to become a least developed country her party’ s presence in parliament to the hope for a new Myanmar rests largely
was the result of decades-long inter­ amend the constitution. The military on the shoulders of Thein Sein. He has
ference by the military in the economy. has a role to defend the constitution and won the support of the moderates within
For unlike in, say, Indonesia, where a to continue its role in national politics, the military faction, the increasingly
coup in the 1960s saw the military rulers he said. assertive Lower House speaker Shwe
control only the political space, in Mann among them. And in these early,
Burma of that same decade, the first Changing the Constitution fragile days of change, the authority of
military dictator, Ne Win, placed banks, So it all comes down to one fact: Chang­ the man who reluctantly accepted the
industries and international trade under ing Myanmar’ s current constitution is mantle of president is also respected by
the m ilitary’ s command. And 50 years the final frontier. It was drafted to pro­ the hawks. Yet will Thein Sein be able to
later, public resentment towards the tect the military and ensure that its grip deepen the reforms he is presiding over,
military mismanaging the economy had on power is perpetuated. Where else but ushering in a greater civilian presence in
become palpable. And efforts by Than only in a country run for and by generals political life? Will he achieve peace in
Shwe to seek an economic lifeline from is the commander-in-chief of the armed the northern Myanmar, where govern­
China in the wake of sanctions imposed forces guaranteed a role in the constitu­ ment troops are fighting ethnic Kachin
by the United States and European gov­ tion to appoint the ministers of defence, rebels? Will the tone he has set resonate
ernments triggered another sentiment home affairs and border affairs. Where louder by 2015, the year of the next
in the national psyche: patriotism and else but in a county under the grip of general elections? These are questions
nationalism. The recent years saw grow­ a military that the powers of a parlia­ that even Myanmar’ s best astrologers
ing concern and resentment - even among ment are brazenly undermined by the may not hazard an answer.
sections of the military elite - about the
dominance of China’ s footprint in the
country, with the Asian giant emerging E co n o m ic& P o litica lw E E K L Y
as the largest investor ($14 billion) and
EPW 5-Year CD-ROM 2004-08 o n a S in g le Disk
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And then there were regional reminders The digital versions of Economic and Political Weekly for 2004, 2005, 2006,2007 and 2008
that Myanmar was falling behind coun­
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tries like Vietnam in development. Yet
research and utilities to make your browsing experience productive .The contents of the CD-ROM
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for economic reform - that included
With its easy-to-use features, the CD-ROM will be a convenient resource for social scientists,
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China’ s dominance, power had to shift gateway at epw.in
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Yet to draw from all this that Myanmar’ s
march out of its military past is certain Circulation Manager,
Economic and Political Wookly
and that the country’ s return to civilian
320-321, A to Z Industrial Estate, Ganpatrao Kadam Marg, Lower Parel, Mumbai 400 013, India
rule is on the horizon is to ignore the
16 m ay 5, 2012 v o l XLVii n o 18 DDES Economic & Political w e e k ly

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Why Did Mayawati Lose? Pradesh. Earlier, Mayawati held this

record in 2007 with the lowest winning
vote share (30.4%). The s p did not suc­
ceed in “ inclusive politics”this time too,
A K VERMA it failed to increase its vote share among
certain caste groups in both 2007 and
The Mayawati-led Bahujan Samaj he recent assembly elections in 2012, though the groups were not the
Party suffered a defeat in the
Uttar Pradesh elections because
of the losses in its dalit vote base.
T Uttar Pradesh (up) aroused un­
precedented interest and anxiety
about its outcome that remained un­
same in these elections. The increase in
its vote share was due to significant ac­
cretions of votes from numerically domi­
certain till its end. Besides the resound­ nant middle and lower castes (Kurmis
Voters seem to have favoured ing victory of the Samajwadi Party (sp) +14, most backward classes (m bcs) + 6 ,
parties on the basis of and marginalisation of national parties, Jatavs +12, other scs 4 -6 ) (Table 1). The
this election will be remembered for s p making inroads into M ayawati’ s dalit
expectations of better governance
the failure of the Bahujan Samaj Party constituency, especially Jatavs, is a big
and “returns”rather than on the (bsp) to resolve the contradiction be­ story this election. This is because it is
basis of identity alone. tween means and end: the party’ s much believed that dalits and Yadavs can
hyped social engineering as a means to never come together to vote for the same
achieving the end of inclusive politics political party as their economic inter­
by getting a legislative majority. Ironi­ ests clash - the Yadavs were predomi­
cally, both Congress and s p are into the nantly landowners while dalits were
same “ inclusive politics”mode, but they landless and in many places Yadavs
too have not been able to succeed on were seen as exploiting dalit labour.
this count. This was the reason why b sp ’ s Kansi
There were three major individual Ram and s p ’ s Mulayam Singh Yadav
players: incumbent chief minister Maya­ could not sustain their early alliance
wati (bsp ), former chief minister Mulayam and the ambition of Kansi Ram for
Singh Yadav’ s son Akhilesh Yadav of the forming a homogeneous coalition of
s p , and Rahul Gandhi of the Congress, the backward classes in the form of All
besides other marginal players like Uma India Backward (sc, s t and o b c ) and
Bharati of the Bharatiya Janata Party Minority Communities Employees Feder­
(b j p ), Ajit Singh of the Rashtriya Lok Dal ation ( b a m ce f) could not sustain itself
(r l d ). The Congress and the r l d had a in the long run.
pre-poll alliance. The people asked some Table 1: SP Vote Share in 2007 and 2012
Assembly Elections__________________
crucial questions in the run-up to the
Castes AssemblyElections2007 AssemblyElections2012
elections. Would Mayawati manage to VoteShare Gain/Loss VoteShare Gain/Loss
replicate her social engineering feat of over2002 over2007
Brahmin 10 +7 19 +9
2007? Would s p succeed in retrieving its
Thakur 21 +12 26 +5
46 seats that it lost without losing too Vaishya 12 -5 12 00
many votes in 2007, and whether it Upper caste 17 +3 15 -2
would emulate the “ inclusive politics Jat 11 +6 7 -4
model”of its rival b s p ? Would Rahul Yadav 73 +1 66 -7

Gandhi succeed to win votes from dalit Kurmi 21 +12 35 +14

MBCs 20 -2 26 +6
sections for the Congress through his
Jatavs 3 +1 15 +12
repeated forays into dalit hamlets, and
OtherSCs 13 -2 19 +6
maintain its record in the 2009 Lok 47 -7 39 -8
Sabha (ls ) elections? Would Uma Bharati Source: Survey data, UP Assembly Election Studies 2007
This article is based on the author’s and 2012, CSDS, Delhi.
succeed in revitalising the b j p and win
presentation “ Analysing the Uttar Pradesh
Elections 2012: People, Parties and Trends”at
more seats for her party? Mulayam and Mayawati both claimed
the Institute of South Asian Studies, National that Muslims had largely voted for the s p
University of Singapore on 3April 2012. The Impressive Vote Share for the SP but that is not proved by the data avail­
author is especially grateful to Robin Jeffery, The people gave a clear mandate able.1The Muslim vote share for s p had
Gyanesh Kudesia, Ronojoy Sen, all of NUS, for
(224/403 seats) to s p without an impres­ been fluid: survey figures from 2007
their critical comments and searching questions.
sive vote share (29.1%) - the lowest since showed that 47% voted for them, corre­
AKVerma (akvi722@gmailcom) teaches at Independence with which any majority sponding figures for the 2009 Lok Sabha
Christ Church College, Kanpur.
government was ever formed in Uttar elections and the current 2012 elections

Economic &Political w e e k ly DDES m ay 5, 2012 v o l x l v i i n o 18 17

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were 30% and 39%, respectively. Com­ party and government were Figure 1: Muslim Support for SP-BSP
pared to the 2009 elections, Muslim sup­ displaced and felt threatened
port for s p was up by 9 percentage points, at the shrinking political space
but compared to 2007, Muslim support for them in the b s p . In the
was down by 8 percentage points. From welfare sphere as well, her gov­
the looks of it, the s p managed to retain its ernment could not do enough
vote share among Muslims by arresting the for the dalit community. The
trend of loss of support which was seen in Balmiki community - many of
the previous Lok Sabha elections in 2009. whom are engaged in jobs such
as scavenging and sanitation -
Decisive Defeat felt betrayed by the govern­
The decisive defeat of b s p with the loss m ent’ s policies, such as those Assembly LokSabha Assembly
elections 2007 elections 2009 elections 2012
of 80 seats since 2007 and a drop in vote related to government recruit­
share by about 4.5% gives a picture of ment for such jobs, of which 25% parties, we find that Muslim support for
the failure of the “ inclusive politics” were provided to brahmins and other s p was double the support for b s p in
strategy of its leader Mayawati. The b s p upper castes (who in turn outsourced to 2012 ( b s p : 20, s p : 39) (Figure 1).
had lost seats and votes in every sub- the Balmikis, paying them miserly Mayawati, however, lost votes among
region of u p except for the western region sums). Survey results showed that the the m b c s as well. This was attributed to
where the losses to the party were far Balmiki com m unity’ s vote share for the the expulsion of Babu Singh Kushwaha, a
lower. In other words, only in western b s p dropped 40% since 2007. In fact m b c leader who was the minister of health

u p was Mayawati successful in garner­ dalits from every class segment, irre­ and family welfare earlier in Mayawati’ s
ing support from the Jat-Jatav sections spective of gender, age or attained cabinet, following his involvement in a
that she had pinned hopes on (Table 2). levels of education, voted against the National Rural Health Mission ( n r h m )
b s p (Table 4). related scam. Kushwaha, the b s p ’s “ most
Table 2: BSP's Performance in Different
Subregions of Uttar Pradesh
Table 3: BSP Vote Share in 2007 and 2012 backward” face since the days of Kanshi
Regions Total Seats Gain/ Vote% Gain/Loss Assembly Elections Ram was known for his organisational
Seats Won Loss Seat 2012 Vote%
Castes Assembly Elections 2007 Assembly Elections 2012
2012 2007-12 2007-12 abilities and hold over large sections
Vote Share Gain/Loss Vote Share Gain/Loss
Ruhelkhand 52 11 -14 22.7 -4.4 over 2002 over 2007 from the Kushwaha, Maurya, Pal, Shakya,
Awadh 73 8 -24 25.7 -5.8 Brahmin 17 +11 19 +2 Saini and Kachi and other communities
East UP 81 13 -4 0 27.9 -5.1 Thakur 12 +7 14 +2 which constituted close to 9-10% of the
West UP 44 17 -6 29.2 -0.3 Vaishya 14 +11 15 +1 electorate. It was not a surprise that the
Doab 73 15 -20 26.8 -4.4 Upper caste 15 +10 17 +2
drop in vote share among these commu­
Bundelkhand 19 7 -7 26.2 -7.0 Jat 13 +13 16 +3
nities for the b s p was about 9%.
East UP N orth 61 9 -15 22.7 -4.7 Yadav 8 +3 11 +3
Total 403 80 -126 25.9 -4.5 Kurmi 16
Source: Survey data, UP Assembly Election Studies 2007
+6 19 +3
The National Parties’
MBCs 28 +9 19 -9
and 2012, CSDS, Delhi.
Jatav/Cham ar 85 +6 62 -23
The Congress had pinned its hopes on
However, a closer look at the caste Muslims 17 +7 20 +3 the popularity of its party general secre­
profiles of the b s p voters (Table 3) provi­ Source: CSDS Data Unit, UP Assembly Election Studies 2007 tary and Amethi Member of Parliament,
and 2012.
des a more nuanced reading. M ayawati’ s Rahul Gandhi. He had visited various
social engineering project in order to Table 4: Category-wise Dalits Who Voted BSP regions - Bundelkhand in particular
win votes was not a complete failure - Dalit Category 2007 2012 Change very early - and raised a lot of farmer-
Dalit men 79
the b s p still registered accretions in vote 56 -23
related issues in places like Bhatta and
Dalit w om e n 80 48 -32
share in almost all social groups except Parsaul since 2007 and had also tried to
Balmiki 70 30 -4 0
for the most backwards (a drop of 15%) win support from dalits by staying in
College educated dalits 75 41 -34
and her core dalit base among the Jatavs their hamlets. His party conducted a
Young dalits (18-25 years) 81 42 -39
(a drop of 23%). Considering these two Urban dalits 75 41 -34
spirited campaign in the run-up to the
groups were numerically large, the drop Source: UP Assembly Election Studies 2007 and 2012, elections involving him centrally and it
in vote shares affected the party drasti­ CSDS Data Unit, Delhi.
must be said that while the Congress’
cally. Yet the party managed to win sup­ Mayawati had explicitly complained defeat did show him up, he was not fully
port from the “ add on”sections such as that her loss was attributed to the Muslims’ to blame for the extent of its defeat.
the upper castes. shift in their allegiances away from her In fact, there was an undercurrent in
Why did her core base desert Mayawati party. This charge can be proved to be favour of Congress which is proved by
even as upper castes voted for her party? wrong as there has been no decline in two facts; one, in spite of the overall
Mayawati’ s social engineering brought Muslim support for the party (2007 17%, defeat, the party still managed to enlarge
more brahmins, upper castes and Muslims 2009 18%, 2012 20%). However, when its vote share in all subregions of u p
into the party fold even as dalit elites in we compare Muslim support across (Table 5) and registered vote accretions
18 MAY 5, 2012 v o l x l v ii n o 18 QBS3 Economic & Political weekly

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in almost all caste groups as compared national party’ s high command is over, Table 7: BJP'S Vote Share in 2007 and 2012
Assembly Elections____________________
to 2007 (Table 6: column 5). Actually, and that also signals a maturing of
Assembly Assembly Gain/loss
the Congress had already shown such in­ electorate in up. Elections (2007) Elections(2012)
creases in the 2009 Lok Sabha elections The Congress folly of attracting Mus­ Castes VoteShare VoteShare +/-

itself (Table 6: col 3). Since then the Brahmin 43 38 -5

lims through the politics of quotas also
Thakur 46 29 -17
party has come into the reckoning once proved to be disastrous as it had the un­
Vaishya 49 42 -7
again in u p politics and Rahul Gandhi desired impact of communalising the
Upper caste 40 17 -23
has become almost a household name issue of reservations. Muslims thought
Jat 23 7 -16
even in rural u p . that they will have to compete with Yadav 5 9 +4
Table 5: Congress Performance in Different other minorities - Christians, Sikhs, Jains, Kurmi 36 20 -16
Subregions o f UP (2012)__________________ Buddhists, Parsis, etc, in the 4.5% quota MBCs 18 17 -1
Regions Total Seats Gain/ Vote Gain/ Loss
Seats Won LossSeat % Vote% for jobs and admissions in educational Jatav/Chamar 3 5 +2
2007-12 2007-12 institutions, while Other Backward Classes Muslims 3 7 +4
Ruhelkhand 52 2 +1 10.7 +2.2 Source: UP Assembly Election Studies 2007 and 2012,
(o b c s ) thought that Congress was trying
Awadh 73 4 -4 14.1 +2.6 CSDS Data Unit, Delhi.
to reduce their share from 27% to 22.5%
East UP 81 4 +3 8.1 +2.4
44 +4 14.4 +6.8
in reservations. Thus, Congress suffered a the end of the era of fractured mandate
West UP 5
Doab 73 2 -1 9.4 +1.5 double loss in potential votes; it failed to that plagued the state since 1989, and
Bundelkhand 19 4 +1 18.6 +5.3 attract Muslims; it also annoyed o b c s the formation of governments by parties
East UP north 61 7 +2 12.2 +3.2 who had voted in big numbers for the with clear majorities. Mayawati got an
Total 403 28 +6 11.6 +3.0 party in the Lok Sabha elections in absolute majority in 2007, and Akhilesh
Source: ECI Data, CSDS Data Unit, Delhi. 2009. The Congress vote share in 2012 Yadav had emulated her as he became
was down by 7 percentage the youngest chief minister of u p this time
Table 6: Congress Vote Share in 2007 and 2012 Assembly and 2009
LS Elections points among Muslims and in 2012. The state is moving away from
Castes Assembly LokSabha Assembly Gain/Loss Gain/Loss substantially in o b c s (Jats exclusionary caste politics relatively - a
Elections2007 Elections2009 Elections2012 2007-12 2009-12
-2%, Yadavs -7%, Kurmis trend that started in 2007 and parties
Vote% Vote% Vote% (+/-) (+/-)
1 2 3 4 5 6 -15%, m b c s v -5%). are seemingly willing to forgo a kind of
Brahmin 19 32 (+13) 13 -6 -19 The b j p performed poorly politics that fragmented the electorate,
Thakur 9 16 (+7) 13 +4 -3 losing both seats (-4) and warranted post-poll coalitions, and
Vaishya 10 18 (+8) 21 +11 +3 votes (a drop of 1.97% since resulted in non-performing unstable
Upper caste 12 31 (+19) 13 +1 -18 2007). Its maximum losses governments. The u p voter is moving
Jat 2 13 (+11) 11 +9 -2
were in the Doab (from away from a “ marriage model”of voting
Yadav 4 11 (+7) 4 00 -7
Fatehpur to Aligarh). It did behaviour to a “ share market model”
Kurmi 6 28 (+22) 13 +7 -15
better in Bundelkhand where which means that voters are no more
MBCs 8 17 (+9) 12 +4 -5
2 4 (+2)
it won three seats and its wedded to a party and are willing to
Jatavs 5 +3 +1
OtherSCs 5 16 (+11) 14 +9 -2 vote share was up by 5.7 vote for a party that may provide them
STs 1 24 (+23) 14 +13 -10 percentage points may be greater returns. The Yadavs voting
Muslims 14 25 (+11) 18 +4 -7 because of the local influ­ against the s p and the Jatavs voting
Total 8.6 18.4 11.6 +3 -6.8 ence of Uma Bharati who led against the b s p exemplifies this. We also
Source: CSDS Data Unit, UP Assembly Election Studies 2007,2012, and the party at the hustings. see a tactical shift in Muslim voting be­
Lok Sabha Elections 2009.
However, it also proves that haviour; earlier it was b j p centric “
Yet, the party could not substantially such cosmetic tactics as importing lead­ tive vote”as they voted a party that
capitalise on the increase in support in ers from outside may not work now in could defeat the b j p . N o w Muslims seem
the Lok Sabha elections in 2009 due to Indian politics. to exercise their franchise with a posi­
irrational allocation of tickets, and poor The b j p voters’ social profile does not tive orientation to elect the party they
organisational presence. Various sec­ look impressive; the party lost support perceive will act best in their interests.
tions among the dalits, for example, in almost all sections of the society, And, finally, there appears to be a transi­
showed an inclination to vote for the though registering very small accre­ tion from caste to class in the determina­
Congress, but poor candidate choice put tions in support among Yadavs (+4), tion of voter support. Though this deter­
them off. In fact, reports suggest that Jatavs (+2) and Muslims (+4) (Table 7). mination seems to be in a early stage,
dalits shifted their support to the sp A vote share of 7% among Muslims, the coalescing of subalterns, cutting
instead of voting for the Congress in according to the c s d s survey, shows across party affiliations is very much in
various places. That was true of other that there is a possibility of rapproche­ the offing.
castes too. The Congress’loss suggest ment between the party and the minori­
n o t e ____________________________ ________
that the era of winning elections through ties in the future.
1 Based on figures, there seem to be a good cor­
the cosmetic interventions by charismatic This election is a pointer to a few relation between the CSDS survey figures and
persona and the machinations of the trends in u p politics. One, it is signalling the actual vote shares won by various parties.

Economic & Political w e e k ly Q2Q m ay 5, 2012 v o l x l v i i n o 18 *9

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Koodankulam’ s Reserve The potable water requirement is 1,272 m3

per day. The total industrial and domestic

Water Requirements requirement for two reactors is 6,936 m3

per day (Muthunayagam et al 2011). One
year after commissioning, once the first
refuelling of the reactor has been com­
V T PADMANABHAN, R RAMESH, V PUGAZHENDI pleted, the spent fuel in s f p will also
need to be cooled.
There is not enough reserve he Nuclear Power Corporation of
water inside the Koodankulam
nuclear power plants complex for
cooling the reactor cores and the
T India Ltd ( n p cil) constructed two
1,000 megawatts (electric) Mw(e)
pressurised water reactors (pw rs) at
Historical Background
k k n p p was given conditional clearance

in 1989. According to the Environmental

Koodankulam in Tirunelveli district of Impact Assessment (e ia ), fresh water for
spent fuel pools. Tamil Nadu. The first unit was to be industrial purposes was to be brought
commissioned in December 2011. Local from Pechiparai reservoir, 65 km north­
communities stalled the commissioning west of the site on the river Kodayar, in
of the reactor as they feared that the Kanyakumari district. “ At project site, it
reactor complex would threaten their is proposed to construct a reservoir with
lives. An analysis of the official docu­ a capacity to store seven days require­
ments reveals that there is not enough ment of process and drinking water (of
reserve water inside the campus for capacity approximately 60,000 m3 for
cooling the reactor cores and the spent two units). This reservoir is planned to be
fuel pools (csfps). located at an elevation of 35 metre which
Koodankulam Nuclear Power Project is much above the safe grade elevation
(k k n p p ) requires fresh water as a moder­ of the reactor building”(n e e r i 2003).
ator and as a coolant. There are three While giving its nod to the project, the
types of coolants. The primary coolant Atomic Energy Regulatory Board (a e r b )
removes the heat generated by nuclear made the following conditions regard­
fission from the reactor core. Part of the ing fresh water:1
heat in the primary coolant is trans­ •Facility to store at site adequate quantities of
ferred to the secondary coolant, which is water should be provided to meet the make­
converted into steam that runs the up requirements of uninterrupted cooling of
core and other safety related systems on a
turbine. The de-mineralised, de-ionised
long-term basis.
fresh water used as a moderator and • Facilities engineered at site should meet
primary and secondary coolants are in the requirements even in the event of pos­
close loop and are condensed by seawater sible disruption of piped water supply from
(condenser coolant) drawn from and Pechiparai dam.
•The safety of the 65 km long pipeline from
disposed off in the Gulf of Mannar.
Pechiparai dam should be ensured by appro­
About 30% of the heat generated in the priate security arrangement.
reactor core is transferred to primary and •In the unlikely event of the breach of the
secondary coolants and the remainder is dam, alternative sources of water supply
absorbed by seawater. Since the spent should be available for the site within a rea­
sonable time.
fuel will contain radioactive decay heat
We are extremely grateful to the peer reviewer • n p c i l should conceptualise schemes at

for the criticisms and suggestions on an from the fission products, a reactor core the Detailed Project Report (d p r ) stage for
earlier draft. needs to be cooled by de-mineralised utilisation of the water from Upper Kodayar
fresh water even when no electricity is reservoir for such an eventuality.
V T Padmanabhan (ytpadman@gmail.com) has
been studying the health effects of ionising being generated. Likewise, the spent
radiation and hazardous chemicals since 1982. fuel pool (s f p ) will also have to be Water Source and Reserve
R Ramesh is a Coimbatore-based family cooled till fuel rods are reprocessed or Before preparing the detailed project
physician who is also a scholar of geology and the radioactive materials in the spent and the environmental impact assess­
oceanography. V Pugazhendi, a family
fuel rods decay sufficiently so that the ment, n p c il neither conducted any
practitioner at Sadras, near Kalpakkam
nuclear complex, has been researching the heat generated is low enough to be dissi­ study of the assured availability of water
health status of the downwinders. The authors pated by air circulation. The fresh water in the reservoir nor did it inform the peo­
are members of the expert committee requirement (evaporative loss) of one ple who have been using the water from
appointed by the Peoples’ Movement Against reactor is 2,832 cubic metres (m3) during the 120-year-old dam. According to a
Nuclear Energy.
operation and 400 m3in shutdown mode. study, “the district had faced 52 years of
20 may 5, 2012 v o l x l v ii n o 18 DBm Economic & Political weekly

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drought and drought-like situations reactor plant for at least 10 days in case marine organisms like jellyfish, called
during 1901-89. The run-off in the dam of power failure from the grid even fouling agents by the industry. With
during 1963-90 was 15% to 37% less though the regulatory requirement is global warming, jellyfish is poised to
than the expected average” (Ramesh only seven days.”The regulatory require­ recapture the empire they lost some
2006). As o f now, there is neither a pipe­ ment, according to a e r b is for 30 days 600 million years ago. Their intrusion
line from the dams nor an on-campus and not for seven days: “ if the minimum in desalination plants, ships and power
reservoir with 60,000 m3 of water at water supply required for long-term heat plants has been on the increase during
k k n p p . Instead, the campus has four removal from the core cannot be en­ the past couple of years. In July-August
desalination plants. sured under all circumstances, then the 2011, nuclear power plants in Japan,
site shall be deemed unsuitable. Avail­ Scotland and Israel were shut down
Desalination Plants: There are three ability of adequate quantity of water to due to their ingress, a feat that half a
different technologies for desalination. maintain the reactor under safe shut­ century of anti-nuclear activism could
They are (a) reverse osmosis (r o ), down state for at least thirty days needs not achieve. “ The plants logically have
(b) multi-stage flash (m s f ), and (c) mul­ to be ensured under all circumstances” filters (called flumes) to keep marine
tiple vapour compression (m v c ). The (emphasis added).2 life out, but a possibly global jellyfish
Bhabha Atomic Research Centre (b a r c ) The Expert Group is silent about the bloom is proving too much for these
has extensive experience in seawater following issues. filters to handle”.3
desalination using r o and m s f techno­
logies and no expertise in m v c techno­ (i) Drinking Water Requirement of the (iii) Longer-term Outage of Desalination
logy. Six desalination plants were con­ Campus: The reserve water available in Plants: Though there are several desali­
structed at k k n p p . The first two units two tanks meant to store potable water nation plants in India and b a r c is a
built by b a r c in the k k n p p township is 1,425 m3, whereas the daily require­ leader in this field, there is no expertise
based on r o with a combined capacity of ment is 1,272 m3. Even if the consump­ for m v c desalination technology in
1,200 m3per day take care of the needs tion is reduced when the supply chain India. All the plants in India are based
of the township. The other four plants, breaks down, the reserve may not last on either r o or m s f technology. In the
based on m v c technology, were built by for more than two-three days. (Since the case of a major defect, experts may have
an Israeli company at a cost of Rs 115 industrial water is laced with elements to be brought in from Israel. What if the
crore. As this is the first m v c desalina­ like boron and chemicals, they cannot desalination plants are not brought on
tion plant in India, expertise for han­ be used for drinking.) line within 10 days? A desalination plant
dling major problems within a short at Minjur near Chennai broke down in
time may be difficult. (ii) Failure of Desalination Plants Due 2008 and it took 45 days to repair. The
to Causes Other Than Grid Failure: The experts had to be flown in from the
Reserve Water: The daily output of three expert committee considered grid failure Netherlands.
operating plants (one plant on reserve) alone as the only probable event. If the
will be 7,680 m3, sufficient to meet the grid fails, the reactors will shut down (iv) Reactor shutdown and the Iodine Pit:
industrial and potable water require­ automatically and hence the coolant If the desalination plants break down,
ments of two reactors and the residents requirement will be about 800 m3 for the reactors also will have to be shut
in the complex. The campus has a re­ two reactors. (All reactors rely on grid down. Unlike other machines, a nuclear
serve of 11,445 ni3 of water in 12 tanks power for maintaining their safety related reactor cannot be restarted immediately
(Krishnamurthy et al 2011a). Of this, pumps and instrumentations as the grid after the shut-down, because of the
2,000 m3is in fire-water tanks and 1,425 is more reliable than the reactors.) A de­ phenomenon called the iodine pit/xenon
m3 is in tanks for domestic use located salination plant is a complicated machine poisoning.4The start-up may be delayed
outside the k k n p p island. The daily re­ for cleaning and sterilising a chemically by three days.
quirement of potable water is 1,200 m3. and biologically complex medium. That The first project proposal stated that
Leaving aside the fire and potable water, machine can also fail due to wear, tear there will be a reservoir with a capacity
k k n p p has a reserve of 8,020 m3, suffi­ and corrosion or due to an attack of of 60,000 m3 of water brought from
cient enough to cool two operating reac­
tors for about one-and-a half days. If
there is a problem with water supply, the Permission for Reproduction of Articles Published in EPW
reactors will have to be shut down and
No article published in epw or part thereof should be reproduced in any form without
the reserve will last about 10 days.
prior permission of the author(s).
Committee on Water Reserves A soft/hard copy of the author(s)'s approval should be sent to epw.

According to Muthunayagam et al (2011) In cases where the email address of the author has not been published along with the
“the inventory available in various tanks articles, epw can be contacted for help.
is adequate for cooling requirement of

Economic & Political weekly Q3Q may 5, 2012 v o l x l v ii n o 18

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Pechiparai. aerb gave “the clearan ce for In case of an accident or a natural disaster, re co m m en d ed by the Fukushim a Task
excavation in O cto b er 2001 subject to the cooling of the core is top priority and Force (Krishnamurthy et al 2011b). Tara-
drawing lessons from the Fukushima sce­
com plian ce o f stipulations like restric­ pur A tom ic P ow er Station (taps ) w hich
nario,... India’s plants are now supplied
tion on surface m in in g o f lim eston e and by alternate water sources that will not be
uses light w ater as m odera tor and c o o l­
d esign o f em ban k m en t for w ater storage vulnerable to disruption. ...“N ot depending ant has an on-cam pus reserve o f 3,868
reservoir as ultim ate heat sin k”
.5 E xca­ on on-site water sources alone, water pipe­ m 3 o f fresh w ater (Bhattacharjee et al
vation w ork for a reservoir w as started lines from remote locations will supplement 2011). The reserve w ater per mw o f in ­
and provide fail-back apparatus. ...India has
in 2004. It is n ot kn ow n as to w hy co n ­ stalled capacity is 12 m 3 in taps as
ramped up safeguards at its atomic power
struction w ork o f the reservoir w as not against 5 m 3 in kknpp.
plants with three layers of power back ups,
com pleted. Both aerb and the Expert water pipes drawn from off-site locations ,
Group o f the central gov ern m en t are elevated water towers and options for inject­ Conclusions
silent on this issue. If the reservoir w ere ing nitrogen to prevent explosions”(empha­ npcil did not d o its hom ew ork regarding
sis added) (Deshpande 2011 ).
there, they cou ld have stock ed 60,000 the availability o f fresh w ater at or near
m 3 o f w ater from four desalin ation kknpp d o e s not have p ip es draw n the reactor site b efore sign in g a contract
plants (lying idle for the past three from off-site location s or elevated w ater w orth Rs 13,000 crore w ith the Russians.
years) in six days. towers. O ther cam p u ses d o have such T hey con stru cted the kknpp cam pus in
p ip elin es and also h igher on-cam pus violation o f the term s and con dition s
The World of Virtual Water reserves o f fresh water. M adras A tom ic laid d ow n by the aerb . npcil and ele­
Q u otin g npcil and dae sou rces several P ow er Station (maps ) w ith tw o heavy- ments w ithin the Governm ent o f India
stories have ap peared in the national w ater c o o le d and m odera ted reactors have been spreading misinformation
m edia sh o w in g that the reactors have w ith an in stalled capacity o f 440 Mw(e) about the safety o f the reactor com plex.
en ou gh reserve water. Excerpts from a has 28,400 m 3 o f fresh w ater and the Since the back-up for coolan t w ater is
report that ap p ea red in Times o f In dia: cam pu s is au gm en tin g its w ater reserve insufficient, the co m m issio n in g o f the
(19 O cto b er 2011): w ith an additional reserve o f 750 m 3 as reactor w ill b e a dan gerou s gam ble.

0 0 0 - fl
Shaped by the past, creating the future
Institute of Advanced Study
2 0 1 3 /1 4 Fellowships

The IAS was launched by Durham in October 2006 as stipend, travel, accommodation, subsistence and costs
a research-led, University-based forum for world-class associated with replacement teaching or loss of salary
multi and interdisciplinary debate. The Institute seeks to (where appropriate).
catalyse new thinking on major annual themes through Further particulars are available from the IAS website
critical dialogue between gifted individuals from diverse www.dur.ac.uk/ias. Further details of the 2013/14 Light
professional and academic backgrounds. The theme for theme can also be found here. Informal enquiries with
2013/14 is “ Light”, interpreted in its broadest sense - the Directors of the Institute can be made via Linda Crowe,
scientifically, symbolically, legally, philosophically, literarily, the IAS Administrator (Tel: +44(0)191 3344686
politically, economically and sociologically. Applications are or email linda.crowe@durham.ac.uk).
now invited for up to 20, three-month fellowships (October- Please quote reference EPW.
December 2013 and January-March 2014), which will be Closing date for applications is Sunday, 17 June 2012.
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MAY 5, 2012 VOL XLVII NO l8 Economic & Political weekly

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NOTES_________________________________ 5 AERB 2 0 0 9 , Koodankulam Nuclear Power Krishnamurthy, S, M Ramasomayajulu, R R Sahaya,

Project, www.aerb.gov.i1vT/sj/book/chapter5 . S Chandramouli (2011b): “ Safety Evaluation of
1 AERB, letter no: CH/AERB/KK/8 4 8 6 /8 9 dated
pdf Indian Nuclear Power Plants Pressurised Heavy
10 November 1 98 9 .
Water Reactors at Madras Atomic Power Station” .
2 AERB Code of Practice on Safety in Nuclear
Power Plant Siting, http://www.aerb.gov.in/ Muthunayagam, A E et al (2011): “ Safety of
T/ documents/regprocess.pdf
REFERENCES___________________________ Koodankulam Nuclear Power Plant and Impact
3 http://news.yahoo.com/jellyfish-invasions-shut- Bhattacharjee, S, K R Anil Kumar, P K Malhotra of Its Operation on the Surroundings” , report
down-three-nuclear-power-plants-03 io i 6757 .html. and V S Daniel (2011): “ Safety Evaluation of by Expert Group Constituted by Government of
Indian Nuclear Power Plants BWRs at Tarapur India, December.
4 Xenon135 is a fission product which is a neutron
guzzler. While the reactor is operational, there Atomic Power Station (TAPS-1&2)” . National Environmental Engineering Research
are two sinks for this isotope. One is its beta de­ Deshpande, Rajeev (2011): “ Indian N-plants Step Institute (2 0 0 3 ): “
EIA for KKNPP 1 and 2 Reac­
cay to i 35 Cesium and the other is the neutron- up Safety Measures”, Times of India, 19 October. tors” , pp 2 -4 5 .
activation decay to Xe136. Since there is no neu­ Krishnamurthy, S, U S Khare, K R Anilkumar, Suresh Ramesh, R (2 0 0 6 ): “ KKNPP and the Pechiparai
tron in the shut-down mode, Xe135 builds and Kumar Pillai, R K Gupta (2011a): “ Interim Reservoir of Kanyakumari District” , paper sub­
prevents reactor start up. Xe135 was also Report of Task Force on Safety Evaluation of mitted to the Ministry of Environment and
involved in the Chernobyl accident. the Systems of KKNPP Post-Fukushima Event” . Forest, Government of India.

The Right-to-Public-Services Laws and state levels on the lines of the Central
and State Information Commission.

Initiated By State Governments

A S H O K K U M A R S I R C A R __________________________ Starting with Madhya Pradesh in 2010,
another 10 state governments ( s g s ) have
Eleven state governments have rrespective of its nature, one of the so far enacted the Right-to-Public-Serv-
enacted Right-to-Public-Services
laws in the last couple of years
without any pressure from the
I accepted tasks of any government is ices ( r t p s ) Act, albeit under different
to provide a variety of public services names, with five declared intents: (a) as­
to its citizenry varying from issuing a surance of the service, (b) service within
passport to registering an autorickshaw. a stipulated time frame, (c) holding
centre. All except one of these Therefore, assuring these services with­ designated officers accountable, (d) a
states are in the Hindi heartland in a stipulated time and holding duty system of grievance redressal by two
bearers accountable for it could be seen stage appeal, and (e) a system of penalty
which is known for its fractured
as renewing the pledge that a govern­ and fine for delay/denial in service.
polity. These enactments are ment makes to its citizenry, and is cer­ These s g s are of Rajasthan, Delhi, Jam­
perhaps an attempt to regain the tainly laudable. However, the recent mu and Kashmir ( j& k ) , Bihar, Punjab,
faith of the middle class in the endeavour of a number of state govern­ Uttar Pradesh, Himachal Pradesh, Utta­
ments to provide service guarantee is rakhand, Karnataka and Jharkhand.
political and bureaucratic system.
noticeable in a number of ways: this More s g s are at various stages of enact­
While there are limitations in article attempts to look at it from the ing similar laws and Kerala and Harya­
their conceptualisation and perspectives of politics and governance na are very close to promulgation. The
implementation, the enthusiasm in India. model for all these Acts has common
Following the initiatives of several characteristics. The departments are
of the respective state
state governments and the response, the free to declare a few or all of their serv­
bureaucracies in pushing for these central government too has now pro­ ices to come under its purview. A depart­
laws is encouraging. A number of posed the “ Rights of Citizen for Time- ment that wishes to declare that a serv­
measures suggested herein could bound Delivery of Goods & Services and ice would come under the legislation
Redressal of Their Grievances Bill 2011” must designate a responsible officer to
help reduce the shortcomings in
drafted on similar lines. This is slated for provide the service, a first appeal officer
the legislation. introduction in Parliament. It intends and a second appeal officer for each de­
to make the preparation of a citizen clared service, determine the fine or
charter mandatory for local, state and penalty for failure to provide acknowl­
central governments and their respec­ edgement, delay in service or its denial.
tive departments. The charter must in­ The citizen is required to submit appli­
clude the name of the service and the cations with supporting documents
officer responsible, the time period, and and mandatorily get an acknowledge­
the redressal mechanism. It also details ment. Only the j & k government has
a grievance redressal mechanism in the defined what is service deficiency and
form of first and second appeal and a the case for imposing penalty.
Ashok Kumar Sircar (<ishok.sircar@apu.edu.in) policy cum regulatory body like the Griev­ Since the services that come under
is with the Azim Premji University, Bangalore.
ance Redressal Commission at central this Act are dependent on departmental

Economic & Political w e e k ly OB59 m ay 5, 2012 v o l x l v i i n o 18 23

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w illingness, their n um ber varies from as m ak in g an attem pt to address the co n ­ However, the provision s o f the Act like
low as 15 in Uttar Pradesh to 124 in stituency o f the poor, excluded, vu ln era­ supply o f w ork w ithin 15 days o f demand,
Rajasthan. Kerala’
s p ro p o se d legislation ble and m arginalised. The rti m ay in ­ u n em ploym en t allow an ce if w ork is not
covers on ly 13 services. The services m ay trinsically be an exception, th ough its p rovided in that time, w a ge paym ent
include d ocu m en ts (certificates-licenc- gen esis surely w as the rural poor. The w ithin 15 days, etc - (features that require
es-permits), cash (pension, stipends) disabled, ch ild labourers, w om en, trib- im provem en t o f internal efficien cy and
and kind (electricity-water connections). als and oth er forest dwellers, the illiter­ accountability) have not w ork ed in any
The nature o f these services can b e cla s­ ate and h un gry are all con stituen cies large m easure. The im p lem en tation o f
sified as regu latory (trade licence), w aitin g to b e in clu ded in the m ain ­ the fr a rem ains abysm ally p o o r across
adm inistrative (birth, caste certificate), stream. The third feature is that the le g ­ the country. Except perhaps the r t i,

basic (water, electricity), and w elfare islations by the very nature o f their co n ­ oth er such legislation s have not really
(pension, stipend) services. stituen cy focu s on, ex p ect and dem an d m ade the adm inistration ordinarily
W hat is m ost striking about these Acts o rga n ised con stitu en cy action w hich accountable. A basic qu estion can be
is that they are all initiated by state can brin g su ccess in realisin g the rights. legitim ately raised now. D o such rights-
governm ents. This is in stark contrast to The exp erien ce o f actual im plem en ta­ b a sed legislation s that e m p ow er citizen s
the pleth ora o f rights-based legislation s tion o f these rights-based legislation s w ith econom ic, socia l and civil rights
in the last d e ca d e or more, w hich cam e tells us a differen t story. W hile these have the poten tial to ch an ge the ch arac­
prim arily out o f a large n um ber o f civil legislation s have certain ly raised public ter and nature o f the public adm inistra­
society orga n isa tion s’ad v oca cy efforts expectations, dem an d and orga n ised tion and its structural accountability?
w ith the u n ion gov ern m en t and Parlia­ con stitu en cy action, they have n ot tran s­ In contrast to these central legisla ­
ment. The Persons w ith Disabilities (p w d ) lated into any internal ch urn ing w ithin tions, the rtps Acts have tw o distinctive
Act 1995, Right to In form ation (r t i ) Act the public adm inistration. Neither have characters. One, all o f them are rights
2005, Forest Rights Act (f r a ) 2006, they im proved the internal efficiency, b a sed legislation s o f the states, en acted
M ahatma Gandhi National Rural Em pl­ accoun tability or tran sparen cy o f the solely due to the state g ov ern m en ts’ow n
oym en t Guarantee Act (m g n r e g a ) 2005, system. It has also not im proved d o w n ­ initiatives, w ithout any im p osition from
D om estic V iolence (d v ) Act 2005, Child w ard accoun tability o f the departm ents/ the union government. Two, none o f these
Labour (Abolition and Rehabilitation) authorities tow ards these con stitu en ­ Acts in any state are the results o f any
Act 2006, and R ight to E ducation (r t e ) cies. A case in poin t is the m g n r e g a , con stitu en cy action. In that sen se these
Act 2009, can all b e classified as central w h ere the p ro gra m m e o f p rov idin g are purely state-led legislation s tryin g to
legislation s p u sh ed for by civil society. w ork on d em an d has had m ix ed results. m ake their o w n public adm inistration
The National F ood Security Bill is on e
such legisla tion in the m aking. All o f
these rights-based legislation s w ere e n ­
Training Programme in
acted as central Acts w ith a clear m an ­
date for the states to im plem ent b y fram ­ Statistical Software for
in g appropriate rules. T he states had no
choice. In som e notable cases, the central Data Analysis
gov ern m en t is p rov idin g m ajor financial Five full days of intensive hands-on training programme to derive
resou rces to im plem en t th ese Acts, the expertise in statistical software and data analysis techniques.
m ost celebrated o f w h ich is the m g n r eg a
The program m e will enable participants to handle the latest versions o f statistical software
and r te . However, in the cases o f the r t i, easily for their data analysis purposes. It equips the participants with basic statistical
p w d , dv Acts, the states have the o b li­ concepts as well as statistical software. Concentration will be on the software SPSS 20.
gation to finance their im plem entation. Consultants, Analysts, Researchers, Teachers, NGO Activists, and Students
will find the program m e highly useful.
Yet to Make an Impact • 100% hands-on training program m e in the m ost innovative, intensive and informal way.
The rights-based legislation s en acted by • Simplest and the easiest m ode o f learning data analysis at professional level.
• Even those without expertise in com puters or statistics can make use o f the programme.
the u n ion gov ern m en t have a few fea­
• Course materials include text books, ebook s and free software.
tures in com m on : in all cases, the citizen • Seats limited to 10 to ensure individual attention; allotted on first com e first serve basis.
is giv en a lega lly ju sticiab le entitlement,
For m ore details and online registration: www.normaschool.in
for w h ich the state gov ern m en t (or pan-
Phone: 0471-2446986/ 09447046986
chayats/urban loca l b o d ie s as the case
m ay be) is accountable. N one o f these
Acts m ake the un ion gov ern m en t
accountable ba rrin g som e excep tion a l PB No. 2505, Medical College P 0, Trivandrum 11, Kerala, India
cases. The seco n d feature o f th ese le g is ­ Phone: 0471 2446986, 09447046986 Fax: 0471 2445485 Email: office@normaschool.in
Website: www.normaschool.in
lations is that alm ost all o f th ese are

24 MAY 5, 2012 VOL XLVII NO l8 Economic & Political weekly

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internally accountable as well as legislations, the first appeal lies with an economic indicators. A notable excep­
towards the citizenry. It may be inferred officer at the district level, and the sec­ tion is Kerala. For over a decade and half
that from a purely civil society discourse ond appeal with an officer at the state now, it has already devolved many serv­
via central legislations, rights-based leg­ level thus limiting the ability of the poor ices to local governments ( l g s ) and al­
islations have now seeped into the dis­ to access the institutions of first and most in tandem, built a fruitful relation­
course of the state legislature and state second appeal. ship between them and wom en’ s com-
bureaucracy. However, in doing so, the All these limitations notwithstanding, munitybased organisations through the
concept of public services and rights it is encouraging to note the enthusiasm Kudumbashree programme. Therefore,
have taken a reductionist, inequitable of the state bureaucracy in pushing for it is now proposing only 13 services to be
climb down. its implementation. This is manifested brought under this Act. The other notable
in the fact that all these state govern­ point about Kerala is that all the services
Enthusiastic Bureaucracy ments are taking proactive steps to digi­ devolved to l g s are meant to enhance
For example, public services in all these tise parts or the whole of the service human, social and financial capital. An­
cases are defined as entitlement to delivery system connected with these other encouraging exception is Haryana
documents, and cash and services in services, with clear internal control and which has taken almost all the actions
kind as explained above. Public services transparency built in it. One good ex­ conceived under the Act without actual­
that are linked to enhancement of ample is Bihar, where the designated ly enacting any legislation, and has
human capital (nutrition-food-health- monitor can track each application by achieved comparable results. Thereby it
education-security), financial capital name on her computer screen. Other has raised a more basic question: are the
(employment-wage-loan-relief) are not software versions being piloted else­ r t p s required at all, if similar results

under the law’ s purview. Neither is the where even have the provision for the can be achieved by executive action?
issue of equity addressed in the services. citizen to track her own application as it The enthusiasm of the state govern­
There is no guarantee that if a service is goes through the various stages of pro­ ments, at a time when the political class
to be given in the stipulated time of 30 cessing. The initial results are encourag­ and bureaucracy are suffering from low
days, one may not get it by paying speed ing and Bihar has already received 99 public credibility, is probably an indica­
money. In fact, the Acts are surprisingly lakh applications for various services, of tor of a conscious political attempt to re­
silent on the corruption issue. A majority which almost all have been attended to. gain the faith of the middle class in the
of the services that are listed primarily The average rate of disposal seems to be political and bureaucratic system. The
address the requirements of the rural 98%, an appreciable achievement in­ Hindi heartland is now well known for
and urban middle and lower middle deed. Similarly, Madhya Pradesh has re­ its fractured polity and search for stable
class, barring a few exceptions. For ceived more than 88 lakh requests and political allegiance. These rights-based
example, in case of Rajasthan which has has attended to them all. legislations are clearly an attempt to re­
notified 124 services only about 15-17 generate faith in public administration.
services are clearly meant for the poor, Attempt to Regenerate Faith? To what extent they deliver is yet to
vulnerable and excluded sections. The What can explain the sudden spurt in be ascertained.
exclusion of the poor in some services is such state legislations most of them en­ The r t p s laws have had another ex­
remarkable. For example, in all these acted during mid to end 2011? Has it to tremely important political and gover­
states, the services of the land revenue do with rising public disgust over wide­ nance effect and that is a clear going
department come under the purview of spread corruption, lack of governance, back on the promise of local governance
this Act, where land records, drawing decreasing faith in the bureaucracy partic­ through panchayati raj and the Pan-
traces, conversions and other relevant ularly at the lower level? Interestingly, chayats (Extension to Scheduled Areas)
documents are promised in a stipulated barring Karnataka, all the legislations Act ( p e s a ) . Many of the services that fall
time period. However, land alienation is have been enacted in the Hindi heart­ under the Acts are clearly in the domain
a problem faced mainly by the poor. land, where lack of governance is notice­ of the 29 subjects under Schedules 11and
Even if a poor family has the record of able in many aspects of social and 12 of the Constitution. It is interesting to
rights ( r o r ) , it often does not have the
possession or vice versa. Significantly, For the Attention of Subscribers and
this is not promised to be regularised Subscription Agencies Outside India
under the Acts. Most importantly, the
It has come to our notice that a large number of subscriptions to the EPW from outside the country to­
legislations have not made it mandatory gether with the subscription payments sent to supposed subscription agents in India have not been for­
for all service providers to come under warded to us.
their purview, resulting in such a wide We wish to point out to subscribers and subscription agencies outside India that all foreign subscriptions,
variation in the number of notified together with the appropriate remittances, must be forwarded to us and not to unauthorised third parties in
services among state governments.
We take no responsibility whatsoever in respect of subscriptions not registered with us.
Another major inequity lies in the system Manager
of first and second appeal; in almost all

Economic & Political weekly D BQ may 5, 2012 v o l x l v ii n o 18 25

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note that while many of the above state in all totality are consciously kept out of How do we improve the situation? First
governments have devolved these 29 the local governments’ purview. and foremost, it is essential that services
subjects to the l g s , the central sector How can we explain this phenomenon of all types are clearly defined, and that
schemes that mandated delivery through under a governance framework? India’ s cannot be the prerogative of state govern­
panchayats (like m g n r e g a ) and some three-tier local governments are plagued ment departments. An umbrella legisla­
state schemes have been devolved to the with the absence of policymaking power tion is needed to define these services
panchayats, but the bulk of essential, and very little devolution, thus becom­ through wide-ranging political and civil
regulatory, administrative and welfare ing just an agency of the central and society consultations. Second, it is critical
services still lie within the purview of state governments. Most of the works to define the nature of such services as
state departments. that the l g s are engaged with are cen­ to whether it is regulatory, administra­
The r t p s Acts clearly reinforce the tral sector schemes (csss) that aim to tive, basic or welfare. Third, if the prom­
state and district bureaucracy’ s suprem­ improve human, economic and social ises of local governments made under
acy over the local governments. While capital. This is a tall order considering 73rd, 74th amendments, p e s a and 6th
the l g s are tied up in implementing cen­ that the l g s suffer from institutional in­ Scheduled Areas, are to be fulfilled then a
tral and state sector schemes that aim to capacity, elite capture, and lack of legiti­ large number of such services must
enhance human and social capital, the mate governance space based on the clearly be devolved to local govern­
same local governments are not given principle of subsidiarity. In comparison, ments. And local governments must
the responsibility of delivering the ad­ the challenge of providing the services have a mandatory overview function of
ministrative, regulatory, welfare, and mentioned here is relatively less com­ these services to ensure that service de­
essential services. Interestingly enough, plex as techno-managerial solutions in livery does not subvert local democracy.
very few of the first or second appeals lie delivery process re-engineering can solve Finally the services that aim to enhance
with the local governments in any of most challenges. So we see an interest­ human, economic and social capital
these Acts and nor do the e-solutions ing contrast here: l g s with substantial must in all cases be included under one
being created have any significant weaknesses are struggling to address umbrella. Only then can the discourse of
component of overview by the local more fundamental problems of develop­ internal and downward accountability
governments. Therefore, delivery, griev­ ment while the state bureaucracy prom­ of public administration improve to a
ance redressal, and oversight functions ises the relatively easier delivery. desirable degree.

April 28,2012

State Policy and the Twelfth Plan through a Gender Lens - J Devika, Mary EJohn, Kalpana Kannabiran,

Sharmila Rege, Samita Sen, Padmini Swaminathan

Gendering the Twelfth Plan: A Feminist Perspective - Mridul Eapen, Aasha Kapur Mehta
Gender Responsive Budgeting in India: What Has Gone Wrong? - Yamini Mishra, Navanita Sinha
Ladlis and Lakshmis: Financial Incentive Schemes for the Girl Child -T V Sekher
Addressing Domestic Violence w ithin Healthcare Settings: The Dilaasa Model - Padma Bhate-Deosthali,
TKSundari Ravindran, U Vindhya
Beyond Feminine Public Altruism: Women Leaders in Kerala's Urban Bodies - J Devika, Binitha V Thampi

For copies write to:

Circulation Manager,
Economic and Political Weekly,
320-321, A to Z Industrial Estate,
Ganpatrao Kadam Marg, Lower Parel,
Mumbai 400 013.
email: circulation@epw.in

26 MAY 5, 2012 VOL XLVII NO 18 DDE3 Economic & Political w eb k ly

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Kick-starting a Second Green continue to pay a metered tariff for their

electricity consumption - a tariff that is

Revolution in Bengal unsubsidised and indeed a little higher

than average cost of supply.

Why Are These Changes

A D I T I M U K H E R J I. T U S H A A R S H A H . P A R T H A S A R A T H I B A N E R J E E Important?
In order to understand the full implica­
Two decisions taken by the ate last year the Government of tions of these two policy changes, we need
Government of West Bengal, one,
to facilitate easier extraction of
groundwater, and the other, the
L West Bengal took two policy deci­
sions not widely publicised by the
media or commented upon by the
to understand agriculture, groundwater
and electricity situation in West Bengal
and how it is different from the dominant
academia. They are decisions which will discourse of over-exploitation and scar­
application of a fixed connection change the lives of millions of small and city that we often read about (Janakarajan
fee for an electricity connection to marginal farmers in the state by improv­ and Moench 2006; Moench 2007; Sarkar
ing their access to groundwater and in 2011; Mukherji 2006). After posting im­
farmers could well lead to a
the process may as well kick-start a new pressive agricultural growth rates of 6%
quantum leap in agricultural green revolution. and above per annum in the late 1980s
production. First, the Water Resources Investigation and early 1990s (Saha and Swaminathan
and Development Department ( w r i d d ) , 1994), West Bengal’ s agricultural growth
vide a memo dated 9 November 2011, has stagnated at 1-2% per annum since
changed a provision of The West Bengal then (Sarkar 2006). Production of summer
Groundwater Resources (Management, boro paddy is showing a declining trend.
Control and Regulation) Act 2005. Now While the costs of cultivation (especially
farmers located in 301 or so “ safe” irrigation costs) have increased several
groundwater blocks and owning pumps times, the market price of paddy has
of less than 5 horsepower ( h p ) and tube either stagnated or risen less steeply than
wells with discharge less than 3om3/hour the cost of production - thereby hurting
will no longer need permits from the State -farmers’profit margins. For example,
Water Investigation Directorate ( s w i d ) . from 2000 to 2008, the index value of
This will effectively put all farmers cost of labour and fertiliser has gone up
except those located in 37 semi-critical from 100 to 136 and 115 respectively,
blocks outside the purview of the Act. while irrigation costs have increased
Earlier, farmers needed these permits to from 100 to 223 at 1999-2000 constant
apply for electricity connections from prices. High irrigation costs are a direct
the West Bengal State Electricity Distri­ result of farmers’ dependence on expen­
bution Company Limited ( w b s e d c l ) . sive diesel for pumping groundwater
This process of procuring s w i d certifi­ and low rates of electrification in the
cates was fraught with rent-seeking and state. Now let us briefly discuss ground-
corruption and at the receiving end were water and electricity policies in West
small and marginal farmers. Bengal since the mid-1990s and the
Second, the w b s e d c l on its part has overall impact they have had on the
also passed a policy resolution by which agriculture in the state.
it will give new electricity connections
to farmers against a payment of a fixed Low Rates o f Pump Electrification and
connection fee ranging from Rs 1,000 to Groundwater Utilisation: West Bengal
Rs 30,000 per connection depending on has the lowest rates of pump electrifica­
the connected load. This means that tion for irrigation in the country. Here
farmers will no longer have to individu­ only 15% of pumps run on electricity
ally pay the full cost of wires, poles and as against a national average of 67%
transformers based on the distance from ( g o i 2011). The w r i d d memo recognises

Aditi Mukherji (ia.mukherji@cgiar.org) is at the the network, as they were required that an s w i d permit was one of the key
International Water Management Institute, before. But through a uniform connec­ reasons for low rate of pump electrifica­
New Delhi Office; Tushaar Shah is at the IWMI, tion fee, the utility will still be able to tion. This is also confirmed by several
Anand Office and Partha Sarathi Banerjee is an cover the full cost of new connection other studies (Mukherji 2007) and by a
independent researcher based in Kolkata.
on an average. The farmers will also recent survey by the International Water

Economic & Political weekly QB29 may 5, 2012 v o l x l v ii n o 18 27

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Figure 1: Number of New Electrical Pump Connections Given to Farmers in West Bengal (1979 to 2009) depend on diesel pumps - even though
12,000 -------------------------------------------------------------------- electric pump owners are metered and
charged full cost of supply of electricity.
A similar energy squeeze has been
experienced by farmers in other eastern
states like Bihar (Shah 2007). This is
in contrast to several other states in
India like Punjab, Karnataka and And­
hra Pradesh where farmers are given
free electricity and the electricity utility
is in turn compensated by the state
0 I--- 1------- 1 I !-! 1 !--- 1 ! 1
--- 1 ! ---1 -r— r ~ r - '- r- - ,— ■
1 r v 1 , > I- < " ? '1 1 >
1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 government for providing free electricity
Source: WBSEB (and now WBSEDCL), various years.
to farmers.
Management Institute and Delhi School use diesel tube wells for irrigation - even
of Economics (iw m i -dse 2010 survey, at the cost of ever declining profit Contraction in Groundwater Economy:
Meenakshi et al 2011). This memo also margins due to high diesel prices and The overall impact of these two restric­
recognises that groundwater utilisation stagnant output prices. This affected tive policies was a reduction in the
in the state is only 42% of its potential and boro cultivation. Boro paddy is one of number of groundwater wells from 6.48
less than 10% of the blocks are in a semi- the most profitable crops in Bengal and lakhs in 2001 to 5.19 lakhs in 2006 (goi
critical stage of groundwater development is therefore a preferred crop of farmers. 2001 and 2011). This is a paradox given
and therefore there is scope for further It was a rapid increase in area and pro­ that the same minor irrigation census
groundwater development. Before this duction of boro paddy in the 1980s and shows that in 80% of the villages,
new order came in, it was usual for sw id early 1990s that unleashed the green groundwater is available within less
officials to reject up to 60-75% of all revolution in West Bengal (Harriss 1993; than 10 m. Groundwater data provided
applications for a permit even in safe Palmer-Jones 1995). Since 2001, accord­ by sw id shows that groundwater levels
groundwater blocks without citing any ing to government data, the area under recover sufficiently after the monsoon
reason. For example, till September 2010, boro paddy has remained constant at season due to high rainfall and alluvial
some 23,000 farmers had applied for 14 lakhs hectares, though remote sens­ nature of the aquifer (Figure 2, p 29). If
permits and only 8,500 got them. That ing data shows that this area has de­ there is any place in India where ground-
this process was fraught with rent-seek­ clined substantially from 2001 to 2007 water can be deployed as a poverty
ing and corruption was openly acknow­ and recovered somewhat in 2010. While alleviation tool without significant impact
ledged even by groundwater officials data on actual area under boro paddy is of long-term sustainability of the re­
in the state. debatable, what is quite clear is that source, it is in these water-rich areas
The iw m i -dse 2010 survey found that farmers with electric pumps have much like West Bengal. Indeed, there is ade­
a majority of the farmers who did not lower cost of cultivation than farmers who quate evidence to show that higher the
own electric pumps cited the cumber­
some s w i d certification p rocess and
high capital cost of tube well electrifica­
tion as the main reason for not opting for CALCUTTA (CSSSC)
electric tube wells, even though opera­
tional cost of such electric pumps are a M. Phil. In Social Sciences 2012-14
fraction of diesel pumps. Quite predicta­
bly, the number of new electricity con­ (Affiliated to Jadavpur University, Kolkata)
nections for tube wells had fallen drasti­
cally over the years (Figure 1). Indeed, Applications are invited from eligible candidates for admission to
West Bengal has the lowest number of
M.Phil in Social Sciences Programme 2012-14. For eligibility
electric pumps in India - lower than the
adjoining states of Bihar (18%) and Orissa
criterion and other details, please visit: www.cssscal.org.
(27%) and much lower than in Punjab, Applicants may also contact the Office of the Programme Officer
Andhra Pradesh and Karnataka even (M.Phil-Ph.D) at CSSSC, R-1, Baisnabghata Patuli Township,
though overall groundwater endowment
Kolkata 700 094. Application forms are available on the website
per unit of land is much higher.
and from the office of the Centre.
Dieselisation o f Irrigation Economy
and High Costs o f Cultivation: Lack of Last date of receiving applications is May 28, 2012.
access to electricity pushed farmers to
28 m ay 5, 2012 v o l x l v i i n o 18 E33Z1 Economic 8c Political w e e k ly

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Figure 2: Water Tables in the Pre- and Post-Monsoon Season (1990 to 2009)

Average Depth to Waiter Table in Pre-Monsoon Average Depth to Water Table in Post-Monsoon



IKoch Bihar

Uttar Dinaj pur

)akshin Dinajpur

1| bowfdwy
Depth to water table eater t«Wt
m m
E 3 <2-99 I f <2.99
1 3.00-5.99 ■ 1 3 .0 0 - 5 .9 9
■ 1 6 .0 0 -8 .9 9 ■ |6 .0 0 -8 .9 9
■ 1 9 .0 0 -1 1 .9 9 ■ I 9.00-11.99
MB >12.00 ■ I >12.00

Twenty Four Parganas


Parganas wenty Four Parganas

100 kilometers 50 0 100 kilometers

.... » —J____ l_____ i_____I
Source: Data collected by SWID.

level of abstraction in the pre-monsoon Let us assume that as a result of these paddy productivity of 2.5 tonnes/ha, this
season, higher is the net recharge in two policies, 50% of existing pumps are will lead to additional production of
postanonsoon season; intensive ground- electrified. The number of electric pumps 4.62 million tonnes of paddy. Assuming
water use may actually have positive will increase from roughly 1,20,000 to Rs 1,000 per 100 kg of paddy, this trans­
externalities. This is often called the around 6,00,000 or very near the poten­ lates to additional income of Rs 460
Ganges water machine hypothesis (Revelle tial stated by cea in three to five years. crore in a year. Similarly, with addition
and Lakshminarayana 1975). What will be the impact of the use of an of half a million electric pumps, the area
additional half a million electric pumps served through water sale will increase
Can Electrification o f Pumps Unleash on net irrigated area? Given that, on an as will the number of water buyers who
Agrarian Growth? The net impact of average, one electric pump irrigates 7.9 are served. On an average, diesel pump
these two new policies will be an hectares of land (Mukherji 2007), an owners serve 12 water buyers per year,
increase in number of electric pumps in addition of 4,80,000 electric pumps would while electric pump owners serve 38
the state. There is indeed a large scope lead to creation of an additional 3.7 water buyers (Mukherji 2007). Even as­
for an increase. According to the Central million hectares (mha) of irrigable land. suming that each electric pump owner
Electricity Authority (cea 2010), the state This will be more than the largest canal will serve only 10 water buyers, the
had a total of 1,16,343 electrical pump irrigation systems in the country which number of new water buyers who will be
sets as on 31 March 2010 against a poten­ take 30-50 years and thousands of crores brought under the ambit of water mar­
tial of 6,50,000 pumps. West Bengal’ s to complete. Assuming that only 50% of kets will be a staggering 4.7 million.
agrarian growth has been stagnating this potential will actually be irrigated, Right now around 25% of cultivating
since the early 2000s. Can these new this amounts to 1.85 mha of additional households (or 1.5 million households)
policies trigger a new phase of agrarian irrigated area. Thus net irrigated area of do not have any access to irrigation
growth? Using secondary data from West Bengal will go up from 2.98 mha as (n sso 1999; Mukherji 2008). This sce­
agricultural censuses and the 54th round of now to 4.83 mha in a short period or nario might as well change with electri­
of nsso (nsso 1999) coupled with primary three to five years. This will mean an fication of tube wells in the state.
data and by making some fairly simple increase in the ratio of net irrigated area
assumptions, we provide a rough but to net cultivated area from 54.5% to 88% Financial Health o f WBSEDCL? In
realistic estimate of the impacts of simply by electrifying around half a most states, the groundwater economy
electrification of pumps. million pumps. Assuming average boro and agricultural production have boomed

Economic & Political w e e k ly [3259 m ay 5, 2012 v o l x l v i i n o 18 29

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- but at the cost of electricity sector also serve the interests of w r i d d and Meenakshi, J V, A Banerji, A Mukherji and A Gupta
(2011): “Does Marginal Cost Pricing of Electri­
(Shah et al 2003). Will the same happen geologists were entrusted
w b s e d c l . s w id city Affect Groundwater Pumping Behaviour of
in West Bengal? Prima facie, it seems with the task of providing s w i d clear-, Farmers? Evidence from a Natural Experiment
in West Bengal” , final project report submitted
not, especially as long as the Govern­ ance to millions of small and marginal to 3 ie by International Water Management
ment of West Bengal does not change its farmers in the state - a job for which Institute.
policy of metered supply to agriculture they were neither staffed nor well Moench, M (2 0 0 7 ): “ When the Wells Run Dry
But Livelihood Continues: Adaptive Responses
and charges farmers the full cost of equipped. This, quite predictably, led to to Groundwater Depletion and Strategies
supply keeping in mind that night-time rent-seeking and arbitrary decisions, for Mitigating the Associated Impacts” in
M Giordano and K G Villholth'(ed.), The A gri­
supply to agricultural consumers is priced thereby hurting the small and marginal cultural Groundwater Revolution: Opportuni­
lower than full average cost of supply farmers they were supposed to serve. ties and Threats to Development (UK: CABI
Publishers), pp 173-92 (Comprehensive Assess­
because there are no other takers of Now the s w i d staff will be responsible ment of Water Management in Agriculture
electricity in those time slots. Under the for providing permits to bulk users of Series No 3 ).
Mukherji, A (2 0 0 6 ): “Political Ecology of Ground-
current tariff regime, farmers in Bengal groundwater (such as industries and water: The Contrasting Case of Water Abun­
are full revenue-paying customers like municipalities) and this will lead to a dant West Bengal and Water Scarce Gujarat,
India” ,Hydrogeology Journal, 14 (3 ): 3 9 2 -4 0 6 .
any other and increase in such a custom­ substantial reduction in their workload.
- (2 0 0 7 ): “The Energy-Irrigation Nexus and
er base should not affect the finances of These measures also serve the interest Its Impact on Groundwater Markets in Eastern
the utility adversely. However, increased of w b s e d c l . In West Bengal, farmers Indo-Gangetic Basin: Evidence from West
Bengal, India” , Energy Policy, Vol 35 (12):
agricultural consumption brings with it pay a metered tariff that reflects full 6413 -3 0 .
its own set of challenges such as load average cost of supply. Unlike most other - (2 0 0 8 ): “
Spatio-temporal Analysis of Markets
for Groundwater Irrigation Services in India,
management, monitoring of a spatially states like Punjab, Haryana, Karnataka 1976-77 to 1997 -9 8 ” , Hydrogeology Journal,
dispersed clientele, power thefts and and Andhra Pradesh where farmers get 16 (6 ), 1077 -87 .

matching electricity supply with peak free electricity, farmers in Bengal do not Mukherji, A, U Amaresinghe, A Sarkar, A Das and
N Chanana (2011): Agriculture, Groundwater
irrigation demand. West Bengal can receive any tariff subsidy. Nor do they and Energy Nexus in Punjab: 1970 to 2008,
learn from other states such as Gujarat demand any, for that matter. Therefore, report submitted to the World Bank by the
International Water Management Institute.
(Shah and Verma 2008) and Punjab for w b s e d c l , farmers are revenue pay­ NSSO (1999 ): 54th Round: Cultivation Practices in
(Mukherji et al 2011) and take proactive ing customers as any other and they are India, January 1998-June 1998, Department of
Statistics and Programme Implementation,
steps to manage the energy-irrigation now more than happy to increase their Government of India, August, New Delhi.
nexus. Such steps may include segrega­ customer base and improve their cash Palmer-Jones, R W (1995 ): “ Understandings of Re­
cent Agricultural Growth in Bangladesh and
tion of agricultural and domestic feeders flows. Finally, with ease in electrifica­
West Bengal” , paper presented at the Work­
in rural areas, intelligent rationing of tion procedure, farmers of West Bengal shop on “ Agricultural Growth and Agrarian
power supply to match peak irrigation in will be able to make intensive use of Structure in Contemporary West Bengal and
Bangladesh” , 9-12 January, Centre for Studies
the summer boro season, high voltage groundwater for increasing their agri­ in Social Sciences, Calcutta.
distribution systems (h vds) for improv­ cultural production. This will also con­ Revelle, R and V Lakshminarayana (1975): “ The
Ganges Water Machine” , Science, New Series,
ing the quality of power supply to agri­ tribute to poverty alleviation in a state Vol 188 (4188 ): 611-16 .
culture, etc. Until 2008-09, West Bengal that is home to 214 lakhs of poor and Saha, A and M Swaminathan (1994 ): “ Agricultural
Growth in West Bengal in the 1 9 8 0 s: A Disag­
was a power-surplus state, since then its of these 84% live in rural areas. These gregation by Districts and Crops” , Economic &
generation capacity has suffered due to initiatives will also give concrete shape to Political Weekly, 19 (13): A2 -A1.
lack of proper upkeep of its generation the central governm ent’ s policy directive Sarkar, A (2 0 0 6 ): “ Political Economy of West
Bengal: A Puzzle and a Hypothesis” , Economic
capacity. This can be rectified with addi­ of encouraging food production in eastern & Political Weekly, 41 (4 ): 341 -4 8 .
tional investments, which anyway needs India without compromising ground- - (2011): “ Socio-Economic Implications of Deplet­
ing Groundwater Resource in Punjab: A Com­
to be undertaken for the long-term via­ water resource sustainability. parative Analysis of Different Irrigation
bility of the sector. Systems” , Economic & Political Weekly, 4 6 (7):
r e f e r e n c e s _______________________________ Shah, T (2 0 0 7 ): “
Crop Per Drop of Diesel: Energy
Conclusions Central Electricity Authority (2010 ): http://www. Squeeze on India’ s Small Holder Agriculture” ,
In this short note, we have discussed cea.nic.in/god/dpd/pumpset_energisation.pdf Economic & Political Weekly, 4 2 (39 ): 4 0 0 2 -0 9 .
downloaded on 15 February 2011 . Shah, T and S Verma (2 0 0 8 ): “ Co-Management of
two recent policy changes by the Gov­ Electricity and Groundwater: An Assessment of
GOI (2001 ): Report of the 3rd M inor Irrigation Cen­
ernment of West Bengal - policies that sus, Ministry of Water Resources Development, Gujarat’ s Jyotirgram Scheme” , Economic &
Government of India, New Delhi. Political Weekly, 4 2 (39 ): 5 9 -6 6 .
will have a profound impact on agricul­ Shah, T, C Scott, A Kishore and A Sharma (2 0 0 3 ):
- (2011): Report of the 4th M inor Irrigation
ture in the state. By removing compul­ Census, Ministry of Water Resources Develop­ “Energy-Irrigation Nexus in South Asia: Im­
ment, Government of India, New Delhi. proving Groundwater Conservation and Power
sory s w i d certification and providing
Harriss, J (1993 ): “ What Is Happening in Rural Sector Viability” , Research Report # 7 0 , Inter­
electricity connections against a fixed West Bengal: Agrarian Reforms, Growth and national Water Management Institute, Colombo,
connection fee, the Government of West Distribution” , Economic & Political Weekly, Sri Lanka.
2 8 (24 ): 1237 -47 . State Water Investigation Directorate (2010 ): “ Water
Bengal has finally realigned different Janakarajan, S and M Moench (2 0 0 6 ): “ Are Wells a Level Data from Monitoring Wells from 199 0 to
interests in order to serve the interests of Potential Threat to Farmers’ Well-being? Case 2008” , data shared in soft copy.
of Deteriorating Groundwater Irrigation in WBSEB (and now WBSEDCL) (several years):
poor farmers in the state. These policy Tamil Nadu” , Economic & Political Weekly, Annual Reports, West Bengal State Electricity
decisions are not only pro-farmer, but 4i(37): 3977-87. Board, Kolkata.

30 MAY 5, 201 v o l x l v ii n o 18 laAVi Economic & Political weekly

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The Emerging Environmental times the highest levels of pharmaceuti­

cals detected in the us. Ciprofloxacin (an

Burden from Pharmaceuticals antibiotic), generally detected at micro­

gram levels per litre in the west, was de­
tected at 3img/L in Patancheru effluents
(this is much greater than the maximum
GEETHA MATHEW, M K UNNIKRISHNAN therapeutic blood level). The discharge
load of ciprofloxacin has been estimated
The enormity of pollution due to obody ever anticipated prescrip­ to be greater than 45kg per day. The
pharmaceuticals in India has
caught the attention of
researchers all over the world.
N tion drugs to pollute the world,
except perhaps at the point of
manufacture. Pesticides were the only
antibiotics lomifloxacin, ofloxacin, nor­
floxacin, etc were detected at levels which
are toxic even to plants and algae. It was
recognised environmental pollutants estimated that if the drugs extracted
This was due to the near employed in healthcare. The menace of from the effluents were sold as tablets, it
extinction of vultures in the pollution from the use of dichlorodi- would fetch approximately Rs 65 lakh
phenyltrichloroethane insecticide ( d d t ) per day (Larsson et al 2007).
Indian subcontinent in the 1990s
began to be appreciated only in the late
caused by diclofenac and a recent 1960s and eventually culminated in its Scale of the Environmental Burden
study in 2007 by Swedish ban in the United States (us), as late Drugs are considered among the most
scientists on pharmaceutical as in 1972. Until recently, prescription non-biodegradable in the environment
drugs were thought to be environmen­ (Stuer-Lauridsen et al 2000). Most drugs,
effluents in Patancheru in
tally benign, owing to the relatively being insoluble in water, are not effec­
Hyderabad. The massive small manufacturing volumes and the tively washed away by rain. Therefore,
outsourcing of pharmaceutical extensive safety guarantees associated drug residues tend to build up in the
production by the west has made with the licensing. environment and eventually accumulate
In the early 1990s, the Indian subcon­ in the bodies of terrestrial and aquatic
third world nations like India a
tinent witnessed a dramatic reduction organisms (Halling-Sorensen et al 1998).
victim of unbridled opportunism. (approximately 95%) in the population Many drugs not only resist their own
As the west wakes up to the of its vultures. Ten years later the culprit degradation, but also interfere with the
environmental implications of was identified as diclofenac (an anti­ microbial degradation of other substances
inflammatory drug). Vultures feeding on in sewage. This is because antibiotics

pharma pollution”
, Sw eden’
dead cattle, dosed with veterinary for­ kill friendly microbes which decompose
Medical Products Agency mulations of diclofenac, died en masse organic waste. Another major concern is
recommends a reduction in on account of kidney failure (Oaks et al that microorganisms exposed to extra­
outsourcing and revisions in 2004). This is the first recorded event ordinarily high concentrations of anti­
that linked prescription drugs with the biotics evolve into extremely dangerous
pharma manufacturing practices.
extinction of a species. This being a pathogens. The competitive struggle for
Would these exhortations reduce recent phenomenon, the possibility of survival in effluents containing a cocktail
pharmaceutical pollution in India drugs polluting the world remains largely of antibiotics would eventually favour
or would they adversely impact unknown, even among the educated. the selective survival of the deadliest
If the extinction of vultures sounded microbes resistant to many antibiotics
s advantages in the global
the first warning bells about pharma­ (Kummerer 2001). This has already
drug market? ceutical hazards of the environment, the resulted in the emergence of many multi­
second trigger, which came from a report drug resistant microorganisms in effluents
by Swedish scientists, took the world by exposed to environmentally-relevant
storm. From effluent samples collected levels of antibiotics (Larsson et al 2007).
from Patancheru (a Hyderabad suburb; Microbial resistance to antibiotics is a
the w orld’s pharmaceutical manufacturing global concern because jet travel pro­
hub), the Larsson study (2007) identified motes the rapid spread of epidemics.
a number of drugs in alarming quantities. Thus, pollution anywhere becomes a
Among the 59 active pharmaceutical problem everywhere.
Geetha Mathew (geeth_math@yahoo.co.iri) and ingredients (a p i ) tested, 21 were detected Waste water effluents may be from
M KUnnikrishnan (mkunnikrishnan@gmail com) at levels greater than imicrogram/L. three different sources - municipal, in­
are with the Manipal College of More than 11 drugs were detected at the dustrial and hospital (Tsoumanis et al
Pharmaceutical Sciences, Manipal University, highest level ever on the planet. Waste 2010). Incomplete metabolism, improper
water from Patancheru showed 150 disposal or insufficient removal by the

Economic & Political w e e k ly BBSS m ay 5, 2012 v o l x l v i i n o 18 31

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treatment plants are the main causes for expiry, etc are often discarded un­ 90 bulk drug manufacturers. The clari­
the release of pharmaceuticals into the scientifically (Thormodsen et al 1997). fied effluent is finally discharged into
environment (Bergheim et al 2010). Popular routes of disposal such as streams which merge with Godavari and
Even small quantities of drugs can po­ garbage, toilet, sink, etc, result in signi­ solid waste is used as landfill (Larsson
tentially harm aquatic life (Bound and ficant environmental burden (Bound et al 2007). The Patancheru disaster
Voulvoulis 2005). For instance, ethinyl and Voulvoulis 2005). was inevitable because smaller com ­
estradiol (a hormonal drug) found in Pharmaceuticals having multiple uses panies have very inadequate effluent
effluents, has resulted in feminisation of have a greater propensity of polluting treatment plants.
fish downstream of sewage plants (Larsson the environment. Antibiotics are rou­ Many pharmaceutical firms are
et al 2007). Effluents from Patancheru tinely used as feed supplements in poul­ migrating to the greener terrains of
Enviro Tech Ltd ( p e t l ) , Hyderabad, try, fish or pig farms. Pig house dust was Himachal Pradesh, Punjab, etc to enjoy
India, produced up to a 40% growth found to contain five antibiotics in a tax concession; further expanding the
reduction in tadpoles, even at very low combined concentration of i2.smg/kg reach of pollution. In Toansa Village
drug concentrations (Carlsson et al 2009; (Hamscher et al 2003). In a recent study (Punjab), groundwater has been found
Fick et al 2009; Larsson and Fick 2009). in the us, pigs given low doses of anti­ polluted up to 100 feet depth (Ghosh
Even at very high dilutions, pharma­ biotics had gut bacteria that were resist­ 2006), highlighting the implications of
ceuticals in effluents stimulated expres­ ant to antibiotics, confirming that the pharma migration to greener terrains.
sion of genes (Gunnarsson et al 2069; routine practice of feeding antibiotics The us introduced federal guidance3
Kristiansson et al 2011).. to livestock leads to emergence of anti­ for disposal of prescription drugs in Feb­
Even the most developed countries biotic-resistant bacteria (Looft et al ruary 2007. It recommends discarding
are not entirely free from the environ­ 2012). The evolution of the methicillin- unused pharmaceuticals to household
mental burden of pharmaceuticals. Even resistant staphylococcus aureus ( m r s a ) , trash, after mixing the pharmaceuticals
in developed countries, pharmaceuticals also known as pig m r s a or livestock- with an inert substance and concealing
have been detected in surface, ground associated m r s a , which infects people the contents from view. Following the
and drinking water (Fram and Belitz with direct exposure to livestock, has Montreal protocol-1987 (Leach 2007),
2011). The Associated Press reported also been traced back to antibiotic use in us Food and Drug Administration ( f d a )
that traces of pharmaceuticals have livestock (Preidt 2012). is currently phasing-out chlorofiuoro-
been found in drinking water supplied carbons (propellant in inhalers) and re­
to around 4.6 crore Americans (Larsson The West Is Waking Up placing it with alternatives which do not
et al 2007). India pays scant attention to pollution. deplete the ozone layer. The us f d a ’s
Excretion via urine and faeces is the Around 70% of all available water in the recent order to restrict antibiotic cepha­
primary route by which drugs enter the country is polluted; 7.3 crore working losporin in livestock production is
environment (Daughton and Ruhoy days each year are lost due to water­ expected to contain the spread of drug
2009) . Antibiotics have been detected in borne diseases.1India has also earned resistance (Levy 2012).
livestock and hospital effluents (Sim et notoriety with the intractable multidrug In the west, hospitals follow scientific
al 2011). Although separate treatment of resistant New Delhi metallo-beta-lacta- safety guidelines for the appropriate
hospital waste water would reduce a p i mase-i ( n d m - i ) -producing superbugs.2 sorting and disposal of unused/expired
load, it may not reduce high-risk a p i s be­ being named after the Indian capital drugs (Faure and Rizzo Padoin 2003).
cause faeces and urine are also sources (Kumarasamy et al 2010). The alarm Prudent options such as community, city,
of a p i (Escher et al 2011). Drugs discarded bells sounded by the Larsson study (Pa­ and state collection events, government-
in municipal solid wastes and dumped tancheru incident) is probably responsi­ funded projects, etc are also being offered
in landfills could undergo degradation, ble for triggering worldwide research (Glassmeyer et al 2009). Sweden recom­
adsorption, or leach into waterbodies. A on pharma pollution. India can take mends return of unused medicines to a
study reported drugs at levels of 7.4 to “credit”for having provided two sam­ pharmacy. Patient education at least partly
45mg/kg in solid waste (Musson and ples of calamity (vulture extinction and remedies the problem of unscientific
Townsend 2009). Municipal waste water Patancheru) for the world to study. drug disposal (Seehusen and Edwards
treatment plants are an abode of anti­ Andhra Pradesh accounts for 80% 2006). A formalised protocol for drug
biotic-resistant bacteria (Novo and Manaia of the drugs manufactured in India. disposal and destruction worldwide has
2010) . Even well regulated drugs such as However, the Indian pharmaceutical become essential today (Tong et al 2011).
narcotics have been found in significant industry is highly fragmented with However, many countries including India
quantities in rivers, waste water treat­ approximately 34% of the total market have no standard medication disposal
ment plants and hospital effluents share being accounted for by the top protocols yet.
(Lin et al 2010). 10 companies and more than 1,300 Opinion is divided on donating unused
Unused prescription drugs, which accu­ companies supplying the rest, petl prescription drugs. Donations can often
mulate as a result of altered disease states, Hyderabad, for instance, receives about cause harm because such drugs may have
missed doses, changes in prescription, 15 lakh litres of waste water/day, from expired or lack prescribing information.
32 m ay 5» 2012 v o l x l v i i n o 18 DES9 Economic & Political w e e k ly

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World Health Organisation says storage India and China. Globalisation and out­ support while pollution is taking away
and handling of unused drugs is a strain sourcing has made India a major producer, India’ s competitive edge in a p i s . The
on resources, pose logistical bottlenecks meeting 40% of w orld’ s and 90% of small-scale industries in India need
and create environmental hazards (Gold domestic drug needs. This highly know­ Rs 3-4 crore for effluent treatment alone.
1995)- Reports suggest that unused ledge-intensive industry is expected to The cut-throat competition could even­
drugs and human excreta should be grow at a rate of 21% by 2013-14. Cygnus tually destroy the competitive advan­
treated as chemically hazardous waste Business Consulting and Research esti­ tage of Indian pharma.
(Mayer 1992). This policy may not be a mate that by 2013, India will be the second Pharmaceutical Research and Manu­
good idea for poor countries like India. largest bulk drug manufacturer in the facturers of America, representing major
world (Peethambaran 2011). us drug makers, said “ we cannot com­
Apathy towards Pollution in India Around 31% of drugs in the Swedish ment about Indian pollution because
Pollution has never been a major con­ drug market originate from India. Fin­ Patancheru plants are making generic
cern of the public administration in ancial reasons now dominate environ­ drugs and their members are branded” .
India, except when there is a public out­ mental concerns. The high growth in Generic Pharmaceutical Association
cry. The enormity of pharma pollution volumes of pharmaceuticals has brought said “ issues of Indian factory pollution
began to get noticed with the Larsson in its wake, concerns about the environ­ are not within the scope of the activities
study. Experts had already recommended mental burden of pharmaceutical waste. of our group” .5
a policy shift from pollution control to The Central Pollution Control Board and Environmental pollution should be
pollution prevention (Kathuria 2001). the m o e f has ranked pharmaceutical an internationally shared responsibility.
However, the timing of creation of the industry as one among the 17 highly The massive outsourcing of pharmaceu­
Environment Cell under the department polluting4industries in India. tical production, owing to globalisation,
of pharmaceuticals linked to the Minis­ Outsourcing of production to low sal­ has made India a victim of unbridled
try of Environment and Forests ( m o e f ) , ary countries is an attractive option for capitalistic opportunism.
in November 2008, suggests that the the west, and is good business for both
Larsson study was the triggering event. the parties concerned, but at the cost of Concluding Remarks
In India, industrial effluents are han­ the environment (Larsson and Fick Every pill eventually ends up in the envi­
dled by end-of-pipe treatment, which, 2009). In effect, the west is exporting ronment. Around 95% of the antibiotics
like common effluent treatment plant, their environmental problems to India. are excreted unaltered (Boehringer 2004).
results in residual persistent organic pol­ The lack of awareness on the a p i source Approximately 54% of people throw
lutants and toxic metals in the treated is a major reason for the west ignoring medicines into trash (Choi 2007). The
water. The common treatment of efflu­ the implications of outsourcing. “ We general water treatment plants are ill-
ents from heterogeneous industries have no reason to believe that the mar­ equipped to handle pharmaceuticals.
results in a mixture of chemicals with ket situation, and thus the ethical Thus, “ drugs pollute the world twice,
unpredictable toxicology (Kathuria 2001). responsibility, is markedly different in firstly in the bodies of those who take
The antibiotics in the effluents can kill other western countries”(Larsson and them and secondly, in the rivers and
the very same bacteria that breakdown Fick 2009:162). oceans where the toxic residues inevit­
toxic wastes. Green chemistry minimises by-product ably accumulate”(Adams 2009).
The near extinction of vultures led to waste and replaces the worst reactions The diclofenac and the Patancheru
a ban of veterinary formulations of with green technology. Non-biological episodes have their origin in India and
diclofenac in 2006. However, a survey methods using ozone, u v + h 2o 2 or acti­ have served as critical landmarks that
(November 2007 to June 2010) revealed vated carbon, etc, are better for treating exposed the scale and scope of a hither­
that 36% of 250 veterinary and general antibiotic-containing effluents (Larsson to unknown phenomenon called phar­
pharmacies in 11 Indian states continued and Fick 2009). Many routine chemical ma pollution. Both these events high­
to sell veterinary formulations of diclo­ reactions in pharma manufacture can be light the pivotal role of academics as
fenac. Moreover, 30ml vials of diclo­ replaced with green but expensive alter­ whistle-blowers. The proactive role
fenac intended for human use are being natives. Pharma giants win awards for played by academics further emphasises
sold for veterinary use. Only Jharkand their innovations in green technology the need to involve them while framing
has seen some rise in vulture population but outsource their production to India. policies in manufacture and prescrip­
due to increased awareness from contin­ Unbridled free market capitalism is forc­ tion of medicines.
uous media campaigning (Sudhi 2011). ing companies to cut costs at the expense The 71st International Pharmaceutical
of the environment. Federation ( f i p ) World Congress in Hy­
Globalisation to Blame? China’s biggest antibiotics producer has derabad, India, in September 2011 en­
The Hatch Waxman Act (Mossinghoff been accused of releasing effluents with gaged a special session on the environ­
1999), which promoted generics, has led 10 times the admissible limit of chemical mental implications of pharmaceutical
to the outsourcing of pharmaceutical oxygen demand. However, the Chinese manufacture (Unnikrishnan 2011), in
production to third world nations like pharma companies enjoy government which a team of Europeans, regretted the

Economic & Political weekly ODBCS may 5, 2012 v o l x l v ii n o 18 33

T h i s c o n t e n t d o w n l o a d e d f r o m o n T u e , 06 N o v 2018 23 :58:05 U T C

A l l u s e s u b j e c t t o h ttp s:/ / a b o u t.jsto r.o rg / term s
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h ttp :/ / w w w .d o w n to e a rth .o rg .in / n o d e / 7202. p h a rm a b iz.co m / A rticle D e ta ils.a sp x ? a id = 6 4 i3 i
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34 MAY 5, 2012 v o l x l v ii n o 18 0DES3 Economic & Political weekly

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T ow ards a Revival o f R evolutionary Ideas


t is a daunting undertaking for a R E V I E W A R T IC L E seasons of freebies and casual employ­
reader with negligible personal ex­ ment, the revolution is not only going to
perience of class struggle at the grass­ Scripting the Change: Selected Writings be a long haul, but will definitely require
roots level to review the selected writings of Anuradha Ghandy edited by Anand Teltumbde accomplishment of much harder and
of a dedicated communist leader who not and Shoma Sen, foreword by Arundhati Roy more complex tasks.
(Delhi: Daanish Books), 2011; xxiv+ 456, Rs 350.
only commented thoughtfully and inci­ It is a pity that a close and perceptive
sively on theoretical issues crucial for review of Naxalbari finds no place in this
Marxists in India, but also accomplished to yield an appropriate line for the strug­ selection. While Naxalbari certainly made
such feats as organising five thousand gle of the oppressed and resisting masses. a decisive break with explicit or implicit
construction workers of Khaparkheda But while I am impressed by the con­ collaboration with bourgeois parliamen­
thermal power plant near Nagpur and sistency and clarity of Ghandy’ s stand tary politics, looking back one could
leading them in a strike that lasted three that at this moment all such struggles are hardly claim for it a path-breaking role
months in the face of the clout of giant potentially part of a broad revolutionary like Lenin’ s April Theses and Mao’ s Hunan
construction companies and brutal police movement to establish radical democracy Report in their respective contexts. For
repression. This selection includes not only in the country, I cannot believe that mili­ enlightenment I had ventured into the
discussions at length of specific features tancy can or need be maintained at its hot-house-like atmosphere of the debate
of Indian society that complicate class peak in all the phases of the struggle. among Naxalites on Charu M ajumdar’ s
struggle and attempts by Indian Marxists Neither can the term “ revolutionary” legacy, with claims and counter-claims
to address them, but also concrete and serve as a maid of all work in contexts based solely on quotations without any
insightful analyses of various struggles that actually require more patient enquiry objective assessment of historical con­
and incidents of class conflicts. The task and innovative thought. texts, and had come out exhausted but
is a privilege and heavy responsibility. At the peril of being dubbed a counter­ not a whit wiser.
One however wishes that the editors revolutionary I also find it difficult to Neither, I regret to say, can I share the
had read the proofs of the last 50 pages believe that except in a very broad sense author’ s unqualified enthusiasm for the
or so more carefully and corrected such the “ line”laid down by Mao Zedong Great Proletarian Cultural Revolution
obvious slips of the pen as “James Stewart more than 80 years ago out of his study under Mao’ s leadership. Here and there,
Mill” (p 157) that trip up the reader. of Chinese (and global) political and to be sure, there had been mature appli­
Otherwise it is a selection that shows social conditions can apply to present- cation of its basic ideas, releasing creative
the wide variety of the author’ s interests day India where things have developed energies of the working people for pro­
and experience. far beyond rudimentary comprador capi­ ductive innovations and social reforms.
talism, where feudalism has been able to But as it snowballed, it turned into a vast,
Agreement and Disagreement adjust to capitalist penetration and for­ regimented, highly emotive ritual which
Let me however at the outset indicate mal democracy with greater ease under aroused destructive mass hysteria among
certain basic points of agreement and state patronage, where there could not be young people, which, in turn, provoked
disagreement with Ghandy’ s approach to any question of powerful warlords defy­ an equally massive reaction, with ulti­
the issues discussed. First, I agree entirely ing the central government and ruling mately devastating results for the work­
with the author of these essays that par­ over vast stretches of the country for ing masses. It is futile to insist that the
liamentary politics has been of little help decades. The repressive machinery rep­ reaction had been the handiwork of a
of lasting worth in addressing the basic resenting the interests of imperialists, mere handful of super-subtle conspirators.
problems of the working masses of the comprador capitalists and feudal ele­ The parrot-like drill is highlighted by
country, and there is a very great danger ments having acquired wider reach and the fact that in a country of hundreds of
of fascist mobilisation out of disillusion­ greater technological clout, the electronic millions, only 13 operas were allowed to
ment. Hence the urgent need for alterna­ media busy corrupting the minds of the be performed as “ safe”for the people!
tive non-utopian strategies that do not people with non-stop dissemination of Centuries-old feudal mental habits of
lead to momentary palliatives or slow all kinds of crap and confusing them, the entire society were sought to be
demoralisation. That itself demands a most non-governmental organisations wiped out overnight by insults and injuries
trenchant critique of earlier theories of standing guard over those interests, heaped on reputed elderly academics
Indian society and state that have failed election-time over decades turning into and writers by hordes of hysterical

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Red Guards. There was an outright outbursts of dalit anger in the 1970s) as a and more tribes were assimilated to brah-
denial of the course of history and the decadent social relic destined to fade away minism (“ Sanskritised” ), ethnic rules of
dialectical nature of progress, and of the with social progress. Such a view neglected endogamy and exogamy were used to
need for critical assimilation of tradition. the way feudal production-relations in advantage by brahmin lawgivers through
(Needless to add, both positive and neg­ the country remained enmeshed in caste, smritis to raise barriers to unity among the
ative lessons ought to be drawn from and the dangerous and devious ways exploited and oppressed communities, who,
this great upheaval by left historians.) in which it is propped up by the state, in turn, found such barriers “ natural”
This is not to minimise the compelling not to speak of its subversive impact on Likewise, when cattle began to be used
power and significance of this collection revolutionary activities. Even present-day for agriculture, the patriarchy already
of essays. A positive and inspiring feature parliamentary politics is so dominated by emerging in pastoral tribes along with
of these essays is that unlike the dry, caste that parties that originally recog­ private property was also taken over and
scholastic and jargonised prose so com­ nised its role have struck a corrupt bar­ turned into a pillar of the social system.
mon in Indian leftist tracts and writings, gain with it. The left has ignored the But Anuradha Ghandy is on spot in relat­
Anuradha Ghandy’ s Scripting the Change task of tenaciously dealing with it and ing caste to the rise and consolidation
is a book where for the most part sustained finding appropriate solutions to the of class. In addition, she follows Marxist
rigour of logic is animated by passionate problems it poses. This is tricky business historians like Kosambi and Sharma in
commitment and theoretical disputes are as it demands the recognition of its char­ holding that after the decline of trade
relieved of their sense of barrenness by a acter as a long-standing historical forma­ and empire (which was favourable to the
vision of radical authentic democracy. tion amenable to change without slack­ rise of heterodoxies like Buddhism and
It is now more than evident that the ening efforts to fight the oppressions and Jainism) and the growth of relatively
Marxism as propounded by the founders discriminations it daily imposes on the self-sufficient village economy, division
and their eminent successors could lower castes. Caste in India is organic to of labour became rigid, hereditary and
hardly have foreseen the specific forms the feudal relations that imperialism has multitudinous, sanctioned by scriptures
that concentration of capital and their deliberately allowed to survive and sup­ and ritual and occasionally enforced by
political regimes have assumed today, ported. A lot of academic research on the Raj-danda. The monarchical state of
though the general trajectory was pre­ caste seems to deal with it as an ineradi­ the kshatriyas expanded and proliferated
dicted correctly. The unexpected novelties cable given feature of Indian life. by incorporating more and more tribes
and qualitative changes that have oc­ Anuradha Ghandy’ s two essays, “ Caste as shudras and ati-shudras, as brahmins
curred in the environment of different Question in India”and “ The Caste Ques­ through land-grants of kings and nobles
countries and regions, economic, cultural tion Returns” , are illuminating and fairly introduced more advanced techniques
and social, under the general rubric of decisive interventions on the debate on of agrarian production supplemented by
imperialism, feudalism and tribalism, caste from the point of view of historical magic in previously backward areas.
require painstaking study to adapt, modi­ materialism. Though she depends on Even foreign invaders (until the advent
fy and apply familiar Marxist c o n c e p t s . Kosambi, R S Sharma and others for of Muslims) were turned into neo-
(For example the Soviet model of national inputs, she constructs the argument kshatriyas through fake genealogies
development did not succeed in Afghan­ with lapidary clarity. There might be and the domination of two castes was
istan despite the massive fire-power of minor quibbles on details. For example, thus sanctified at the cost of social stag­
the Red Army though it is true certain no one in Assam has heard of a tribe nation. The hierarchical system became
positive steps were taken by the govern­ called “Bhar”having ruled there for six inexorable guaranteeing social peace and
ment in Kabul from above.) This is a book centuries! (p 24) And while it is true that unhindered surplus extraction, steered
where we find such a bold and energetic Kshatriyas in alliance with brahmin by the occasional use of violence by the
initiative, rich in experience and resolute lawgivers kept down lower castes by state. This also led to degradation of
in spirit. It bears the mark of a sincere, force (pp 23, 29), Kosambi has warned many castes along with their professions
and practice-oriented attention to both us not to underestimate the pernicious in social estimation, internalised by
the historical heritage (and burden) of opiate role of religion in this suppression. many of such communities as destiny or
Indian society and the major bourgeois Again, granted that the system became karmaphal But the general picture pre­
intellectual and ideological currents that rigid with the consolidation of feudalism sented is correct and illuminating: the
have emerged in contemporary dis­ (in the sense appropriate for India), its explosion of violence against dalits and
course about society and the state, in the institutions and customs were not con­ adivasis since independence by higher
face of an acute consciousness of loom­ jured out of thin air, but had been trans­ castes and the local administration, with
ing crisis in the given socio-political order. formations of tribal ritual. For example, the government ignoring and under­
the yajna, originally a tribal ritual for com­ playing it, the corporation ruthlessly
Caste and Feudal Relations mon good, became a ritual for confirming evicting them from traditional environ­
Caste had been brushed aside by the the social pre-eminence of brahmin ments where they eked out a precarious
orthodox Indian communists (until they priests and kshatriya rulers, following livelihood, moneylenders and contractors
were jolted into some sense by the tidal the emergence of monarchy. As more sucking their blood, and the lower courts
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and lawyers wrapping up justice into the law, universal education, the impor­ their collaborationist attitude, why
knots, most definitely underscore the tance of science and reason, civil rights, should we not concede the positive if
persistence of Indian feudalism and the percolated to the intelligentsia of this limited role of the upper caste elite
“democratic”state’ s role in defending it. class, though the rulers skimpily and in our social and political history? The
Its current virulence under the influence rather reluctantly implemented them. typical Naxalite attitude to the pioneers
of upper-caste politics is demonstrated The idea was to implant in the minds of of nationalist awakening among the
in a report in The Hindu (6 March 2012) the natives an image of the rulers as a middle class is to express disgust and
that exposed s c / s t students to recurring superior race of benevolent guardians disdain at their contributions. Anuradha
humiliation and discrimination at national destined to rule over them until they Ghandy is more restrained, but she also
institutes of higher education like the All acquired after centuries necessary quali­ blames them for not seeing feudalism as
India Institute of Medical Sciences, and ties for self-rule. Such ideas, though a mortal enemy of the people. Granted
picking up at random current journals meagre and weak, were enough to that they had the gumption to speak for
one comes across a report about forcible generate some social ferment among the the whole nation, while exempting feudal
sterilisation of tribals in a Bharatiya Janata middle class culminating in the birth elements that sat on the bent backs of
Party (bjp) -ruled state keeping them of movements for liberal reform and the working people, they also helped
totally in the dark about the real nature of education such as the Brahmo Samaj in spread the ideas of equal social and
this “treatment”(Outlook, 12March 2012). Bengal and Prarthana Sabha in Bombay political rights. (Consider especially the
The medieval Bhakti movement was a Presidency, by and large among higher role of Congress socialists up to a point
challenge to the rigidities and indigni­ castes. On the other hand, the weak in history.) Anuradha Ghandy rightly
ties of caste, and it was apparently given impetus of capitalism in its imperialist points out that the anti-caste campaign
momentum by rapid urbanisation and role also changed social relations to a little of dalits was often in content a struggle
expansion of trade and commodity pro­ extent and stirred a section of the lower against upper-caste moneylenders and
duction under the sultanate and early castes into an awareness of their wretch­ landlords, but fails to mention the limi­
Moghuls. But for reasons which we edness and an impulse for liberation. tation that its form and ideology imposed
cannot go into in the present review, But the comprador nature of native on it. Actually, as she says, the rise of a
brahminism succeeded in defeating this capital and imperialist support to feu­ dalit middle class, however small, in­
challenge. The intervention of colonial dalism necessarily restricted their vision, creased the stress on identity and diluted
powers at this juncture, and the total and they (like Jotiba Phule, B R Ambedkar the sense of underlying socio-economic
lack of foresight and initiative of a deca­ in Maharashtra and Periyar in south oppression. Subsequently, this develop­
dent feudal state and ruling classes who India) sought the support of British rulers ment encouraged discursive analysts like
often entered into alliances with them against the hated upper castes and reli­ Gyanendra Pandey to concentrate on sup­
to defend themselves against popular gions that the latter promoted. Neither pressed identity as the existential trauma
regional forces prevented the dissolution the upper caste elites nor the pioneers of of dalits. The situation has led to splits in
of feudalism. As Ghandy puts it, imperi­ campaign against the caste system from the movement of depressed classes, pitting
alism found it convenient and profitable the lower castes could recognise the ba­ dalits against Other Backward Classes
to maintain an ailing feudalism as a jun­ sically feudal character of the society. (obcs), and triggering raucous skirmishes
ior ally, which led to f u r t h e r impoverish­ Following the transfer of power half­ among them, and eventually placing the
ment, degradation and wretchedness of hearted land reforms by the Indian rulers various governments in power in a position
the lower (working) castes. (It was not only benefited certain backward castes to strike deals with the fractured leader­
only the East India Company, but the and offered little succour to scheduled ship by offering the bait of reservation.
Privy Council on many occasions of castes and scheduled tribes. But it is The Mandal and anti-Mandal agitations
caste disputes that gravely deliberated surely significant that sincere and intel­ further confused and divided large num­
on caste status in the 20th century with ligent leaders of the dalits such as bers of the educated middle classes,
the help of learned pundits!) B R Ambedkar continued to pin their blurring the sense of the large picture.
hopes on the state and its power to legis­
Imperialism late. Anuradha Ghandy underscores the Towards Annihilation of Caste
and Caste-based Feudalism rise of dalit elites who poured out their Anuradha Ghandy’ s way out of this
Yet the dialectics of imperialism, which wrath against the shackles of caste in labyrinth is that while revolutionaries
was based on expansion and concentra­ burning poetry and prose arousing a must put annihilation of caste on their
tion of capital beyond national boundaries, sense of guilt among the upper caste agenda, the oppressed castes must also
also compelled it to recruit educated elites but stopping short of a revolt be made to realise that this is impossible
assistants for various administrative and against feudalism that still persists, and without an uncompromising fight against
technical tasks from an emerging native eventually getting sucked into the vortex the three enemies of the Indian people -
middle class which it sought to make of bourgeois parliamentary politics. imperialism, feudalism and the compra­
over in its own image through western But if we are to take the anti-caste dor bourgeoisie (p 62). She believes the
education. Ideas such as equality before struggles of dalits seriously, in spite of poorer sections of upper castes and the

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members of the oppressed castes must masses of the doubly burdened lower true democracy is more than evident.
unite in an agrarian revolution that will castes. It is also difficult to accept her po­ One of the most impressive articles in the
give land to the tillers and power to sition that in the transitional period the selection is an erudite and magisterial
local people’ s committees. All caste in­ revisionists among the left are also to be essay “ Philosophical Trends in the
stitutions, caste ideologies and practices strictly ostracised, in view of her admis­ Feminist Movement”(pp 145-209). The
must be fought with a clear demand for sion that the ranks of those fighting for author exposes the theoretical weak­
radical democracy (pp 72-79). While democracy are much broader than the nesses and confusions in feminist move­
correct as a whole it does not address revolutionary left. At least at the grass­ ments originating largely in the ad­
the quandary that dalit movements are roots level a certain level of tolerance and vanced capitalist countries and argues
eventually facing by putting the state mutual understanding has to be arrived convincingly that without a proper under­
run by “ the three enemies of the Indian at with due caution. She agrees that the standing of the role of feudalism and
people”on the seat of the arbitrator. Such Communist Party of India (Marxist) capitalism in the oppression of and dis­
aspirations, however deluded, cannot be [ c p i( m ) ] in theory accepts feudalism as crimination against women these dan­
brushed aside so easily, and there is no an obstacle to social change (p 85), but gers to true democracy cannot be over­
scope for armed struggle here. Her own condemns its mechanical approach to it come. She also suggests that patriarchy
29 prescriptions for this phase of the in practice as more a question of super­ is no class-neutral institution, but had
struggle include support to such demands structure than of the base, thus allow­ been adapted by both feudalism and
as right of entry to temples, real (rather ing the ruling classes to play a vicious capitalism by virtue of their basically
than formal) equality in employment, caste politics. This is not correct, for oppressive and exploitative character.
reservation in educational institutions “ semi-feudalism”cannot be a matter of Failure to acknowledge it had led femi­
and jobs. Of course such demands can superstructure alone. But she is right on nists astray into all kinds of eccentric
conceivably be realised by militant agi­ spot insofar as parliamentary tactics utopianism and compromises, including
tations forcing the state to concede them. prevent the c p i ( m ) from taking on the downright reactionary ideas.
But bourgeois parliamentary methods problem seriously. There is no question of ignoring the
with dilatory rules can dampen such In my opinion, for all it is worth, it revolutionary and profoundly illuminat­
movements and also find time and scope will be better if overground fronts are ing impact of feminism on the democratic
to instigate the poor of upper castes properly built up to work for the party revolutionary movements. Patriarchy has
against lower castes in general! without blind “ revolutionary”tactics but been a constituent of all kinds of class
The quandary compels the author to with dedication, patience and discipline. rule, and it has deprived women of their
make a highly significant concession in It seems that in West Bengal the “ Police deserved role in leading such move­
another important essay “ The Caste Santras Birodhi Andolan Committee”was ments, considerably weakening them
Question Returns” : formed only after police excesses reached (p 147). Further, struggle against it has
It is true that the communists must be the a peak. Such front organisations, not promoted some progress in emancipa­
f o r e m o s t f ig h t e r s f o r d e m o c r a c y a n d d e m o ­ d i r e c t l y c o n t r o l l e d by the party but with tion of women from domestic slavery
cratic revolution... but they need not be, mature workers with a truly democratic and some expansion in wom en’ s social
and are not, the only fighters for democratic outlook, may serve as an ideal platform and political rights and role (pp i47ff).
change (p 83).
for all genuine democrats and widen the The initial intensity (not without some
She also warns: influence of democratic ideas and values. fanaticism) of this movement soon cata­
Today, many of the present-day leaders of Issue-based joint action (e g, corruption, pulted it towards a leftist direction. “But
the dalit movement go on a tirade against illegal violation of civil rights, lumpen after 1975 there was a shift. Systemic
communists but see no harm in associating hooliganism of ruling-class agents) can analysis (of capitalism and of the entire
with such caste-ridden parties as the Con- rescue dalits from identity-sectarianism, social structure) was replaced or recast
gress-I and the b j p (p 81).
inspire class solidarity and strengthen as cultural fem inism ”, which was based
There is therefore no way in which the party’ s links with the people. This on the “ assumption that men and
we can bypass the class nature of the will help keep alive something like women are basically different”(p 153).
present dalit leadership and their con­ “ social conscience”among middle-class Eventually there emerged schools of
sequent opportunism. Identity politics academics and artists. Of course there feminist thought that centred around
fuelled by dogmatic academic research must be strict prohibition against tinker­ biology of reproduction as the sole basis
and celebrations of separate culture also ing with electoral politics. There will of theory and advocated total separation
obstruct class solidarity and strengthen be bad eggs in the basket, but it is of women from men, oblivious of the
the influence of ruling class politics. The not unexpected. historical development of patriarchy in
author virtually admits as much by con­ class societies. Certain schools gave up
demning the situation as a “ quagmire of The Woman Question working for changes in material condi­
sectarianism”(p 91). But she does not W omen’s problems and issues are the tions of social life and confined them­
address the problem of uniting the ex­ next major area of the author’
s concern, selves to analysis of “ representations”
ploited poor of upper castes and the and their relevance for a struggle for and “ symbols”(pp 158-172). The author
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asserts forcefully that concentration on private property, and in failing to see Dream” . No wonder in the early 1990s
patriarchy as a separate system could that oppression of women had begun Omvedt turned into a vocal and embattled
only have a negative impact on revolu­ long before the rise of private property, advocate of globalisation, which has since
tionary democracy as a movement (p 190). with the rise of the first states around heaped untold misery on the working
She also points out that eco-feminism 3000 b c in west Asia. Patriarchy in people of India, through enormous con­
which idealises nature and assimilates her opinion was a product of violence. centration of private property at the
patriarchy to domination of nature by Apparently, Omvedt had depended on expense of the immiserisation of the people
man mystifies the human-nature me­ research by Gerda Lerner in her cate­ and their loss of control over the remain­
tabolism while postmodernism favours gorical assertion. ing “
common”property gifted by nature.
an anarchist attitude to organisation in But from my casual studies in ancient
the struggle of the masses against a economy I have gathered that there was Revolution
highly organised capitalist system and some kind of private property, including and Women’ s Liberation
its state (pp 180-99). land, there even then, and both Egyptian Anuradha Ghandy’ s preferred alternative
Coming to contemporary India she records and the Babylonian Code of is a “revolutionary”wom en’ s movement
reveals how different political parties Hammurabi refer to sale and purchase of as part of a Marxist mobilisation of the
have been using the woman question in land. It had some links with the wide­ broad masses for the overthrow of the
their own ways. The participation of spread prevalence of slavery and slaves ruling classes (together with their state).
large numbers of women in the demoli­ were treated like private and state She calls it a “ Maoist”alternative insofar
tion of the Babri Masjid and in some property, though the capitalist idea of as its strategic ideas are derived from
anti-Muslim pogroms opened the eyes of property is certainly the main strand in Mao’ s adaptation of Marxism to conditions
liberal feminists to the stark fact that modern law which rejects slavery. The of semi-feudal, semi-colonial countries.
“ the sisterhood of women cannot form evidence is somewhat ambiguous as in Women’ s movements are an integral part
the basis of wom en’ s movement for ancient Egypt an upper-class woman of the revolutionary forces, but the strategy
democracy (p 202). Certain liberal leaders could sell and purchase land and own it not only makes women equal participants
of the wom en’ s movement oppose such by herself, and women did have legal with men, but insists that women share
reactionary politics and also aim at identity as individuals, whereas in Sumer, leadership of the revolutionary forces
forming a democratic society through women had no legal identity and owned with men. A broad historical review shows
mass movements. But since they oppose no property of their own. The significant that in peasant movements and working-
the use of force under any circumstance fact is that in Egypt women were already class movements women not only took
as a means of overthrowing class rule, kept out of the public sphere and there­ part with equal ardour alongside men,
their movement is fated to reach a plateau fore had a somewhat lower social status. but showed exemplary courage, heroic
and slowly lose momentum. Significantly, While Engels’pioneering work may be stamina, ability to face and overcome
this isolates them from militant mass supplemented by findings of latest risks in such struggles. Such evidence of
movements in different parts of India. research, it cannot be claimed emphati­ the capabilities counted for nothing and
Anuradha Ghandy deals in detail with cally that systematic violence rather was allowed to fade from public memory
the contribution of Gail Omvedt who has than the rise of private property pro­ (pp 2i4ff). It was only during the truly
studied not only t h e woman q u e s t i o n i n duced patriarchy, which therefore existed revolutionary uprisings of Telangana,
the Indian context but also the mass in some kind of socio-economic vacuum. Naxalbari and Srikakulam and the armed
movements of dalits and other op­ Violence cannot be the basis of a system, struggle of adivasis under revolutionary
pressed classes in some depth (pp 203ff). only its instrument. If it is to be sus­ guidance that women rose to leadership
Of course it may be said in passing that if tained it must have a socio-economic equally with men. Along with the general
communist orthodoxy in India is much foundation. As Anuradha Ghandy aptly aim of overthrowing the “ three enemies
too influenced by the feudal ambience of retorts: “ The fact of the matter is that of the Indian people”there must be in
society in their neglect of such problems Omvedt emphasises the role of violence the movement specific demands for
(there was some attempt to rectify this in the subjugation of women, but she is equal wages, right to take part in modem
in the 1956 Congress at Palghat), Gail unable to answer the question that arises industrial production and emancipation
Om vedt’ s American background may from it - violence for what?”(p 207). from patriarchal custom for fulfilling
also have inclined her unconsciously No wonder Omvedt has no revolution­ gender justice (pp 2i3ff).
towards pluralism. But radical demo­ ary perspective but turns out to be a Ghandy holds c p i ’s change from a revo­
crats owe many insights to her pioneer­ reformist (p 206). The emphasis on lutionary to a parliamentary line, and
ing work. Having studied the works of “ violence”in the abstract goes along later the c p i ( m ) ’s descent into the same
Sharad Joshi, Sharad Patil and Vandana with a vision of a democratic state where morass, responsible for dilution of both
Shiva, she came to the conclusion that equal rights and equal opportunities mass struggles and wom en’ s movements.
“ traditional”communists had erred in prevail, irrespective of gender and class. The reformist and collaborationist outlook
concentrating on economic causes like Such is the idealised picture of bourgeois had led to a weakening of popular revo­
the production of surplus and rise of democracy, epitomised by the ‘ American lutionary forces and in consequence to a

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series of demoralising defeats (pp 303-06). bear witness to that. “ Cotton ...the Best percolate in from time to time, the
The conclusion to the essay “ Working Flower!...?”is a brilliant specimen where parliamentary illusion has entrenched
Class Women: Making the Invisible she combines political economy, socio­ itself, and the tradition of armed revolt
Visible”(pp 308-10) formulates specific logical understanding and history in a is strong only among certain sections.
demands, and does not end in empty typical Marxist synthesis. She deals The shudras over a vast extent of land
revolutionary rhetoric. with issues of environment in “ Incham- had been deprived of the right to bear
“Fascism, Fundamentalism and Patri­ palli-Bhopalpatnam Revisited”not only arms as early as the Mauryan Empire,
archy” is another illuminating article by laying bare the corporate-government and the ceaseless inculcation of the doc­
where Ghandy exposes sharply and force­ allian ce’ s brutal callousness to the lives trine of ahimsa for centuries by various
fully the links between subjugation of and livelihood of the common people, religious sects has resulted in a fatalist
women, religious fundamentalism and but also cautions against the romantic mentality and pacifist culture. Only among
fascist reaction. While in developed capi­ idealisation of the pre-industrial society castes marginally touched by the brah-
talism fascism need not find a prop in as a peaceful, serene conflict-free way minical doctrines the martial tradition
religion, in countries like India where of life, reminding us of the hunger, survives dormant. And the machinations
religion still has a significant hold on the oppression and human degradation to of upper castes and classes are constant
people’ s mind, it is bound to seek a mass which it had subjected the people and and insidious in the countryside. The
base through religious symbolism. (The rejecting it as a viable alternative to introduction of the panchayat system in
decline of capitalism in its monopoly stage capitalist “ development” . rural areas has spread the politics of
usually arouses both revolutionary con­ Small magazines, published not by corruption into the very bases of Indian
sciousness and a throwback to religion.) fortune-hunters in the literary wasteland, society. A firm commitment to armed
While she lays bare the reactionary ten­ but by people committed to spreading struggle can be achieved only by pain­
dencies of both the Hindu and Christian the message of social transformation, staking, strenuous and prolonged political
fundamentalists, she regrettably finds also draw her attention in a brief but and cultural work.
something to praise in Islamic fundamen­ substantial essay. Legal questions regard­ Such a notion finds a ready and fertile
talism for its stern and stubborn opposi­ ing labour laws and assaults on the dig­ seedbed among tribals or semi-tribal
tion to imperialism. But there is little nity and status of women are also studied castes. Among them there is no customary
hope for democracy in it, and Ghandy with intent and concern and the inade­ bar against resort to arms, nor a tradition
is underestimating the weight of ideo­ quacies, deliberate ambiguities and sheer of non-violence. But tribal traditions,
logy in such forms of resistance. Actually hypocrisy of measures in the bourgeois however heroic, have no perspective of
Islamic fundamentalists hope to restore regime are analysed with acute common far-sighted strategies, meticulous plan­
feudalism, and if left alone, may coexist sense in another essay. She also suggests ning, patient implementation and no
with imperialism. Nor must we forget improvements and amendments that trained mentality that can bear frustra­
imperialism’ s role in funding and promot­ are relevant, perhaps for mobilising re­ tion and setbacks. Further, there is greater
ing Islamic fundamentalism as an anti­ s i s t a n c e r a t h e r than h o p i n g that the danger of spontaneous violent reactions
dote to communism. I think evidence can bourgeoisie will really concede them. that are unlikely to be of much help in the
be found in an unlikely source, Naipaul’ s There are also discussions on the origin long run - witness the death sentences
anti-Islamic reportage, notwithstanding and fate of different movements. But I imposed by “ people’ s courts”that raise
his defence of imperialism. He found the am afraid I do not find in such chronicle worries about rash adventurism.
most virulent spokesmen of Islamic fun­ of events much more than an irritated This is where I have to pause, for
damentalism in American campuses! rejection of all attempts to evade the practice alone can help form firm judg­
revolutionary alternative. ment here. From first-hand accounts of
With ‘
New Democracy’ Gandhians like Himanshu Kumar about
The range of Ghandy’ s passionate inter­ The Indian Revolutionary Path the reckless and lawless police atrocities
est is not confined to the caste and wom­ Finally the reviewer has to face the core among helpless tribals (not to speak about
an questions but includes everything question: Is protracted armed struggle the Salwa Judum and the Special Police
that has got something to do with the the only and correct path of the Indian Officers) that have no sanction in law or
democratic revolution of her vision. She revolution? As already suggested at the civilised administration, in situations
realises that revolution is an all-embracing outset, the vast majority of Chinese where the police are aggressors, this
process, though she does not mention peasants could not expect relief from reviewer realises the futility of a dog­
Gramsci, while warning us that the dif­ any quarter from the ruthless feudal matic adherence to non-violence, but the
ferent strands may not have the same exploitation and they were no strangers doctrine of protracted war faces many
ends in view or work at the same tempo. to armed revolt. On the other hand, serious obstacles.
On the other hand if the revolutionary among the majority of Indian peasants
process gets going its eventual culmi­ dribbles of state charity (however stu­
Hiren Gohain (hiren.gohain@ gmail.com) is a
nation in radical democracy is inevit­ pendous the plunder by agents of the distinguished Assamese literary and
able. Her fugitive essays in journalism state and traders and moneylenders) do social critic.

40 MAY 5, 2012 VOL x l v i i n o 18 0221 Economic & Political w e e k l y

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Dealing with a Deteriorating improve them including the sugges­

tions for 10 census studies and about

Statistical Base 60 types of sample studies.3

Alas, except for the initial one-shot
effort to setting up the n s c in 2005 albeit
as a non-statutory and non-permanent
S L SHETTY body and the provision of staff incen­
tives in the form of upgradation of posts

s official statistical collection ndia’s pride in being a nation with a and promotions for the statistical cadre,
machinery has been in decline for strong base in statistics is getting many substantive recommendations of
increasingly punctured. Now for the n s c concerning improvements in
more than two decades. The
about three decades, particularly after the system of data collection and the
National Statistical Commission T N Srinivasan exposed the frailty of the quality of data themselves remain to be
was supposed to reverse the Indian statistical system to the inter­ implemented. The n s c has shown some
decline, but the n s c has had to national audience in a seminal paper in results: it has got the Indian Statistics
the Journal of Development Economics Act 2008 enacted, and adopted the
suffer the governm ent’
(1994), there have been a series of stud­ Collection of Statistics Rules 2011; it has
indifference. It is time the users of ies expressing concern about the deteri­ advanced fairly substantially in defining
information, the academic orating quality of the Indian database in the nature of “ core statistics” ; it has
community in particular, wake up general. After surveying the quality of drafted a national policy on official sta­
data availability for different sectors of tistics as also on the National Statistical
to the fall in quality of Indian
India, Srinivasan (1994:23-24) had then Code; and has just got published a com­
data. As a first step, academics characterised the situation as “ disturbing” . mittee report which has looked into leg­
and public intellectuals should He wrote: islative measures on statistical matters.
come together to form an India It has also completed a major report on
The disturbing conclusion emerging from
the discussion in the previous sections is unorganised sectors statistics. While all
Database Forum which could
that the situation with respect to the qual­ of these are very useful for laying a firm
discuss and highlight what ails ity, coverage, inter-temporal and interna­ legal and legislative basis for data gather­
the statistical system and then tional comparability of published data on ing and dissemination, the substantive
vital aspects of the development process is questions of improvement in data collec­
pressure the government to still abysmal in spite of decades of efforts at
tion and data quality in different areas
fix what was once the envy of improvements (pp 23-24).
remains to be addressed.
the world but is now among It is widely known that the system
the weakest. developed further cracks during the 1990s A Low Priority
after liberalisation, how the problems All indications suggest that collection of
attracted attention in non-official as accurate statistics has a low priority in
well as official quarters,1and how these policymaking today and the intellectual
finally culminated in the appointment community which studies India’ s eco­
of the National Statistical Commission nomic problems also shows no concern
( n s c ) in January 2000. Even though it for the deteriorating quality of the
faced some critical comments including Indian database, which they otherwise
that from T N Srinivasan himself (2003),2 studiously use for economic analysis or
The author wishes to thank K Kanagasabapathy there is no gainsaying that the report of for various econometric exercises. The
for his comments on an earlier version of this the n s c (2002) was a path-breaking, latter then lead to loaded judgments
article. He also wishes to thank YV Reddy for historical document geared to improve that are based on a weak statistical
encouraging him to pursue studies related the Indian statistical system quite foundation! A telling example of the
to the theme of deterioration in the data
significantly. The report was unique in scant regard for quality economic and
standards and what could be done to arrest
the decline. This article is a revised version of the sense that never in the past had there social statistics is to be found in the
a presentation made at a recent seminar of the been such a comprehensive study cover­ fact that India has no statistics on the
Indian Association for Research in National ing all aspects of the statistical system - pattern of income distribution but
Income and Wealth held in Puducherry during the institutional and administrative struc­ scholars in a nonchalant manner use
15-16 March 2012.
tures, the extent of data gaps in every household expenditure distribution as
S L Shetty (slshetty@vsnl.com ) is at the ministry and department of the Govern­ a surrogate for income distribution.
EPW Research Foundation.
ment of India and recommendations to What colossal errors of judgment!

Economic & Political w e e k l y EBSSB m a y 5, 2012 v o l x l v i i n o 18 41

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All use subject to https://about.jstor.org/terms
Undoubtedly, the malaise in India’ s robust because it follows the u n System up-to-date information on the number and
statistical system is deep-rooted. A cur­ of National Accounts (u n -s n a ) is facing profiles of non-governmental organisa­
sory survey suggests how data problems flaws because of the defects in its com­ tions operating in the microfinance (mFi)
and data weaknesses are widespread ponents. Apart from poor industrial sta­ sector. Similarly, there is no reliable data
and serious. These relate not only to the tistics, many components of saving and on non-banking financial companies
informal sectors of the economy where investment estimates are admittedly ( n b f c s ) and their operations. Rural co­

the statistical problems are indeed daunt­ faulty, partly because of the defects in operative sector credit and deposits data
ing, but also to each and every segment estimates of corporate savings and invest­ are four to five years old. For over 25
of the organised sector. Corporate sector ment and to a certain extent because of years now the Central Statistical Office
statistics, industrial statistics compris­ the weak estimates of rural household (cso) has been assuming one-third of
ing, in particular, the index of industrial saving and capital formation due to de­ the gross/net value added in the organ­
production (up) and the Annual Survey of terioration in the sample sizes of the ised financial sector as the correspond­
Industries (a s i), and the macroeconomic All-India Debt and Investment Surveys ing estimate for the unorganised non­
data on the capital market - are all in a (a id is ). We do not have any dependable banking financial enterprises (money­
shambles. Studies show that u p and a s i estimates of investment in agriculture or lenders, indigenous bankers, capital
grossly underestimate both the level and any other major sector of the economy. market players, etc).
the annual growth of the manufacturing Many quantity and price index number The Government of India has ceased
sector in India. The extremely poor series are dated; and numerous com po­ to publish data on Income-Tax Revenue
database on the small-scale sector (or nents of the service sector estimates Statistics after 1999-2000, thus depriv­
now the medium and small and micro­ remain guesstimates. ing us of opportunities to undertake
enterprises - the m sm e) is widely known The most innovative method of con­ income distribution studies on urban
despite periodic nationwide surveys. They ducting an economic census of enterprises households. And, finally, despite repeat­
are not covered in any case in the all- and their follow-up surveys has failed to ed suggestions, no integrated survey has
India up. The National Accounts Statistics produce the desired results such as the been done on household income, expen­
(n a s ) which is otherwise technically creation of a business register. There is no diture and savings so that instead of


IBS 6th International Conference on Decision Sciences for Performance Excellence
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IBS Business School, Hyderabad
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42 m ay 5, 2012 v o l x l v ii n o 18 DB 53 Economic & Political weekly

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using consumption distribution as a question of the statistics profession be­ Survey Office ( n s s o ) , the facilities for
poor substitute, we actually have in­ ing made more attractive intellectually. training of staff are found to be grossly
come distribution data. Fifth, the drawbacks in the statistical inadequate. A recent World Bank report,
system as well as the unattractive nature “Modernisation of India’ s Statistical Sys­
What Ails the Statistical System? of the profession in general, have also tem ”, had placed the additional staff re­
The answer to this question may lead us arisen because there is a serious flaw in quirements for the systems at central
to the complex issues of governance and the organisational set-up of the statistical and state levels at about 6,000. The in­
is likely to attract controversy. Neverthe­ system. The n s c was to be a statutory troduction of information technology
less, there are certain drawbacks of the body with permanent members and may have reduced that requirement, but
system which stand out. First, the subject with executive and financial autonomy, the fact remains that the staff size, its
of statistics is not receiving the attention but the government chose to appoint an quality and its training requirements
and importance it deserves in the hands n s c with part-time chairman and mem­ have all been affected by a defective
of public administration. There are many bers and did not make the body a statu­ staff policy in the government. Various
departments of the government which tory one. As an initial effort, this was no research papers have brought out how
do not appear to consider quality data as doubt commendable, but no effort has the sample sizes have been drastically
an essential need for policy. They are since been made to place the n s c on a reduced in diverse field surveys because
happy with half-baked statistics and statutory and permanent footing. The of the inadequacy of the organisational
they show no awareness of the draw­ purity and reliability of statistics can be strength at the n s s o or at the c s o level.
backs of this data. Even the issues of ensured only when the system is gov­ As a result, both sample and non­
slackness in governance seem to be get­ erned by an enduring institutional struc­ samples errors are feared to be high.
ting reflected in embarrassing statistical ture and is conferred independence and Even statistical units in individual de­
errors of a severe nature. autonomy. Due to the absence of such partments are deprived of adequate staff
Second, the root of the malaise lies in autonomy, we see the sorry spectacle of strength. Institutions like the r b i , which
the loss of development perspectives very many statistical units being treated were involved in such surveys in the
after economic liberalisation began in as appendages to the ministries and de­ past, have taken a back seat and hence
the 1990s. The flow of data as it existed partments of the Government of India. the required sample sizes have dwindled
in the controlled regime collapsed after There is a strong case for making the sta­ in relevant surveys.
liberalisation, but the reformers showed tistical units in different departments au­ The drawbacks of the system are at­
no enthusiasm for substituting the earlier tonomous entities that primarily report tributable to both the neglect by the gov­
controlled arrangement by a method to the n s c . Also, the n s c has a major role ernment and the academic community.
befitting the liberalised environment. of guiding, and collaborating with, the There are very few studies focusing on
Year after year there has been only a state statistical bureaux. The absence of a data adequacy and quality in India.
steady deterioration. statutory commission has truly hindered There is yet another flaw arising from
Third, one of the key components of improvements of statistics in the states the neglect, essentially by the academic
reform policy has been fiscal prudence based on the recommendations contained community. This is an absence of social
and consolidation, and as a consequence in the Rangarajan Commission Report audit of the data put out by public agencies
the worst to be affected has been the (2001). In this respect, the two new claiming success in public programmes.
social infrastructure. Statistics fell in schemes, namely, the IMF-supported Even various professional organisations
this category and there have been steep India Statistical Strengthening Project do not, except for some rare exceptions,
reductions in staff strength in the gov­ ( i s s p ) and the Thirteenth Finance Com­ address database problems in their semi­
ernm ent’ s statistical establishments. In mission grant of Rs 1 crore per district nar programmes. Therefore, a stage has
the mean time, the complexities in m o­ for strengthening the district statistical come for the intellectual community to
bilising statistics in diverse fields have system, should go a long way in effect­ come together and form an India Data­
vastly increased and the training re­ ing an improvement, but this is also con­ base Forum ( i d f ) , on the lines of the
quirements have grown manifold. ditional upon the central system being International Data Forum.4
Fourth, there has arisen a more fun­ able to provide training and other guid­ The data issues raised at the inter­
damental issue of the loss of pride in ance to the state bodies to absorb the re­ national level are, of course, different
statistics as a profession, particularly in sources so provided. from those we face in India, as enumer­
public administration and public institu­ Finally, India had acquired a com­ ated above. The International Data
tions like the Reserve Bank of India ( r b i) . mendable reputation for its sample sur­ Forum “ aims to facilitate and coordinate
It is found that the government and the veys, but of late the survey units in the international production and sharing of
institutions find it difficult to attract suf­ system have suffered a serious blow data for research in the social scien ces” .
ficient numbers of candidates and fill from a paucity of staff and the conse­ However, one of the guiding principles
staff positions created after the regular quential dependence on part-time field set out for that forum, namely, to “ act as
attrition. Therefore, it is not a question personnel. With a multiplicity of field a catalytic and visionary organisation to
of want of resources alone; it is also a surveys expected of the National Sample identify gaps in research data needs and to

Economic & Political weekly DBS9 m a y 5, 2012 v o l XLVII NO 18 43

T h i s c o n t e n t d o w n l o a d e d f r o m o n T u e , 06 N o v 2018 23 :58:09 U T C

A l l u s e s u b j e c t t o h ttp s:/ / a b o u t.jsto r.o rg / term s

p rom ote a r e s e a r c h - d r iv e n d a ta a g e n d a ” In the same vein, another important w a s th a t o f S M V id w a n s (2002a, b, c), h im s e lf

a m e m b e r o f th e N a tio n a l S ta tistic a l C o m m is ­
(w w w . in t e r n a t io n a ld a ta fo r u m . o r g ), e s t a b ­ flaw in all programmes intended for the sion , in t h r e e s e r ia lis e d a r tic le s in EPW. H e
lis h e s s o m e s im il a r i t y w it h t h e o b je c t i v e s informal sectors and the poor concerns th e n w r o t e : “ A b o u t t h e s y s t e m itself, in th e b e ­
g in n in g o f th e 1980s, I h a d n o t e d th e sta rt o f its
p r o p o u n d e d in t h is n o t e f o r t h e i d f . the absence of regular social audit of the d e te r io r a tio n a n d p o in t e d o u t t o th e t o p c e n tr a l
data put out by public agencies claiming g o v e r n m e n t sta t is t ic ia n s w h e r e it w a s h e a d in g .

What Will the IDF Do? success in public programmes. Very often
E v en then, w h e n r e a lit y p r o g r e s s iv e ly u n fo ld e d
b e fo r e m e d u r in g t h e c o m m is s io n ’ s w ork , I w a s
The tasks of the proposed i d f will be the nature and quality of data published u n p r e p a r e d fo r th e s o r r y sta te o f t h e s y s te m
a n d th e w e a k e n in g o f its in stitu tion s, th e s u ­
twofold; promoting research and advo­ are also inadequate to make a critical p e r fic ia l p e r c e p t io n o f t h e m a n a g e r s o f th e s y s ­
cacy. It must be made clear at the outset assessment of the social programmes in t e m o f th e m a la d ie s a fflic t in g th e s y s te m and,
m o r e w o r ry in g ly , th e in a p p ro p ria te , a n d p e r­
that the intention here is not to create an question. Demands for such independ­ h a p s h a rm fu l, p r e s c r ip t io n s t h e y in te n d e d to
institution for producing data on any ent social audits of public programmes a d m in is t e r t o it”(2002a: 3819).
3 T h e e a r lie r t w o s tu d ie s o f 1970 a n d 1980 w e r e
sector of the economy. That is the exclu­ and the authenticity of statistics on the sm a ll- sc a le e ffo r t s b y s m a lle r c o m m itt e e s
sive job of the government. Against the programmes can be made in research ( M in istry o f F in a n ce 1970 a n d D e p a r tm e n t o f
S ta tistic s 1980). T h e s e r ie s o f e ffo r t s m a d e b y
backdrop of data issues posed above, con­ articles or otherwise by the id f .
in d iv id u a l s c h o la r s a s s o c ia t e d w ith p r o fe s s io n ­
certed actions are called for on two fronts. To correct the present malady, the i d f a l a s s o c ia t io n s lik e th e In d ia n E c o n o m e tr ic s
S o c ie ty a n d th e In d ia n A sso c ia tio n fo r R esea rch
First, the i d f should promote research should galvanise the academic com­ in N a tio n a l I n c o m e a n d W e a lth (IA R N IW ) a re
on the Indian database issues. Though munity to take interest in this subject, s p o ra d ic , p ie c e m e a l attem p ts.
4 I p r o fu s e ly th a n k R B B a rm a n fo r p r o v id in g m e
these issues have gained importance in a hold regular seminars, invite papers for
w ith a c o p y o f t h e b a c k g r o u n d p a p e r o n th e
variety of ways, they are not being ad­ workshops and conferences and produce In te rn a tio n a l D a ta F o ru m (2008) (A P r o p o s a l
dressed by professional bodies at all, or if P r e p a r e d b y t h e F o u n d in g C o m m it t e e , Ju n e
a journal focusing on varied database
2008; R e v is e d N o v e m b e r 2008). B a rm a n w a s
they are addressed, they are done as tail- issues. The universities and academic a m e m b e r o f t h e F o u n d in g C o m m it t e e o f th a t
F oru m .
end subjects. institutions should be goaded to introduce
Second, there is the need, and ample credit courses on the Indian statistical
scope, for advocacy work in matters system and database issues at the MA/ REFERENCES_______________________________
relating to database issues. The statisti­ MPhil and doctorate courses. In te rn a tio n a l D a ta F o ru m (2008): A P r o p o s a l to
E sta b lish a N e w S t ru ct u re t o P r o m o te K n o w ­
cal system is receiving stepmotherly Thus, the five key functions envisaged le d g e ab ou t, A c c e s s t o a n d t h e D e v e lo p m e n t o f
treatment at the hands of the public ad­ for the i d f are: (i) encouraging and pro­ D a ta fo r S o c ia l S c ie n t ific R e s e a r c h ( P rep a red
b y th e F o u n d in g C o m m it t e e , J u n e 2008: R e ­
ministration. While the statistical cadre moting research on the extent and qual­ v is e d N o v e m b e r 2008), w w w .in te r n a tio n a ld a -
working in the government as well as in ity of statistics in different areas; (ii) ac­ ta fo r u m . o r g
S rin ivasan , T N (1994): “D a ta B a se fo r D e v e lo p ­
the statistical system in particular have tivism for strengthening the statistical
, Journal o f Deve­
m e n t A n aly sis: A n O v e r v ie w ”
a strong case for better attention from system including of the n s c and can­ lopment Economics, E lsevier, V ol 44(1), p p 3-27,
the government, they themselves cannot vassing genuine autonomy for this body;
- (2003): “In d ia ’ s S ta tis tic a l S y stem : C r itiq u in g
take up such issues. They cannot, for (iii) seeking better focus on distribu­ t h e R e p o r t o f t h e N a tio n a l S ta tis tic a l C o m m is ­
instance, deal with the problem of tional issues in statistics gathering and sion” ,E c o n o m ic & P o litica l Weekly, Vol XXXVIII,
N o 4,25 January.
strengthening the statistical system, in­ dissemination while making public in­ V id w a n s, S M (2002a): “In d ia n S ta tistic a l S y ste m
cluding the conferment of statutory sta­ formation and data policies on inclusive at t h e C r o s s r o a d s I: O m in o u s C lo u d s o f
, Economic & Political Weekly,
C e n t r a lis a t io n ”
tus on n s c and making it an autonomous growth as well as on the scheme of V ol 37, N o s 37 a n d 39,14 S ep tem b er.
and independent institution. Likewise, financial inclusion; (iv) Demanding reg­ - (2002b): “In d ia n S ta tis tic a l S y st e m at th e
C r o s s r o a d s II: E x p a n s io n o f N a tio n a l S a m p le
there is a strong case for making statisti­ ular social audit of the data put out by S u rv ey ” , Economic & Political Weekly, V ol 37,
cal units in different departments and public agencies, particularly in regard to N o 38,21 S ep tem b er.
- (2002c): “In d ia n S t a t is t ic a l S y s t e m at th e
units autonomous and primarily report­ claims of success in public programmes;
C r o s s r o a d s III: M o d e r n is a t io n P r o je c t -
ing to the n s c . India is one of the few and (v) encouraging universities to in­ , Economic &
C e n t r a lis a t io n P a r E x c e lle n c e ! ”
Political Weekly, V ol 37, N o 39,28 S e p te m b e r .
countries possessing no data on income troduce credit courses on different types
distribution. Academicians and inter­ of data for their postgraduate, MPhil
national organisations readily accept and PhD programmes. EPW Index
household consumption expenditure An author-title index for EPW has been
distribution as a surrogate for income prepared for the years from 1968 to 2010.
n o t e s ________________________________________ The PDFs of the Index have been uploaded,
distribution. Demands for undertaking
1 S u ch c o n c e r n s a ttra cte d th e a tte n tio n o f th e year-wise, on the EPW web site. Visitors can
such nation-wide integrated surveys on W o r ld Bank, w h ic h c h o s e t o fu n d a p r o je c t download the Index for all the years from the
income, expenditure and savings have c a lle d “M o d e r n is a t io n o f th e S ta tistic a l S y ste m
site. (The Index for a few years is yet to be
in In d ia ” d u r in g 1998 but, as it w a s t o o
to be done in a concerted manner, and a m b itio u s r e q u ir in g “h ig h c o s t ” a n d m a s s iv e prepared and will be uploaded when ready.)
i d f can canvass for it in a systematic m a n p o w e r w ith a n a d d it io n a l s t a ff o f 6,000,
EPW would like to acknowledge the help of
t h e p r o je c t w a s d r o p p e d in its o r ig in a l form .
way. Likewise, there is the need for B e g in n in g m u c h e a r lie r in 1972, th e In d ia n the staff of the library of the Indira Gandhi
promoting research on green gross E c o n o m e t r ic s S o c ie t y h a d h e ld s e v e n s e m in a r s Institute for Development Research, Mumbai,
o n th e Data Base o f the Indian Economy d u r in g in preparing the index under a project
domestic product and generally on 1972 t o 1997.
supported by the RD Tata Trust.
environmental issues. 2 O n e o f th e m o s t s t u d ie d a n d e x t e n s iv e re v ie w s

44 m ay 5, 2012 v o l x l v i i n o 18 Q323 Economic & Political w e e k ly

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On the 'Failure of Bt Cotton'

Analysing a Decade of Experience


Given that the controversy over success and failure of Bt 1 The Puzzle

technology still exists, this paper discusses the available ntense controversy surrounds transgenic crops in much of
the world. Results from India's first genetically engineered
field studies that have addressed agro-economic
crop - Bt cotton - have figured prominently in global de­
questions of Bt cotton cultivation in India. Since a bates about agricultural biotechnology. Disputes about the ef­
meta-analysis of studies can give only partial fects of Bt cotton on production figured into controversy sur­
conclusions, owing to differences across study rounding India's second transgenic crop: Bt brinjal (Solanum
melongena aubergine, eggplant}. Politics and policy towards
methodologies and coverage, this paper takes a
agricultural biotechnology in India for the future will be con­
different strategy, i e, looking not simply at differences ditioned by the success or failure of Bt cotton. One prominent
between Bt farms and non-Bt farms, but at the claim is that Bt cotton has caused “ crop failures and mass
experience of farmers before growing Bt and after su icides”.1At the end of a decade of cultivation of this crop in
India, an assessment of this claim seems timely.
switching to Bt. It also examines the more general
Much of the controversy around biotechnology addresses
problem of comparing field studies and suggests ways ethical arguments, or concerns for multinational control, human
to use farmer behaviour as a proxy for settling different health, or environmental effects.2Many of these questions resist
interpretations of agro-economic effects of the new empirical testing; some are matters of individual preferences.
In all technological change, uncertainty is inevitable and dif­
technology. The study explains why there has been so
ferent individuals will have different tolerance for uncertainty.
much controversy given virtually universal adoption of Nevertheless, the claim that Bt cotton has caused crop failures
Bt technology in cotton and concludes that in the battle and mass suicides belongs to a different category; it is an
of numbers around Bt cotton, those of the farmers have empirical claim about the actual state of affairs on the ground.
In assessing the empirics of Bt cotton, there are two nested
been curiously missing.
but separable questions, one agronomic, one economic. The
first Bt cotton hybrids in India contained a transgene from a
common soil bacterium, Bacillus thuringiensis - abbreviated
Bt. It conferred a trait: insect resistance. Has this particular
transgene incorporated into cotton cultivars done what genetic
engineering designed it to do? If so, does agronomic perfor­
mance of the new crop induced by the transgene increase net
income for the farmer sufficiently to cover higher costs of
production, if production costs are higher? For example, in
Bt crops, the claim of proponents is that seeds will cost more,
but pesticide costs will decline. Is this true? What is the net
effect on farmer incomes?
The charge that “ Bt cotton has failed”originates from a
loose coalition of non-governmental organisations (ngos),
often connected to transnational advocacy networks. Their
narrative explicitly claims that (a) Bt technology lowers rather
than raises on-farm yields and (b) Bt adoption drives farmers
into debt because of high seed prices and agronomic failure,
often resulting in catastrophe: sale of body parts and suicide
Ronald J Herring (ronherring@ cornell.edu ) teaches at Cornell University, (Herring 2006; Shiva 2006). Proponents of transgenic cotton
Ithaca, New York. N Chandrasekhara Rao (raonch@gmail.com) is at the argue that evidence from the field shows the same success in In­
Centre for Economic and Social Studies, Hyderabad.
dia that is apparent in China and other countries (James 2002).

Economic & Political weekly DDQ may 5, 2012 v o l x l v ii n o 18 45

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This question is consequential. If critics are right, the large These studies have become increasingly isolated over time,
sums invested in biotechnology as a project of the develop­ though they persist in the media and in global advocacy
mental state promise only further misery for India’ s farmers. If networks. Recent studies have converged around rejection of
proponents are right, technological change offers one of the the failure narrative and affirmation of the success story. We
few viable paths out of the classic poverty trap in agriculture - do not know of any peer-reviewed study that confirms failure
low yields, low income, low investment, resulting in low yields of the Bt technology in cotton, but doubts remain prominent in
and on to another cycle. On sustainability grounds, Bt technol­ civil society.
ogy also claims to offer some relief from unsustainable pres­ The standard practice in the face of conflicting results is to
sures on rural ecosystems caused by the pesticide treadmill. conduct a meta-analysis of all studies. Not all studies are com­
How does one settle this dispute? parable as some measure only a subset of the variables that
After this brief introduction, this paper discusses in Section 2 others measure. Nevertheless, one meta-analysis of studies
existing field studies addressing agro-economic questions of relevant to the reported connection between farmer suicides
Bt cotton cultivation in India. Because a meta-analysis of and Bt cotton did attempt a systematic comparison (Gruere
studies can give only partial conclusions, owing to differences et al 2008). Sponsored by International Food Policy Research
across study methodologies and coverage, we discuss in Institute, this analysis covered both peer-reviewed and non­
Section 3 data derived from a different strategy: looking not peer-reviewed published field studies. It found that across 22
simply at differences between Bt farms and non-Bt farms, but field studies available for comparison, covering 12,931 farming
at the experience of farmers before growing Bt and after plots, net returns from Bt cotton farming increased by 53.5%
switching to Bt. Section 4 examines the more general problem as a weighted average in comparison with non-Bt fields. The
of comparing field studies and suggests ways to use farmer be­ reasons for this increase in income were as predicted: a
haviour as a proxy for settling different interpretations of weighted average of 34.4% decrease in pesticide use (on 11,136
agro-economic effects of the new technology. In Section 5 we plots), leading to a 45.8% decrease in pesticide cost and a
return to consider possible mechanisms for the origins of dis­ 39.1% increase in yields. As critics argued, total costs of culti­
crepancies in field reports of success and failure at the level of vation in the studies increased - by an average 15.0% - but in­
the farm. Section 6 looks at the aggregate picture: what can creased costs were more than compensated by better yields,
we say about Bt cotton in India’ s agricultural performance? In resulting in higher net incomes for farmers.5
Section 7, the article returns to explain why there has been so A meta-analysis is decisive only if there is broad agreement
much controversy given virtually universal adoption of Bt on the components of the field of studies being surveyed. Some
technology in cotton for reasons explored in previous sections. studies by local groups are not generally available, nor are
We conclude that in the battle of numbers around Bt cotton, sampling techniques always specified, nor yield measurement.
those of farmers have been curiously missing. Studies finding crop failure were criticised in the scientific
community for lacking rigour and transparency. Opponents of
2 Field Studies Bt cotton rejected studies reporting positive agronomic effects
Normal science takes a hypothesis, collects appropriate data as biased by corporate or state sponsorship. Peer review itself
and tests the proposition. Measuring inputs and yields in agri­ as a standard for establishing integrity of findings was rejected
culture is not rocket science; the hypothesis of Bt cotton failure by some opponents of Bt cotton. There were regional differ­
should be easy to test. But that has not proved to be the case. ences as well. Reports of failure, including the most detailed
Field studies are the starting point, but suffer from lack of (Qayum and Sakkhari 2005), often came from Andhra
comparability: what village, what farmers, what cultivars, Pradesh. No studies known to us reported failure in Gujarat,
what controls, what season? There is no space here to discuss where the making of transgenic cotton hybrids became a rural
all studies of Bt cotton, but some generalisations can be noted. cottage industry - albeit an illegal one (Gupta and Chandak
Formal-sector studies (industry, government) were in the 2005; Herring 2007b).
beginning most likely to find strongly positive agro-economic Problems of comparability across studies led us to employ
effects. These studies were reported in Parliament from two alternative methods. First, to answer critiques that cross-
officially sanctioned field trials of Bt cotton and offered confir­ sectional studies fail to control for critical variables - soil
mation of the standard narrative of Bt cotton advocates: har­ quality, farmer skill, education and connections, class, irriga­
vested yields increased because of superior bollworm control; tion, etc, - we present data from a before-and-after field study
costs of bollworm control went down; therefore, net incomes in areas where reports of failure have been prominent: Andhra
went up. These results led to an official approval of Bt cotton Pradesh. The before-and-after study follows the same farmers
for commercial release in March 2002. Academic studies were in the same fields; the only change in cotton farming is the
more nuanced but largely confirmed this story; in general, for­ adoption of Bt hybrids by those farmers. These findings con­
mal-institutional analyses reinforced the position of the firm that the cross-sectional studies in the same areas - Bt vs
Department of Biotechnology.2 3The studies conducted by n g o s non-Bt farms - are not biased by hard-to-measure effects of farm
(Gene Campaign, Deccan Development Society) contradicted management, farmer characteristics or agronomic potential of
these conclusions and supported the Bt failure narrative: lower particular farms. Second, in Section 4, we look to Andhra
yields, higher debt and sometimes serious externalities.4 Pradesh as a potential regional outlier given the prominence of
46 m ay 5, 2012 v o l x l v i i n o 18 DDES Economic & Political w e e k ly

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A l l u s e s u b j e c t t o h ttp s:/ / a b o u t.jsto r.o rg / term s
suicide claims and failure in that state through a field investi­ Figure 1: Percentage Change in Yield and Net Income after Adoption
of Bt in 2006-07 for Different Size and Social Categories of Farmers
gation of sources of discrepancies in reported data. 300

3 A N ew A nalytical S tra tegy :

B e fo r e a n d A fter Bt C o m p a re d t o W ith a n d W ith ou t Bt
This section analyses panel studies from Andhra Pradesh at
the midpoint of the decade of Bt cotton experience in India.
Data allow us to track the farming situations before and after
the adoption of Bt of 186 farmers in 2004-05 and 2006-07, re­
spectively. In the second round of study, all farmers had
shifted to Bt hybrids, enabling analysis of what happened to
outcomes on the same farms after adoption. Before-and-after farmers farmers farmers farmers

comparisons found statistically significant yield and net income Figure 2: Percentage Change in Yield and Net Income after Adoption
increases from Bt adoption, similar to the superior performance in 2006-07: Different Agro-dimatic Zones

of Bt farms compared to non-Bt farms in the same sample a

year earlier, in 2004-05. Table 1 illustrates the conventional

Table 1: Costs and Returns in Bt Cotton vis-i-vis Non-Bt (NBt)

Cotton in 2004-05 (per acre in Rs)____________________________
Item Bt NBt Percentage
Hired labour 1,780 1,476 20
Attached labour 218 127 72
Bullock labour 859 855 0.47
Machine labour 708 587 21**
Seed 1,402 598 134** Physical yield Net income

Manure 515 406 27 Figure 3: Percentage Change in Pesticide Spending and Cost of Production
1,579 1,603 -2 in Different Size and Social Categories of Farmers after Adoption
SC and ST BC OC Small farmers Medium Large farmers
Insecticides 2,673 3,267 -18**
Irrigation (irrigation and electrical) (charges) 94 84 12
Miscellaneous 94 84 12
Total cost 9,922 9,087 9
Physical yield in quintals 9.49 7.21 32**
Cost o f p rod u ctio n per quintal 1,046 1,260 -17*
Gross income 16,612 12,338 35**
Net income 6,690 3,251 106**
While net income is excess of gross income over all costs, farm business income is the
excess of gross income over variable costs.
In Tables 1 and 2, *, **, * * * indicate statistical significance at 1%, 5% and 10% levels.
Source: Raoand Dev (2010: Chapter 5).

strategy of comparing Bt to non-Bt farmers’ results by taking a

Table 2: Costs and Returns Before-and-After Adoption of Bt Cotton (per acre in Rs)
Item AfterAdoption BeforeAdoption %Change sample containing 437 Bt farmers and 186 non-Bt growers in
(Bt) (Non-Bt) overnon-Bt* 2004-05. It illustrates the story common in the meta-analysis:
Hired labour 1,726 1,476 Bt cotton farms reported higher seed costs, lower insecticide
A ttached labour 67 127 -53
costs, higher yields, lower cost per quintal of cotton produced
Bullock labour 906 855 -6 *
and higher net income. As the growers of cotton containing
M achine labour 886 587 34*
the transgene achieved better results than farmers using con­
Seed 897 598 34*
380 406 -1 7**
ventional cotton hybrids in 2004-05, the demand for the seeds
Fertilisers 1,723 1,603 _4*** was so high that Bt seeds were often sold with police protec­
Insecticides 1,599 3,267 -56* tion in the state.6This rush to Bt is illustrated in the sample it­
Irrigation (irrig a tion and electrical) (charges) 55 54 -9 self: by 2006-07, all farmers had switched to Bt, allowing the
Miscellaneous (repairs and transport) 88 84 -7* before-and-after comparison as a natural experiment.
Total cost 8,327 9,057 -18* Another often-mentioned issue relating to the new cotton is
Physical yield in quintals 10.27 7.21 4 2* that the small farmers lose out in their effort to harness the
1,256 -55*
Cost o f prod u ctio n per quintal 811 technology (Glover 2010). Several studies show that this is not
Gross incom e 19,722 12,338 42
true, and in fact, they gain more relative to their earlier position,
Net incom e 11,395 3,281 209*
though the better-off farmers gain more in an absolute sense (e g,
* The percentage changes are worked out using the monetary values in constant prices,
which are not presented in the table. Rao and Dev 2010; Subramanian and Qaim 2009, 2010). We
The non-Bt farmers in 2004-05 represent the before adoption scenario. The same farmers
present here some results from the study of Rao and Dev (2010:
adopted in 2006-07 and they are taken to represent after adoption scenario.
Source: Rao and Dev (2010: Chapter 5). Chapter 6) that clearly demonstrate that size, social category,

Economic & Political weekly ES3Q m ay 5, 2012 v o l x l v ii n o 18 47

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irrigation or lack of it and agro-climatic zones did not matter about India have stressed the power of Monsanto in preventing
in getting superior results from the technology (Figures 1to 3, the production of non-Bt cotton seeds. Could these claims ex­
p 47). Figure 1 demonstrates that across social categories and plain rapid adoption even in areas of widely reported distress,
farm size, Bt adoption resulted in increases in physical yield including suicides?
and net income. The social categories are scheduled caste/ In Andhra Pradesh, it is clear that the dynamic worked in
scheduled tribe ( s c / s t ) , backward caste (bc), and other caste the opposite direction: the demand for conventional seeds be­
(oc). Farmers are divided into categories of small, medium gan to decline as Bt hybrids became more available. As early as
and large, as is conventional, based on the size of landholding. 2004-05, there were instances of police protection for sales of
Figure 2 shows the effects of irrigation: farmers from both Bt seeds in the state. Interviews with local representatives of
irrigated and unirrigated cropping conditions gained by the seed companies in Andhra Pradesh in 2006 revealed that the
same criteria. Results shown in Figure 3 bear on the question growth in demand for Bt cotton seeds had been exceptional
of environmental effects and sustainability as well: farmers of and unanticipated.7Nuziveedhu Seeds had in 2006 put out its
all size and social categories reduced plant protection expend­ first transgenic cotton, on licence from Mahyco-Monsanto
iture (on pesticides) and produced each quintal of cotton at Biotech (mmb) and found demand far exceeding supply. They
a lower cost. produced 10,000 seed packets; demand proved to be around
40,000. Representatives from seed firms reported large stock­
4 E x p lo r in g M e c h a n is m s : F a rm e r B e h a v io u r a s C h e c k piles of unsold non-Bt seeds, for which there was no demand.
Studies are limited by time and space and are often not com­ Farmers throughout the state were switching to Bt hybrids; the
parable. What gets studied depends on the priorities of fund­ local seed industry had to gear up quickly to expand Bt hybrids.
ing and interests of researchers. Moreover, data in field studies The then director of the Andhra Pradesh Seed Certification
are social products, dependent on the relations of production Agency in Hyderabad estimated in 2006 that Bt hybrids consti­
between data producers and subjects in an artificial setting. tuted 85-90% of the cotton area in the state. Yet it remained
An alternative way to measure the effect of any technology is possible that industry and government estimates of a statewide
to analyse the trajectory of large numbers of individuals using phenomenon concealed variance at the district level. Scien­
it. Consider the mobile telephone: it may well be a health risk tists at the agricultural research station of Acharya N G Ranga
or offensive in some social settings, but it is hard to dispute the Agricultural University ( a n g r a u ) in Warangal district, the
utility of the technology to users. Can we look into farmer most senior of whom was cited as an authority by Shiva et al in
behaviour, a proxy for variables contested in field studies? Seeds of Suicide (2000), estimated that 80-90% of the cotton in
The virtually universal adoption of transgenic cotton in India the district was Bt cotton in 2006. Officers in the Department
alone would lead one to question the representativeness of of Agriculture in Warangal town estimated that 95% of the
studies reporting failure. Bt cotton technology has been avail­ cotton area in the district was transgenic. Local seed mer­
able legally since 2002, and illegally since 1999; if it is failing, chants on Station Road estimated a somewhat higher figure -
would we not see massive dis-adoption - not of specific cultivars, 98%. Some had ceased to stock non-Bt cotton hybrids because
but of Bt technology? One study did document dis-adoption there was no demand for them; their perception of the local
after crop failure and loss of income; it came from Warangal market matched that of state-level seed companies. These
district in Andhra Pradesh (Qayum and Sakkhari 2005). This numbers are consonant with the conclusion of anthropologist
outcome is especially puzzling because the all-India data Glenn Stone's (2007) detailed empirical work in Warangal dis­
showed adoption rates to have been higher in Andhra Pradesh trict: farmers were adopting Bt cotton with such alacrity that it
than in other states in the same period (Herring 2008b). was “ more than innovation adoption, more than a tipping
Warangal figured prominently in early concern with farmer point: it was a craze” .8 The gap between supply and demand
suicides and in the book Seeds of Suicide (Shiva et al 2000). allowed some hucksters to market counterfeit Bt seeds
One entry into the puzzle could be to look at the district most (Herring and Kandlikar 2009).
often mentioned in failure reports to see whether conditions Unstructured interviews with farmers in Warangal district
were different from the rest of India: could there be a district confirmed of the dominant finding of formal field studies in
effect? Specifically, are there mechanisms in Warangal that the rest of India: farmers grow Bt cotton for higher incomes
might explain divergent interpretations of the national trend? through better pest management at lower cost. The extent of
One local refutation of the notion that farmers adopt Bt benefit varies with the level of pest infestation; in heavy pest
technology because of higher incomes with less pesticide con­ years, Bt technology saves cotton crops; in years of moderate
tamination is that there is no choice. By 2010, virtually every­ or low infestations, the enhanced cost of the Bt seed is subjec­
one agreed that non-Bt cotton seeds were disappearing from tively discounted as insurance. This insurance cost is more ex­
the market. The question is why. Devinder Sharma, a promi­ pensive in officially approved Bt hybrids than in the cheaper Bt
nent commentator on Bt cotton, said at a public forum at the stealth seeds, assuming they contain the Bt transgene. The
India International Centre in New Delhi on 4 December 2009, highest yield encountered in unsystematic sampling in
that there were no non-Bt cotton seeds available because the Warangal district in 2006 was of an unlabelled “ Gujarat Bt” ,
government prevented their sale through the Essential Com­ though there were illicit Bt seeds from Kurnool district within
modities Act (personal communication). International narratives the district as well.

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Agro-chemical dealers in their shops, along with farmers germ plasm. Bt technology only confers one trait; some hybrids
coming and going, confirmed these results. Their livelihood with this trait do better than others. The only thing that Bt
depends on monitoring farmer behaviour; they cannot contin­ hybrids have in common is this one trait: insect resistance con­
ually deceive farmers with exaggerated or false claims. Some ferred by a transgene. There are over 800 legal hybrids with
have been physically punished for trying. Local insecticide this specific trait, generated by Bt gene insertion. Not even the
sales were estimated to be down by 60%. Some dealers had mechanism for obtaining the trait is exactly the same in all
lost half their cotton pesticide business; a few reportedly cultivars: Nath Seeds, for example, used a Bt construct from
closed shop. Spraying for sucking insects in cotton, and some­ the Chinese public sector in its hybrids; J K Agri of Hyderabad
times overly-cautious excessive spraying for bollworms, con­ used an indigenously developed Bt gene construct; some m m b
tinued, but the reduction of pesticide use was substantial - hybrids (bgi) use the conventional cryiAc gene (now present
around half in the estimates of local farmers and agro-chemi­ in brinjal varieties and hybrids under consideration for de­
cal dealers. To people who sell and grow Bt cotton, the notion regulation), whereas others use a stacked-gene technology
that “ Bt cotton has failed”was incomprehensible. (bgii). The new public sector Bt cotton is not a hybrid, but an
Why then are there reports of failure in Warangal? History open-pollinated variety, designed to facilitate seed-saving for
and policy provide some help in explanation. Adulterated farmers who prefer to do so.9 There are still many illegal Bt
cotton seeds from the firm Excel had failed farmers in 2000, cotton hybrids as well - deshi Bt. One would expect variance
before Bt cotton was on the market; the firm was forced to pay in performance of Bt cottons ex ante.
compensation. When some farmers in the district demanded For precise measurement of the independent contribution
compensation in 2004 for Bt cotton failure, they were relying of Bt technology - the additional trait - to yields, we would
on a proven model of gaining resources. The administration in ideally compare isogenic cultivars, one with and one without
this district was especially sensitive to rural protest because of the transgene, to isolate the effect of the technology. None of
a history of Maoist agrarian insurrectionist activity. Mahyco- the claims of Bt failure compared two isogenic cultivars, one
Monsanto agreed to pay Rs 3.27 crore compensation to farmers with and one without the Bt gene, to assure control of varietal
despite denying culpability; their calculation was that it was characteristics.10An analysis by Naik et al (2005) found that
an acceptable price to pay for staying in the cotton market cultivar differences were a major source of variation in results
in Andhra Pradesh, where they had Rs 15 crore of business in yield comparisons. By analogy, we would not ask the ques­
(Herring 2008b). Politics and policy in the state in the form of tion: “ has word-processing software failed?”Instead, we would
ex gratia payments for farmer suicides produced perverse in­ ask what software on what machine doing what tasks? And we
centives, as parodied in the popular film Peepli Live and recog­ would compare the genre of technology to alternatives, like
nised by the state government as early as 1998. Despite incen­ paper and pencil or typewriters, before declaring failure of
tives to claim failure of Bt seeds, behaviour in the fields produced word-processing technology.
evidence of general satisfaction with the technology. When Some reports of failure attributed all problems in cotton cul­
three cultivars of Bt cotton produced by Mahyco-Monsanto tivation to Bt. Characteristics of specific hybrids such as staple
were banned in Andhra Pradesh on grounds of agronomic fail­ length, boll size, seed density and sensitivity to drought or wilt
ure, at least one of these hybrids - m e c h 12 - was sufficiently have been used to demonstrate failure. However, the cry genes
popular with farmers that some travelled across state lines to inserted to produce the Bt insecticidal protein have no bio­
procure it, from Nanded and other locations in Maharashtra. logical connection to these phenotypic variations.11 These
The all-India story of adoption of Bt technology parallels the differences across cultivars are reflections of the different
Warangal story. Despite court stays and state government germ plasm in different hybrids. If cotton hybrids did not
bans, Bt cotton hybrids are now essentially universal. In his differ, there would not be hundreds of them grown in India.
announcement of the moratorium on Bt brinjal in 2010, the Unless researchers control for cultivars, variation between the
then minister of environment Jairam Ramesh stated that more Bt crop and the “ check”crop may simply reflect phenotypic
than 90% of cotton farmers in India grow Bt cotton. Without differences resulting from different germ plasm in the plants.
adopting the most demeaning cultural urban bias, it is difficult The illegal Navbharat 151 contained superior germ plasm,
to think that farmers would adopt and spread a technology explaining its persistence as a base for deshi, though illegal, Bt
that is literally killing them. variants. Farmers experiment widely with different cultivars;
even in the same area, some cottons work better in some fields,
5 W h y D o S t u d i e s F in d F a ilu r e ? for some farmers, than others (Roy 2006). There are many un­
Discussions of field studies have often conflated performance measured variables in producing yield results, often in com­
of specific cultivars with performance of Bt technology. India plex interactions, including soil ecology, microclimate, water
has heterogeneous agro-climatic and socio-economic condi­ timing, soil chemistry, pest incidence and availability of nutri­
tions. As a consequence, different cultivars are used in differ­ ents. One of the most criticised of the early official Bt hybrids,
ent areas in different years; farmers frequently switch hybrids. m m b m e c h 184, wilts when subjected to early moisture stress.
Because of agronomic differences, cultivars that work well in This hybrid is probably the source of n g o reports that Bt causes
one region, district, farm, or even field, may fare less well in leaf wilt. Yet some farmers with good water control have found
the next. Each hybrid of cotton contains somewhat different m e c h 184 their best producer (Roy et al 2007).

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Some reports of failure of the technology stem from a differ­ commercial firms’ offerings. India ranked fourth in the world
ent problem that is harder to correct: fraudulent practice in an in area under transgenic crops in 2010, following the us,
unregulated seed market. Even with proper controls for germ- Brazil and Argentina, and ahead of Canada and China
plasm, field studies may err because some seed packets (Herring 2011). Aggregate global data have understated Indian
labelled “ Bt”do not contain Bt cottonseeds. “ Duplicates”are acreage, especially in the early years, as unknown quantities
frauds on farmers; missing the transgene, they do not produce of stealth Bt seeds have been in circulation. Official reduction
the cry protein[s] that provides insect protection. There have in the trait value of Bt cotton seeds by state governments in
been cloth-bag, farmer-generated and F2 Bt seeds that do 2006 reduced prices of government-approved hybrids by
produce the cry insecticidal protein but at uncertain levels; 40-60%, and thus, reduced incentives for gray-market under­
their germ plasm may be very good or not so good. Without a ground breeders.
seed certification process that works, the farmer does not know. Early hybrids contained a single transgene; beginning in
The analogy would be downloading software of unknown 2006, a “ stacked gene”technology produced hybrids with two
provenance from the web to save money: it may or may not be transgenes (cryiAc and cry2Ab) to expand insect control. By
what it represents itself to be. Shortages of Bt seeds in the early 2009 more hybrids incorporated the stacked gene technology
period because of regulatory restrictions and expanding than the first generation single gene technology. By 2010,
demand led to shortages. As a result, seed stock of ambiguous Bt cotton hybrids accounted for about 94 lakh hectares (lh) of
heritage entered the villages and was sold as Bt; there was the approximately 110 lh planted to cotton in India. Within the
widespread fraud. In Warangal, one duplicate was labelled Bt acreage, stacked gene technology covered about 66 lh.
Mahaco to trick farmers into thinking it was Mahyco (Herring These Bollgard 11 seeds are somewhat more expensive than
2008b). Failure to control bollworms on those plants is not a the original single gene Bt hybrids, but farmers are evidently
failure of Bt technology, but a failure of information in an un­ finding the increased cost justified by returns in the field.
regulated seed market. The extent of counterfeit and spurious Production and productivity at the national level reinforce
seed distribution is not known, but has been significant, the micro-level story of increased production and productivity.
including in troubled cotton areas such as Vidarbha.12 Like Table 3 and Figure 4 (p 51) indicate significant increases in
Warangal earlier, Vidarbha has become a site of media reports harvested yield of cotton at the national level, even at a time
of failures of Bt cotton. Some farmers who honestly believe when farmers of many other crops were experiencing in­
that they have planted Bt cotton seeds have in fact been vic­ creased difficulties in India. The jump in yields has been rela­
timised by fraudulent labelling of a popular technology. tively recent. It took 36 years to double the lint production per
Finally, cotton fails when water is inadequate. Government hectare in India from 100 kg in 1950-51 to 200 kg/ha in 1986-87
agencies in India strongly advise against cotton cultivation in (Figure 4). It took only five years for lint production per hec­
drought-prone marginal areas without irrigation, whether the tare to double again, after the introduction of Bt technology in
cultivar is Bt or non-Bt. In thin red soils without irrigation, the cotton in 2002-03. The average yield for five-year period, pre­
risks of planting any cotton are high. Farmers know this, but ceding introduction of Bt cotton, was 203 kg/ha. The most re­
alternatives are often less desirable. There is no evidence that cent estimate for 2010-11 is 518 kg/ha. Total production has
addition of the Bt transgene affects drought tolerance one way increased by more than 150% over the average for the five-year
or the other. Drought tolerance is a trait that would be among period preceding introduction of Bt cotton. Though weather is
the very first priorities of Indian cotton farmers if biotech­ always a critical factor, it seems certain that the new cotton is
nology could produce it, but to date there are only distal prom­ largely responsible for increased productivity, along with
ises, no products. other interventions, such as the cotton technology mission.13

Table 3: Changes in Cotton Production and Productivity at National Level

6 T h e A g g r e g a t e P ic tu r e
Year Area (Mha) Production(Lakhbales Yield
India has more land under cotton than any other country; of 170kgeach) (Kg/ha)

yields before the introduction of Bt cotton were among the Five-year average ending 2002-03 8.7 104 203
2003-04 7.6 137 306
lowest in the world. Bt technology was meant to reduce losses
2004-05 8.8 164 321
to pests - hence improving harvested yields - while reducing
2005-06 8.7 185 354
pesticide use, resulting in improvement of farmers’incomes
2006-07 9.1 226 421
and reduced environmental damage. Cotton yields after the
2007-08 9.4 259 470
introduction of Bt hybrids have increased significantly, along 2008-09 9.4 223 419
with aggregate production: India has surpassed the United States 2009-10 10.31 240 395
as the second largest cotton-producing nation, behind China. 2010-11* 11.00 335 518
Bt cotton was officially approved on 26 March 2002, making * Fourth advance estimates.
Source: Directorate of Economics and Statistics, Ministry of Agriculture.
India the 16th country in the world to commercialise a geneti­
cally engineered crop. In 2002, only three Bt hybrids were This aggregate conclusion has been challenged. Kavita
legally available; in 2010 there were 779 approved Bt hybrids Kuruganti (2009) has presented a counterargument. Her claim
and one open-pollinated Bt variety (from the public sector). Bt was that production increases are caused by increased area
cotton hybrids diffused rapidly and widely on farms and in under hybrids and increased area under irrigation. This
50 MAY 5, 2012 VOL XLVII n o 18 WW Economic & Political weekly

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Figure 4: Cotton Per Hectare Yields since 1950 (yield in kgs/ha) lose remunerative harvest work - but have no voice in crop
600------------------------- :--------- technology choices.

7 C on clu sion s: Why Has T h ere B een C on trov ersy?

Much of the world believes that Prince Charles was correct in
his 2008 pronouncement in New Delhi: “ I blame g m crops for
farmer suicides” . India has been a major source of the global
narrative of catastrophe. Transgenic cotton seeds in India have
been characterised not only as “ suicidal” , but even “ homi­
cidal” , and finally, “ genocidal”in prominent commentaries
1950-51 1956-57 1962-63 1968-69 1974-75 )-81 1986-87 1992-93 1998-99 2004-05 2010-11 about rural India emerging from India and subsequently dif­
fusing through global networks and media (Herring 2009).
Figure 5: Area under Cotton and Percent Irrigated Area since 1950
40 - The catastrophe narrative is widely distributed but devoid
of evidence. Field studies of Bt cotton hybrids in India demon­
strate variance in outcomes, but fail to support claims of tech­
nology failure. The insect-resistance trait from the Bt trans­
gene has generally allowed better yields of harvested cotton
with less spraying of toxins. Reduced pesticide cost and better
yields have improved farmer incomes. These results hold
across size and social categories in both cross-sectional and
1950-51 1958-59 1966-67 1974-75 1982-83 1990-91 1998-99 2006- 2010- longitudinal studies. The reason is that seed technology is
07 11 scale-neutral, offering similar benefits to both small and large
Source: Directorate of Economics and Statistics, Ministry of Agriculture.
farmers. As importantly, because the technology is all con­
argument is not persuasive. The area under hybrids has tained in the seed, Bt cotton allowed “ trialability”
: the possi­
been increasing in cotton for the last two decades and the bility of trying out small amounts of seed at low cost and ex­
process accelerated after introduction of Bt technology; panding planting after assessing performance (Roy 2006).
the big jump in productivity happened only after Bt. The Farmer behaviour is then perhaps the most telling refutation
area under irrigation did not change sufficiently to explain of the failure narrative: Bt cotton has spread almost univer­
so marked an increase in yields and production. Indeed, sally among farmers of all size classes.
continuous increases in irrigated area in cotton did not corre­ Studies may disagree, but do have a centre of gravity, a
spond to a decisive improvement in yields until after intro­ central tendency. That centre of gravity is a clear refutation of
duction of Bt technology. After a continuous increase in the the “ failure of Bt cotton”narrative. But as important as formal
percentage of cotton area irrigated from 1951 up till the studies is this grounded empirics of farmers trying out new
1990s, the percentage of cotton area irrigated stabilised and ways to cope with a periodically devastating problem. Farmer
has been relatively constant in the Bt period, except for a adoption and diffusion ratify most convincingly the techno­
drop in 2003-04 (Figure 5). Neither area under hybrids nor logy behind Bt cotton. Bt genes confer no miracles, but do offer
cotton area irrigated can explain the dramatic increases in a trait that helps significantly in mitigating the effects of a
yields and production. major enemy of cotton - the bollworm - and the accompanying
Farm-level yields and aggregate national production have hazards of pesticide dependency: indebtedness and poisoning.
understandably dominated concerns in the Bt cotton discus­ These robust results - conclusions of farmer and studies
sion, but are only part of the story. Crop success or failure alike - have been rejected in much of the media and in some
has local spread effects. Bt cotton seems to have positive social organisations. There are two kinds of explanations: one
effects in this sense. In studies conducted by Subramanian is based on interests, the other is based on the inherent diffi­
and Qaim (2010), Bt cotton adoption increases aggregate culty of assessing outcomes in so varied an agro-ecology as In­
household incomes, including those of poor and vulnerable dia’s cotton zones. The Bt failure literature requires some ex­
farmers; the net effect is increasing returns to labour, espe­ planation not only for its prominence, but also because it
cially for hired female workers.14 Panel studies in Andhra clashes so egregiously with farmer behaviour.
Pradesh indicate significantly higher percentage increases in The global rifts on agricultural biotechnology have created
labour employment and share of wages in total costs of pro­ rival networks with opposed interests (Heins 2005; Herring
duction, resulting from higher labour productivity.15Higher 2008a). Corporate interests in biotechnology promise miracle
production means more demand for labour, since harvesting seeds; opponents have interests in demonstrating technology
is done manually in India, unlike the situation in some other failure. There are markets for both narratives and interests
countries. More cotton production also means more economic in their production. For some n g o s , failure means affirmation
activity in villages; crop failures, on the other hand, depress of their campaigns for alternatives: organic farming and
village economies whether one is a farmer or not. Landless “GMO-free zones” , both popular in Europe and in international
labourers in particular are vulnerable to crop failures - they advocacy networks. These n g o s can be funded to solve

Economic 8t Political weekly HESS m ay 5, 2012 v o l x l v i i n o 18 51

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problems only if there are problems, or to mediate the contro­ and illegal Bt hybrids muddied the waters. Many reports of Bt
versy only if controversy can be sustained. Some claims of failure in specific fields or specific seasons must be coming
firms and organisations should then be considered strategic or from farmers who think their cotton has the cry Bt transgene
instrumental in an ongoing political conflict over sustainable protection when it does not. No studies that we know of test
futures. Mass publics face daunting information costs in for spurious seeds.
assessing these rival claims; distance from agriculture in More fundamentally, despite the lack of evidence, the fail­
middle-class populations makes assessment doubly difficult. ure narrative resonates with the penumbra of anxiety that
Molecular biology is cognitively daunting. Few urban citizens hangs over the g m o . Reports of India’ s Bt failure resonate
know how traits are introduced into crops, or the complex internationally because of global unease with official science
determinants of yields in fields. Media reports of extreme bent by corporate interests and influence. In discussions of
events leave urban constituencies with considerable anxiety. A agricultural biotechnology anywhere in the world, someone
nuanced report on variable results across different Bt hybrids invariably raises the issue of the farmer suicides in India,
under different agronomic conditions will not be recognised in driven by “ terminator technology”in Bt cotton. Evidence to
global advocacy venues; “ complete failure”gets everyone’ s the contrary - eg, widespread replication of illegal seeds, sav­
attention. An almost universal folk saying runs: “ Where there ing of F2 seeds, high rates of adoption - face a steep cognitive
is smoke, there is fire” . Competition thus selects for extreme obstacle given information co&s and the dominant scepticism
claims that facilitate being heard in the global cacophony. about g m o s. Competing claims of suicide seeds and silver
Aside from the question of interests, field reports of failure bullets, make evaluation of outcomes especially difficult.
have alternative explanations. First, confusion of traits with Ironically, a collective cultural urban bias seems to diminish the
technology with cultivars results in a cognitive lumping con­ power of the numbers of those who take them most seriously:
trary to agricultural practice; hundreds of distinct Bt cultivars the farmers. There is curiously little attention given to the
become “g m o s ”(genetically modified organism). Field studies skill, experience and agency of farmers in assessing the new
have often failed to make the appropriate distinctions, result­ technology. In this case, their numbers - on yields, pesticide
ing in considerable confusion (Naik et al 2005). Second, the costs and income - accord with the central findings of the bulk
very popularity of Bt cotton opened the door to spurious seeds: of empirical work on Bt cotton. As farmers of necessity must
demand exceeded supply. “ Genetic anarchy”of unregulated count carefully, their numbers should count.

NOTES________________________ 4 A m o n g s tu d ie s in d ic a t in g failu re, S a h a i (2003), c o n c e r n a b o u t GM Os, a m a jo r re c e n t re v ie w o f

S a h a i a n d R a h m a n (2003); S h iv a a n d Ja fri 130 rese a rch p ro je c ts fu n d e d b y th e EU fo u n d
1 A r e p o r t p u b lis h e d in Science in Society , L o n ­
(2004) a n d Q a y u m a n d S a k k h a ri (2005) that th ere is n o scien tific e v id e n ce that tra n sg e n ­
d on , b y M ae-W an Ho, w a s s u b m itt e d t o J a ira m
g a in e d p r o m in e n c e . F o r d is c u s s io n o f fie ld e sis as a m e a n s o f m o d ify in g a p lan t’ s g e n e tic
R a m esh , th e th e n e n v ir o n m e n t m in is t e r o f
India, u r g in g h im to sto p g r o w in g Bt c o t to n an d studies, se e APCoAB (2006); G ru ere e t al (2008); m aterial is m o r e risky than “co n v e n tio n a l p la n t
o t h e r G M c r o p s in In d ia d u r in g th e Bt b rin ja l G r u e re (2011); H e r r in g (2008b). b r e e d in g te c h n o lo g ie s ” (E u ropean C o m m is s io n
c o n t r o v e r s y o n th e s e g ro u n d s . S e e http://per- 5 R e v ie w o f a s m a lle r s a m p le o f p e e r- r e v ie w e d D irectorate-G en eral fo r R esearch 2010).
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cid es-an d -bt-cotto n - n igh tm are- u n fold in g- in - sim ilar arithm etic averages o n the m a jor variables fo r C o t t o n R e s e a r c h in N a g p u r a llo w s te s tin g
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c a n r e p o r t fr o m th e N e w Y ork U n iv ersity L aw 6 G le n n S to n e r e fe rs to th is as a “c r a z e ”fo r Bt ta in s th e c r y p r o t e in p r o d u c e d b y th e tra n s ­
S c h o o l: Every Thirty Minutes: Farmer Suicides, c o t t o n in W aran gal. O n e c o n s e q u e n c e w a s ge n e . D r K R K ranthi, th e c h i e f s c ie n t is t th ere,
Human Rights, and the Agrarian Crisis in India, c o u n t e r fe it s e e d s b e in g s o ld as Bt, s in c e th e b e lie v e s c o n t a m in a t io n a n d fa lse la b e llin g to
C e n tre fo r H u m a n R ig h ts a n d G lo b a l J u stice su p p ly o f g e n u in e Bt w a s le s s th a n th e d e m a n d b e q u ite e x ten siv e. F o r d is c u s s io n , s e e H e r r in g
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T h e p h r a s e in th e t e x t c o m e s f r o m an a r tic le in 7 F o r d e ta ils o f m e t h o d a n d p a r tic ip a n t s H e r r in g 13 T h e C A C P a ttrib u te s 50% o f th e in c r e a s e in
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Bt b rin jal, fo r n o w ” , 9 F e b ru a ry 2010: “Bt c o t ­ P rabh at S eed s, D r Satyn arayan a o f N u ziv eed h u t io n o f Bt c o t t o n (G ol 2008)
to n h a s a lr e a d y b e e n d e c la r e d a fa rc e w ith c r o p S e e d s, D r P S atish K u m a r o f P rab h at A g r i­ 14 S e e S u b r a m a n ia n a n d Q a im (2009, 2010).
fa ilu r e s a n d m a s s s u ic id e s o f fa rm e r s in In d ia ”. b io tech , H yd eraba d , 13 D e c e m b e r 2006. 15 S e e R a o a n d D e v (2010) C h a p te rs 5 a n d 7
W e c ite th e s e s to r ie s n o t fo r t h e ir au thority, b u t 8 S ton e’ s u s e o f th e w o r d “c r a z e ”in d ic a t e s h is b e ­ f o r d eta ils.
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2 H e a lth a n d e n v ir o n m e n t a l e f fe c t s in g e n e r a l ra tio n a l fa r m e r b eh a v iou r. H is s u b s e q u e n t
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th e r a n g e o f is s u e s in th e c o n tro v ersy , s e e H er­ m a in e d c o n c e r n e d a b o u t fa r m e r a d a p ta tio n to A sia-P acific C o n s o r t iu m o n A g ricu ltu ra l B io ­
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Revolutionary Movements in a Post-Marxian Era


The key to revolutionary change in today's world lies o start in a lighter vein, let me recall this joke about a
beyond the traditional Marxist conceptual framework or
the leadership of Marxist political parties. In India, four
broad areas of protests constitute the major
T drunk, who is moving on all fours, on a road. He is
searching for something under a lamp post. When
asked by a passer-by, he tells him that he is looking for his
keys. “ Where did you lose your keys” , the passer-by asks him.
components of a new revolutionary strategy in the He replies: “ Over there” , pointing out into the darkness. The
post-Marxian era - (i) movements by forest dwellers passer-by asks him: “ But, if you’
ve lost the keys over there, why
are you looking for them here under the lamp post?”The
against both the state machinery and predatory
drunken answers: “ Because the light is so much better here
commercial forces; (ii) protests by villagers against the under the lamp post” .
establishment of industrial estates, big dams and nuclear Sometimes I wonder whether we are behaving like the
plants that threaten to oust them from their lands and drunk in trying to find the key for the revolutionary transfor­
mation of our society under one single political lamp post -
homes, and endanger the environment; (iii) civil society
while the key may lie elsewhere beyond the circle of light
campaigns against corruption and crime; and shed by that lamp post. We perhaps believe that what is
(iv) secessionist struggles on the issue of sought can be found only under the old lamp post of the tradi­
self-determination in the north-east and Kashmir. How tional Marxist classics. That lamp post does indeed continue
to shed light on a lot of hidden corners of the capitalist mode
will a new generation of post-Marxian revolutionary
of production and its present nefarious form of neo-liberal
theoreticians and practitioners invigorate these globalisation. Marx was prescient in his acute analysis of the
movements with a progressive ideological basic laws of global capitalist development, and therefore he
core and a comprehensive coordinated programme remains relevant for those fighting to change that inequitable
global order. His tools of analysis have been refined or modi­
of socialist change?
fied by various schools of modern political scientists and
sociologists in their attempts to examine different segments
of society. But is the old Marxist lamplight wide enough to
illuminate all the corners of the vast outer darkness of our
present socio-economic order? Should we not increase the
power of the Marxist bulb, to be able to incorporate the vari­
ous upsurges of resistance against the neo-liberal order of
globalisation even in the heart of the west and against the
United States’(us) global militarist ambitions in different
parts of the third world, and discover the signs of a future
revolutionary transformation of our society in the present
outbursts of protests in different parts of India?
In other words, the key to revolutionary change in today’ s
world lies beyond the “ sacred”circle of the old Marxist
gaslit lamp post. Outside the traditional Marxist conceptual
framework, or the leadership of Marxist political parties,
This paper was presented - in an abridged version - at the international
there are a lot of new theoretical challenges and innovative
conference on “Marxism: Marx and Beyond” , held in Kolkata during forms of protest that are breaking out, and which need to be
22-24 March 2012, under the joint auspices of the Institute of faced by Marxist ideologues and practitioners. Hitherto
Development Studies Kolkata, and the Centre for Marxian Studies, ignored social and political grievances of underprivileged
Jadavpur University, and sponsored by the Indian Council of
and invisible sections of society (like demands of aboriginal
Philosophical Research, New Delhi.
people, ethnic and linguistic minorities, gender rights of
Sumanta Banerjee (.suman5ban@yahoo.com) is best known for his book women) are bursting out in sparks of resistance and lighting
In the Wake ofNaxalbari: A History of the Naxalite Movement in India.
up the obscure corners of the vast darkness that lie outside

Economic & Political weekly 13353 m ay 5, 2012 v o l x l v ii n o 18 55

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the Marxist lamplight. I will come to specific instances in intellectuals mainly from the peasantry. But both these forms
India in a while. of party hegemony, in the Soviet Union first and China later,
Opposed to this there has developed a parallel stream of for­ led to the bureaucratisation of the communist movement
tune hunters among the upper and middle classes - who act as * (which provoked Mao to launch the Cultural Revolution to
a buffer zone between the state and its business tycoon allies “ bombard”the party headquarters in China, but which sadly
and multinational industrial patrons on the one hand, and the enough ended up in violent chaos and factional fights within
disgruntled masses on the other. This is the new generation of the Chinese Communist Party).
executives in multinational corporations, employees in the Against this backdrop of the tragic historical experience of
information technology sector, and a host of middlemen like a single party hegemony in the socialist movement and post­
contractors in the booming construction business, as well as revolutionary societies in the 20th century, participants in the
professionals like academics, medical practitioners and others present movements and agitations for socialist change in the
in the tertiary sector who have gained from the privatisation of 21st century often propose another alternative that suggests
their occupations in the neo-liberal era of globalisation. This the doing away of the party altogether - harking back to the
new generation of middle classes are ensconced under a cur­ anarchist vision of a socialist movement based on (pure)
tain - which can be described as the “ brass curtain”. Like the spontaneous popular protests rejecting control by any politi­
“iron curtain”that was stitched by the us cold war tailors cal party or centre. The World Social Forum through its vari­
around the Soviet Union, China, Cuba and other socialist ous congregations (including one in Hyderabad in 2003) has
states in the 20th century, to insulate their socialist experi­ brought together these various voices of protest in a pluralis­
ments from the rest of the world by military intervention and tic ambience. These voices await synchronisation and grada­
trade embargoes, today again the same us-led corporatocracy is tion from “ bilambit”to “ drut”in the “ raga”of Indian revolu­
embroidering a new curtain - the garish, glitzy “brass curtain” tionary transformation. This needs a new generation of crea­
of crass privatisation and brash consumerism to protect its tive and innovative artistes - both ideologues and practition­
employees within a cocoon. ers - who can both bring about the revolution and create the
post-revolutionary society.
M i d d l e C la s s a s t h e V a n g u a r d ' ? There are tensions between these non-party movements
The corruption of these newly educated sections of the middle and the political parties which want to intervene. A typical ex­
classes brings me to another problem being faced today by ample is the adivasi peasants’ uprising against police atrocities
Marxist practitioners - the ability or the desirability of the in Lalgarh in West Bengal sometime ago, that was hijacked by
present middle class intellectuals to act as the “ vanguard”(in the Communist Party of India (Maoist) (cpi(Maoist)) in its
the Leninist sense) in the struggle for socialist transformation. attempt to orient the uprising towards the tactics of guerrilla
The power of the capitalist global order to seduce these influ­ warfare as a part of its strategy of agrarian revolution to cap­
ential members of the professional classes to its fold has ture state power. The Maoists there (led by Koteshwar Rao,
robbed the Marxist movement of an enlightened intelligentsia known as Kishenji, an ideologue and tactician from Andhra
from these classes which in the past had always invigorated it Pradesh), in their amoral opportunist device, backed Mamata
with fresh theoretical insights. The communist movement Banerjee’ s Trinamool Congress, deployed their armed squads
today, whether in India or abroad, lacks leaders possessing the in her favour to eliminate their rivals in the ruling cpi(Marxist),
intellectual calibre and practical experience of those of the campaigned for her in the elections, and paved the way for her
past who could reconstruct their theoretical understanding of coming to power. Once she won the elections with their help,
Marxism in accordance with their national needs in changing Mamata got rid of her Maoist comprador, by allowing the secu­
circumstances - whether Togliatti in Italy, Maurice Thorez in rity forces to kill Kishenji (who was the most vociferous cham­
France, Mao in China, Ho Chi Minh in Vietnam, or P C Joshi in pion of Mamata Banerjee in his t v interviews on the eve of the
India, who could animate a small communist party in the elections). The Maoist party’ s “vanguardist”role in Lalgarh
1940s with a wide scale programme of leading peasants’ move­ thus proved to be a total disaster, and also exposed the naive
ments and working class strikes, organisation of relief for the political judgment of the Maoist leadership.
victims of the 1943 Bengal famine and 1946 communal riots, In contrast with these ideologically committed, well-meaning
and building up of a rich cultural venue (in the shape of the but politically confused, and militarily ill-equipped middle
Indian People’ s Theatre Association and the Progressive Writ­ class leaders of the Maoist movement, who face death in false
ers’ Association) that brought together some of the best talents encounters in the jungles of Chhattisgarh or Jharkhand, a new
from the contemporary Indian scene of arts, music, theatre generation of middle class professionals is emerging in the
and literature. India’ s tertiary sector. Employed in Indian and multinational
In parenthesis, let me in this connection touch upon briefly corporate houses and the i t sector, they are protected by the
the problematic of the “ vanguardist”role of the party - in the flashy “ brass curtain”of the neo-liberal global order. But like
paradigm of revolutionary strategy. In Russia in the past, the the “ iron curtain”of the past, this curtain is also vulnerable to
urban educated middle class intelligentsia formed the leader­ fissures, as evident from the huge wave of protests that began
ship of the Bolshevik Revolution. In China, the Maoist concept over the past year, from among this section of the salaried
of leadership was based on rural-based communist organic petty bourgeoisie in Greece in western Europe and Egypt
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in west Asia - and can soon reach the shores of the Indian population which are simply subjugated, India, Algiers, the
middle class. Dutch, Portuguese and Spanish possessions, must be taken
over for the time being by the (European) proletariat and led
M a r x ia n a n d P o s t - M a r x ia n P o l i t i c s as rapidly as possible towards independence” ).
When we take into account these changing contours of anti- All these preconditions of the traditional Marxist paradigm
state protest - both among the wider masses and the privi­ had faced challenges in the course of the revolutionary move­
leged classes - we feel the need to enlarge the circle of the ments and post-revolutionary construction of socialist states
light from the Marxist lamp post to cover these various seg­ in both Europe and elsewhere during the last 100 years or
ments in the hitherto neglected vast space of complex class re­ more. The outbreak of the 1917 Bolshevik Revolution in a back­
lationships, and the complicated forms of manifestation that ward capitalist state, followed by seven decades of experi­
they are assuming. But before taking up the specific cases of ments in socialist reconstruction there, and the communist
anti-state movements in India that need to be incorporated in revolution and post-revolutionary turmoil (e g, Cultural Revo­
a Marxist programme of socialist transition, let me briefly lution in China), defied the trajectory of change that was
dwell upon the historical context of the political position from designed by Marx. They gave rise to new problems that had
which Marxists are grappling with this challenge today: escaped the attention of Marx and Engels - like issues of
To put it in a broader perspective, the protests - whether the human rights, demands of nationalities, ethnic identity, envi­
social movements, peasants’uprisings and working class ronmental concerns and feminist self-assertion. To give one
strikes in India, or the Occupy Wall Street agitations in the us instance - the post-Marxian ideologues and practitioners are
and Europe, or the Arab Spring in west Asia - are taking place today facing a new challenge in the Arab world. Various layers
in a post-Marxian political scene. This is not to suggest that of complex socio-economic and religious interrelationships are
there is a fragmentation of the ideological core of socialism propelling different types of agitations there - ranging from
that has sustained Marxian and post-Marxian politics. I am acts of terrorism by the conservative religious Taliban and
trying to highlight two factors that are changing the terrain of A1 Qaida outfits in Afghanistan, Pakistan, and countries in
the struggle: (i) the changes in the economy brought about by west Asia and Africa on the one hand, to movements by secu­
a new technology ushered in by the neo-liberal global order lar groups in Tunisia, Egypt, Turkey and other parts of the
that has changed the composition of both the industrial work­ Arab world on the other.
ing class and the professional middle classes, on the one hand; There is a need for an extremely nuanced Marxist approach
and (ii) the growing self-assertion by hitherto ignored op­ to these various types of popular upsurges. Marxists also need
pressed communities and sections of the population, which to acknowledge that the pro-Left secular regimes (cf Baathist)
are being marginalised by the impact of this neo-liberal eco­ in countries like Iraq under Sadaam Hussain, Libya under
nomic order, on the other. These complex developments need Gaddafi, Syria under Assad, had failed their people during the
to be factored in by Marxist ideologues and practitioners who last decades. Like their socialist counterparts in the Soviet
are involved in bringing about a socialist transformation. Union and east Europe, they had also notched up atrocious
It is these changes that call for post-Marxian strategy of records of corruption and repression of democratic opposition
revolutionary transformation. By using the term post-Marxian, - which aroused mass discontent. Although secular and pro­
I mean a period characterised by several important traits that poor in some of their reforms, they carried on the feudal leg­
signify both continuation as well as departure from the o rig i­ acy of dynastic succession of the Arab sheikhs, by promoting
nal programme and prognosis made by Karl Marx in the 19th their sons or nephews (cf the progeny of Sadaam and Gaddafi).
century. It also implies the end of one phase of Marxist experi­ This is not peculiar to the Arab world. Even the communist
mentation with revolutions and socialist reconstruction in ruling party in North Korea has not been able to rid itself of
Russia and China. this feudal habit of dynastic succession. In the Arab world, in
Marx’ s paradigm of revolution was marked by certain the absence of an alternative left leadership to oppose the cor­
important preconditions - one, the movement was required rupt and repressive ruling Baathist and other secular regimes,
to be led by the industrial proletariat of the contemporary ad­ the people flocked to the Islamist fundamentalist eagles which
vanced capitalist states of the west; two, in order to carry out swooped down to occupy the vacuum of political opposition.
the strategy of overthrowing the capitalist state and capturing A post-Marxian strategy of revolutionary transformation
power, the tactics that were to be adopted were primarily city- therefore should also take into account these failures of past
based insurrections (the model available to and appreciated by socialist regimes, the roots of corruption and state terror that
Marx, being the Paris Commune that took place during his led to their fall. Yet, there is a continuity which flows from the
lifetime); three, the post-revolutionary state that was to be Marxist analysis of capitalist development. We are rediscover­
installed was designated as a form of “ dictatorship of the pro­ ing Marx’ s relevance today when, under the neo-liberal order
letariat” , as a transitional phase towards the development of a of globalisation, a reorganisation of the international division
communist society; four, once the proletariat captured power of labour is taking place which, as Marx pointed out in Capital,
in Europe, it would lead to the emancipation of the people of Vol I, is “
suited to the requirements of the chief centres of mod­
the colonies in Asia, Africa and America (cf Engels to Kautsky, em industry”(which are in this case the us-dominated western
12 September 1882: “ ...the countries inhabited by a native economic powers, that are setting up special economic zones,

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call centres, etc, in India and other countries which form the Engels then claimed with confidence: “ We, the ‘revolution­
peripheries to the “ chief centres”). ists’
, the ‘overthrowers’- we are thriving far better on legal
Further, our present-day critique of the global environmen­ methods than on illegal methods and overthrow ” . This was
tal threat again harks back to Marx’ s warning that such an eco­ refuted by history, as is well known by future developments in
logical crisis was bound to happen because of the capitalist Europe. The capitalist rulers could hijack the democratic right
economic system. At the end of Chapter xv of Capital, of universal suffrage to their advantage by buying off a section
“Machinery and Modern Industry” , Marx wrote: “ ...all progress of the working class - who became the “ labour aristocracy”as
in capitalistic agriculture is a progress in the art, not only of described by latter-day Marxists. The capitalist system could
robbing the labourer, but of robbing the soil; all progress in also incorporate into the vast tertiary sector of its economy
increasing the fertility of the soil for a given time, is a progress large sections of the middle classes. Engels had placed hope in
towards ruining the lasting sources of that fertility”Are we these sections when he wrote in his 1895 article: “.. .by the end
not observing today the saturation of the fertility of the soil in of the century we shall conquer the greater part of the middle
Punjab, Haryana and other areas due to the excessive and strata of society, petty bourgeois, and ....grow into decisive
indiscriminate use of chemical fertilisers and pesticides in the power...”His dream was soon to be shattered.
race for progress in growth? Marx ended the chapter with the Thus, while the Marxian critique of capitalism in its basic
following words: “ Capitalist production, therefore, develops analysis still, remains relevant, the Marxian programme of
technology, and the combining together of various processes socialist transformation - either through armed insurrections
into a social whole, only by sapping the original sources of all or through universal franchise - has suffered vicissitudes.
wealth - the soil and the labourer” . In the last century, in Russia, China, Vietnam and Cuba the
To put it in simplistic terms therefore, Marx could get under tactics of armed revolution succeeded in the capturing of
the skin of the capitalist mode of production, and predict its power by the communists - but with mixed outcome as far as
future course - which capitalism as an economic system has the goal of socialist transformation is concerned. The parallel
generally followed. But his critique was limited by the condi­ alternative of attempting the transformation through universal
tions of the historical period in which he was writing - a period franchise has also been tried out by Marxist political parties in
when capitalism in Europe was taking on a ruthlessly aggres­ Europe (at one time conceptualised as euro-communism -
sive posture, concentrating on primitive accumulation of capi­ which failed to take off).
tal, exploitation of resources from its colonies, and pauper­
isation of its own industrial proletariat. A n A l t e r n a t i v e G l o b a l M a r x is t S t r a t e g y

The tactics that Marx and Engels suggested for overthrow­ In the present phase of capitalism, where the system has been
ing this inequitable and oppressive capitalist structure was a able to consolidate its monopoly over the global economy (with
revolutionary insurrection by the urban industrial proletariat the collapse of the alternative socialist system in the Soviet Union,
of Europe. The immediate model was the Paris Commune. and the incorporation of the so-called communist state of China
Both of them dismissed the possibilities of national minorities into that economy), Marxian ideologues and practitioners have
or the rural poor in the colonies as becoming decisive forces in to fashion a new set of strategy and tactics on an international
the revolutionary transformation. scale to challenge that global monopoly. It cannot and should
In fact, in 1848, Engels defended the French campaign not be a replication of attempts to consolidate revolutionary
against Bedouins in Algeria in the following words: “ The strug­ forces that we witnessed in the 1930s under the hegemony of a
gle of the Bedouins was a hopeless one...And if we may regret single communist party (that was based in the Soviet Union)
that the liberty of the Bedouins of the desert has been destroyed, in the name of the Comintern or the Cominform in the 1940s.
we must not forget that these same Bedouins were a nation of There cannot be a repetition of a similar hegemony that was
robbers....”CNorthern Star, 22 January 1848). attempted by the Chinese Communist Party in the 1960-70
But towards the end of their revolutionary careers, Marx period when its theoretician Lin Piao sought to impose on
and Engels possibly toyed with the idea of giving the benefit of communist fighters in Third World countries, the tactics of
doubt to the parliamentary politics of the bourgeois system to encirclement of cities by villages - tactics that proved a disaster.
bring about the radical change that they had envisaged. Engels The alternative global Marxist strategy therefore has to be more
writing in March 1895 in his Introduction to his friend’ s classic nuanced to be sensitive to the various types of popular protests
work - The Class Struggles in France - analysed the changes and rebellions in different parts of the world and select, incor­
since the 1848-50 period in these words: porate or reject them according to its ideological principles.
With ...successful utilisation of universal suffrage... an entirely new Surely the Marxists cannot support the orthodox religious and
method of proletarian struggle came into operation, and this method terrorist A1 Qaida - just because it is killing us soldiers!
quickly developed further...the conditions of the struggle had essen­ There is a need to refashion the Tricontinental strategy that
tially changed. Rebellion in the old style, street fighting with barri­ was envisaged by Che Guevara in the 1960s. Che dreamed of
cades, which decided the issue everywhere up to 1848, was to a con­
more and more Vietnams to defeat us imperialism. That is not
siderable extent obsolete....the conditions since 1848 have become far
more unfavourable for civilian fighters and far more favourable for the possible today. But his basic concept of creating and expanding
military. In future, street fighting can therefore be victorious only if more and more centres of movements against us expansion­
this disadvantageous situation is compensated by other factors. ism still remains valid. Such movements are taking place
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in different parts of the world - in different forms, whether the bourgeois parliamentary system, which they feel, is bound
armed or non-violent, whether the Zapatista insurrection to corrupt communists whenever they join it. But how can the
in Mexico or the parliamentary experiments in Venezuela Maoists gloss over the corruption of the communist rulers who
and Bolivia. came to power through armed struggles and were given a
chance to build an egalitarian society under a communist rev­
I n d ia a s a S i t e f o r P o s t - M a r x ia n E x p e r i m e n t s olutionary system? Whether in Stalin’ s Russia or Mao’s China,
But it is in India, more importantly, where the two alternatives they acquired notoriety for amassing wealth and terrorising
within the Marxian framework of change have coexisted with their own people. There seems to be a continuity in the institu­
various degrees of success and failure for several decades. tionalisation of coercion and terror in governance by commu­
Here for the first time, communists could get elected to a state nist rulers from the Soviet Union in the 1930s to Kampuchea
legislature (in Kerala in 1957) to be able to form a government under Pol Pot in the 1970s. On a mini-scale, we discover the
- but to be dismissed as soon as they introduced land reforms same symptoms in the policies and practices of the Left Front
and changes in the educational sector that threatened vested government in West Bengal during the final decades of its
interests. Since then, it had been a long struggle for parliamen­ regime - in a violent manner it tried to suppress popular
tary communists to inch their way to form governments in protests in Singur, Nandigram and Lalgarh against its indus­
states and operate within the limited constraints of a centrally trial projects that threatened the livelihood and homes of the
ruled structure, but make use of the constitutional powers to local villagers.
bring about certain socio-economic reforms within that struc­ The basic questions that I am raising are - what social or
ture. We have to acknowledge that the Indian Constitution, political enzyme in our past programme of building socialism
notwithstanding the mendacity of the Indian state, still offers could have distorted an idealist revolutionary Stalin into a
opportunities to communists to implement these reforms. For cynical brute, or brought about the mutation of a young sensi­
more than three decades, from 1977 to 2011, the communists tive Marxist like Pol Pot into a ruthless reprobate? How could
ruled at a stretch in West Bengal, enjoying enough rights to communists make such a violent departure from the funda­
bring about institutional changes to meet the basic needs of mental Marxist humanitarian premise of respecting the rights
the people like healthcare, housing, education, and to intro­ of individuals and enhancing their capacity to develop as per­
duce a governance free from corruption and criminality. But, fect human beings? The roots of Marxism are embedded in the
sad to say, the communists in power in West Bengal, after the basic proposition that Karl Marx made in his Economic and
initial period of limited land reforms and efforts to involve Philosophic Manuscripts of 1844: “ ...the complete return of
people in decision-making at the grass-roots level (through the man to himself as a social (i e, human) being - a return accom­
panchayati system and similar popular mechanisms), failed to plished consciously and embracing the entire wealth of previ­
solve these basic requirements of the citizens in their quotid­ ous developm ent” .
ian existence. They soon sank into the slimy mire of corruption In the post-Marxian strategy of revolution, there is an urgent
and crime in the area of daily governance, and degenerated need to restore this Marxian premise of respecting and
into agents of the neo-liberal global order in the area of eco­ encouraging the right of the individual to full development of
nomic reforms (cf Singur, Nandigram, Lalgarh). his/her creative capacities. The communist-led governments
Similar to the pattern followed by the communist rulers in in the past provided the basic material amenities to their peo­
the Soviet Union and east European countries in the period ple, and educated and trained them to the level from where
preceding their downfall, and in China today, in West Bengal they could serve the economic and political interests of the
also a bureaucratic hierarchy developed in the c p i( m ) ’s organi­ state. But beyond that level, they forbade them to think, or to
sation, where power and privilege from the top echelons of the question the state’ s policies. Questioning the status quo, which
party flowed to the apparatchiks at the bottom, who main­ is the basis of human progress, was suppressed in socialist
tained the party’ s control and influence over the people states. Yet, Marx in his theoretical pursuits and political praxis
through a judicious mixture of distribution of largesse and ter­ followed the famous dictum - lDe omnibus dubitandum’ (doubt
ror. The terror tactics which was predominantly resorted to by everything). The post-Marxian revolutionaries, both in the
the cp i( m ) during the latter days of the Left Front rule in West course of their ongoing struggles and in the territories where
Bengal (in Singur, Nandigram) spelt the rout of the cp i(m ) in they have come to power, have to respect and restore the demo­
the 2011 elections. Like the Soviet and east European party cratic rights of both the participants in their struggles, and
bureaucrats and party-patronised privileged elite, who had to the citizens who live in these territories. To hark back to Che
pay the price for their terrorisation, corruption and arrogance, Guevara’ s dream, communists in power, while bringing in an
and lost power at the end of the 1980s, the West Bengal cpi(m ) equitable socio-economic order, should also shape new human
leaders and their prot£g£es are now biting the dust. beings who are capable of developing their individuality.
I think it is necessary to locate this degradation of the cp i(m )
in West Bengal in the wider context of the historical record of T h e P r e s e n t S i t u a t i o n In I n d ia

moral degeneration of communists in power in general. Critics In the light of the above mentioned historical experiences of
from the Maoist camp of the alternative strategy of armed the communist movement in the past and the changes that
struggle, in a simplistic manner, attribute this degradation to are taking place in the post-Marxian era, let me come to the

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possibilities of revolutionary transformation of the current which following past historical pattern, are likely to disappear
popular movements in India. I identify four broad areas of against the inevitable progress of industrialisation? Or, should
such protests in the present Indian context - (i) movements by they be recognised in the third world context, as assertions of
forest dwellers and tribal people mainly in the hill areas a strong traditional sense of sociocultural identity reinforced
against both the state machinery of oppressive functionaries by protests against the modern industrial corporatocracy’ s
(like forest guards), and predatory commercial forces that encroachment on their territory? How can Marxists synchro­
threaten their livelihoods (ranging from the peaceful Chipko nise their voices with those of the industrial working class?
movement opposing destruction of forests in the western Besides, different groups in these movements have different
Himalayas to the violent Maoist-led resistance in the forests of approaches to social change. Some, like non-governmental
Chhattisgarh, Jharkhand and neighbouring areas against the organisations, want to strengthen the role of local forest
encroachment by corporate houses to displace them from dwellers and tribal people in decision-making within the
their homelands to make way for industrial development); present structure, and make the prevailing capitalist system
(ii) protests by villagers in the plains against the establishment more humane. Some like the Maoists want to destroy the
of industrial estates, installation of big dams and nuclear structure and strengthen the antagonistic movement against
plants among others that threaten to oust them from their capitalism by leading these tribal populations in an armed
lands and homes, and endanger the environment; (iii) civil so­ struggle in confrontation with the state.
ciety campaigns by people like Anna Hazare, and citizens’ The Maoists in their areas of control in Chhattisgarh,
groups like “ Wada Na Todo” , or those monitoring elections, Jharkhand, Malkangiri and other pockets of resistance, have
which voice the grievances of common citizens against wide­ often succeeded in carrying out land reforms, and meeting the
spread corruption and crime in the political system and soci­ basic needs of the local villagers. But the encirclement of their
ety in general; lastly, (iv) the most controversial area that pockets by the state’ s security forces has led to the elimination
challenges Marxist ideologues and practitioners in India - the of most of their top leadership (Azad, Kishenji and others,
secessionist struggles on the issue of self-determination by killed in false encounters), large-scale arrests of members of
various dissatisfied ethnic and regional communities in the their central committee, and increasing surrender of their
north-eastern states of Nagaland, Manipur, Assam, and in the cadres. In the absence of any effective political guidance from
north-western state of Kashmir. They range from armed insur­ the central leadership, most of the Maoist guerrilla squads are
rections to peaceful mass demonstrations in the streets, which fast turning into roaming gangs of extortionists and criminals
reflect the popular feeling that they have had a raw deal by in areas like Jharkhand. This again suggests the failure of the
remaining within the Indian Union. leadership in educating the Maoist ranks in the basic ideology
It is these different explosions of protest breaking out in of Marxian socialism and humanism. Like their parliamentary
various corners of India that constitute major components of counterpart - the c p i ( m ) - the Maoists are also facing a politi­
a new revolutionary strategy in the post-Marxian era. They cal crisis and a challenge to their moral credibility. In the light
need to be dovetailed with the traditional Marxist proposition of their experiences of armed struggle during the last three
of a worker-peasant alliance as the main propelling force for a decades or so, the Maoist leaders have to be self-critical, ask
revolutionary change. Such a proposition implies that a joint themselves whether the tactics of a protracted armed struggle
struggle by the industrial working class and the rural peas­ (that was viable in China from the 1920s till the 1940s) can be
antry alone can be decisive in bringing about the change. But replicated in 21st century India, and reformulate their pro­
in a country like India, with diverse sociocultural commu­ gramme for a radical change.
nities, uneven levels of economic development and political Let us take the second type of movements - those against
consciousness, and fragmentations within the working and big dams and industrial projects, prompted by concerns of
peasant classes, Marxist practitioners have to both honestly local villagers about threats to their livelihood and environ­
comprehend this reality and be patient enough to sensitise ment (cf the Narmada Bachao Andolan). Do the Marxist par­
these various sections of a vast disgruntled population to ties have a plan to incorporate their demands in their overall
the political ideology of socialism, and convince them to strategy of a socialist transformation in India? To come to the
participate in a multi-level revolutionary endeavour with flex­ third category of protests, how should Marxists relate to the
ible tactics to move towards a socialist transformation of Anna Hazare type campaigns which take up burning social
Indian society. issues, but stop only at demanding the reforming of the present
structure of governance without challenging the basic capital­
R e la tin g t o t h e P r e s e n t S t r u g g le s ist system that gives birth to corruption and crime? How can
Yet, each of the movements mentioned above has its own com­ Marxist parties take up these quotidian problems of the citi­
plexities with which Marxist ideologues and political parties zens, try to help them in overcoming the myriad problems that
often feel ill at ease. For instance, as for the first category - the they face - and in the course, politicise them to make them
struggles of forest dwellers and tribal population - should aware of the need for breaking down the present political
Marxists regard them as pre-capitalist forms of protest against structure to replace it with a socialist system? To recall Marx
the introduction of technology, like the Luddite rebellion in again - “ The communists fight for the attainment of the im­
the early days of industrialisation, primitive forms of protest, mediate aims, for the momentary interests of the working
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class; but in the movement of the present, they also represent different forms of resistance. In the absence of any secular and
and take care of the future of the movement”(Communist democratic leadership, this space is being dominated by
Manifesto, 1848). In other words, the present revolutionary fanatic religious militant groups like the A1 Qaida, and an
strategy has to be linked to the future post-revolutionary stage equally dogmatic religious regime like Iran.
of reconstruction. But to come back to the various types of anti-state move­
But more challenging for Marxists is the fourth area of pro­ ments in India - both violent and non-violent, secular and
tests - the secessionist movements. Most of the centres of religious - the majority of their participants remain dis­
these secessionist struggles happen to be situated in territo­ persed, each group tightly ensconced within the shell of their
ries which border countries with which India is in a rather respective concerns. They need to coalesce into a single move­
hostile relationship - China in the north-east, and Pakistan in ment. And it is here where a new generation of post-Marxian
the north-west. As a result, a perpetually paranoid Indian revolutionary theoreticians and practitioners can invigorate
state administration had always responded to demands for them with a progressive ideological core and a comprehen­
autonomy by these ethnic and regional communities by deni­ sive coordinated programme of socialist change. There can
grating them as foreign-inspired and suppressing them by be debates over the methods of bringing about that change -
military means. Indian Marxist parties - whether the parlia­ whether through parliamentary reforms or armed struggle,
mentary communists or the armed cpi(Maoist) - have always or a combination of both (as experimented with in Nepal
betrayed an ambiguous attitude towards these movements in and some countries in south America). As in the past, when
their theorisation about nationalities. In their tactics, they Indian Marxist parties drew inspiration from the Soviet
have often betrayed a certain expediency - sometimes dis­ Union and China as models of socialist states, at present,
missing the secessionist movements from the statist point of among Marxist circles in India (like the c p i ( m ) in particular),
view of protecting the Indian nation’ s territorial integrity (e g, there is a lot of curiosity and expectations about the socialist
by the parliamentary communist parties), sometimes by bat­ experiments being carried out in Latin America. Cuba, par­
ting for them to fight the Indian state (e g, the Indian Maoists’ ticularly, during the last several decades, has braved us sanc­
support to the United Liberation Front of Asom ( u l f a ) and tions and has succeeded in bringing about basic socio­
Islamist terrorist groups, their logic being “ my enem y’ s economic reforms that have improved the health and educa­
enemy is my friend” . So, any stick is good enough to beat the tional standards of its people. Venezuela under Chavez has
Indian state!). shown impressive social gains for its people, and has even in­
The ambiguity and expediency in the policies of the spired the concept of a Bolivarian Alternative for the Americas
Indian Marxists towards the nationalities can be traced ( a l b a ) as a pivotal force to bring about a radical change in

back to the conflict among Marxist ideologues on the question Latin America.
of the right of self-determination of nationalities right But, while raising my fist in a red salute to these experi­
from the days of the first socialist state in the Soviet Union. ments in socialism, I also want to keep my fingers crossed. Let
As early as 1917, Rosa Luxemburg questioned the wisdom of us not be carried away by the immediate socio-economic suc­
the new Soviet state’ s grant of that right to every nationality cesses of these regimes. There are problems like allegations
(within the erstwhile Tsarist-ruled territory of the Russian about the suppression of dissident intellectuals in Cuba. In
empire) without taking into account the feudal and fascist Venezuela, there are complaints about a coterie growing
character of the leaders of these local nationalities who around Chavez (known as Chavismo) who are reaping profits
could come to power by taking advantage of the right of and enjoying privileges. Is there going to be a repetition of the
self-determination (cf The Russian Revolution, 1917-18). On same pattern of bureaucratisation and corruption of the
the issue of self-determination of nationalities, today also political system as happened in the Soviet Union and China
the Marxists face a dilemma. While agreeing on the principle in the past?
of the right of self-determination, should they allow it to be Basically, it boils down to the problem of humanising the
usurped by chauvinist ethno-nationalist groups like the strategy and tactics of revolutionary change, and democrat­
Liberation Tigers of Tamil Eelam in Sri Lanka, u l f a in Assam, ising the post-revolutionary reconstruction of society. Let us
or religious fanatic terrorist organisations like the Hizbul in not reduce the problem to a simplistic debate over parliamen­
Kashmir? Drifting with the current of self-determination, tary or non-parliamentary methods, or tactics of violence or
should the Marxists (particularly the Maoists) be passive non-violence - an either/or approach towards the transforma­
witnesses to the future occupation of Kashmir by a Taliban- tion of our society in a socialist direction. On this particular
type mullacracy imposing coercive shariat laws on women debate, let me end by quoting Rosa Luxemburg:
among others? Legislative reform and revolution are not different methods of
historic development that can be picked out at pleasure from the
H u m a n i s i n g S t r a t e g y a n d T a c t ic s counter of history, just as one chooses hot or cold sausages. Legisla­
tive reform and revolution are different factors in the development
It would be both naive and dangerous for Marxists to celebrate
of class society. They condition and complement each other, and
all forms of resistance, just because they are anti-us. Washing­ are at the same time reciprocally exclusive, as are the north and
ton’ s neo-imperialist adventures in Afghanistan and west Asia south poles, the bourgeoisie and the proletariat (Social Reform or
have provoked popular anger, opening up space for many Revolution, 1900).

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Policy Reforms in the Indian Pharmaceutical

Sector since 1994
Impact on Exports and Imports


Liberalisation measures in the pharmaceutical sector 1 In tr o d u c tio n

have brought about major changes in the industrial he debate on the implications of liberalising import

licensing policy, import restrictions, foreign direct

investment and production controls. It was feared that
T restrictions and production controls on pharmaceuti­
cal products in India was rekindled with the decision
to implement product patent rights. The removal of regu­
firms would shift from indigenous production to lations that insisted on local production, placing pharmaceu­
imports, especially of bulk drugs, and this concern was ticals in the open general licence ( o g l ) category and the abo­
lition of restrictions on foreign firms were all expected to
aggravated with the change in the patent law. This
encourage imports of pharmaceutical products into India.
paper finds that these apprehensions have only partly With the new patent regime, it was apprehended that growth
come true. Exports of formulations have grown faster in exports would be limited due to restrictions on the scope
while their imports have not registered any jump, of operations of generic producers, particularly their ability
to export to preferred destinations, while imports would get
keeping the balance of trade positive. But there has been
a boost because of the constraints on domestic producers
a decline in domestic production of bulk drugs and a of patented medicines, thus causing the balance of trade to
growth in imports because the industry is moving away deteriorate. This paper provides an analysis of the trends and
from intermediates and is focusing on bulk drugs at the patterns in pharmaceutical exports and imports in the new
policy era.
high end of the value chain.
2 T h e C o n tex t
The liberalisation measures in the Industrial Licensing Policy
Statement of July 1991 were implemented in the pharmaceutical
sector in 1994 through the Modification in Drug Policy 1986.
Key elements of the liberalisation measures were as follows:
(a) Abolition of industrial licensing for all bulk drugs and their
intermediaries and for all formulations except specific cell/
tissue-targeted ones; (b) Elimination of the ratio parameter
linking the production of formulations to that of indigenous
production of bulk drugs from the basic stages; (c) Abolition of
restrictions on import of drugs and pharmaceuticals and plac­
ing them in the o g l category; (d) Reduction in tariffs for the
import of pharmaceuticals; (e) Automatic approval of foreign
direct investment (fd i) up to 100% ; and (f) Relaxation of the
drug price control mechanism.
These measures essentially came about as a result of the
endogenous policymaking process, but the most significant
policy change in the post-1994 period - the change in the patent
This article is based on my PhD thesis and I gratefully acknowledge regime - came about as an outcome of India’ s obligations under
the direction provided by Jayati Ghosh and Biswajit Dhar in doing this the Trade-Related Aspects of Intellectual Property Rights
study. I also thank the anonymous reviewer who provided me with very
( t r i p s ) Agreement. The concern that liberalisation would
detailed and productive comments.
result in an increased dependence on imports was aggravated
Reji K Joseph (rejikjoseph@ ris.org.in ) is at the Research and Information by the decision to implement product patent rights in the
System for Developing Countries, New Delhi.
pharmaceutical sector. Studies have established a positive
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correlation between the strengthening of patent rights in in 2008 was $5.9 billion, the annual report of the union govern­
developing countries and increased exports to these countries m ent’ s department of pharmaceuticals reports a figure of $8.4
by companies based in developed countries. It was feared that billion for 2008-09.3
the Indian pharmaceutical industry would no longer be able Pharmaceutical products are classified into formulations
to export generics of on-patent drugs, which had been a thriv­ (dosage forms) and bulk drugs (active pharmaceutical ingredi­
ing business in the past. ents, or a p i s ) . The European Medicines Agency ( e m a ) defines a
Maskus and Penubarti (1995) and Smith (1999) found a formulation as “ the physical manifestation that contains the
strong positive correlation between exports and the level of active and/or inactive ingredients that deliver a dose of the
intellectual property protection in importing countries. Smith medicinal product. The key defining characteristics of the
(1999) observed that strengthening patent rights in countries dose form can be the state of matter, delivery method, release
that pose a strong threat of imitation would expand exports, characteristics and the administration site or route for which
whereas strong patent rights in countries where the threat of the product is formulated. A pharmaceutical dose form is the
imitation is weak would enhance market power. India was form in which a pharmaceutical product is presented in the
classified as a country with weak patent rights and strong medicinal product package as supplied by the marketing
imitative abilities where a strengthening of patent rights authorisation holder/manufacturer/distributor” .4The us Food
would bring about market expansion. Following this reason­ and Drug Administration ( f d a ) defines a bulk drug as “ any
ing, it was expected that imports to India would expand with substance or mixture of substances intended to be used in the
the implementation of product patent rights and this would manufacture of a drug (medicinal) and that when used in its
adversely affect the balance of trade. The other view, how­ production becomes an active ingredient of the drug product.
ever, was that the rise in imports of formulations would be Such substances are intended to furnish pharmacological ac­
offset by the growth in exports of bulk drugs (Lanjouw 1999). tivity or other direct effect in the diagnosis, cure, mitigation,
Further, the expiry of blockbuster patents was expected treatment, or prevention of disease or to affect the structure
to provide Indian firms with new opportunities for exports. and function of the body.” 5In India, these terms are defined in
It was also expected that the cost advantages of production the Drugs Price Control Order ( d p c o ) . The d p c o defines a for­
in India, compliance with good manufacturing practices mulation as “ a medicine processed out of, or containing the
and the expertise in reverse engineering would make Indian use of any one or more bulk drug or drugs with or without
firms explore new opportunities in low-volume, high-price pharmaceutical aids, for internal or external use for or in the
regulated markets while retaining their traditional low-price, diagnosis, treatment, mitigation or prevention of disease” 6
high-volume markets in Asia, Africa and Latin America and a bulk drug as “ any pharmaceutical, chemical, biological
(Grace 2004). or plant product including its salts, esters, stereo-isomers and
Chaudhuri (2005) showed that there has been a remarkable derivatives, conforming to pharmacopoeial or other standards
growth in Indian pharmaceutical exports, particularly after specified in the Second Schedule to the Drugs and Cosmetics
2000. The growth in exports to regulated markets, especially Act, 1940 (23 o f 1940), and which is used as such or as an
the us, has been the major reason for the spurt. Exports to ingredient in any formulation.”
regulated markets accounted for 39% of the exports in 2001-02. The s i t c does not explicitly use these terms (formulation
Dhar and Gopakumar (2008) arrived at a similar conclusion. and bulk drug), but classifies pharmaceutical products into
Chaudhuri also pointed out that in 2001-02, formulations two groups - code 541 “ medicinal and pharmaceutical prod­
constituted 52% of the exports with the remaining being bulk ucts, other than medicaments of group 542”representing
drugs.1However, there are no major studies providing detailed bulk drugs and code 542 “ medicaments (including veteri­
analyses of imports of pharmaceuticals to India. This study nary medicaments)”representing formulations. Code 541
attempts to fill the gap and also endeavours to capture the consists of selected products from harmonised system ( h s )
more recent trends in exports. chapters 26, 29 and 30. Code 542 consists of selected prod­
ucts from h s chapter 30 (3003 and 3004). h s chapter 30,
3 M e th o d o lo g y which is on pharmaceutical products, has six sub-chapters
The analysis is based on data accessed from c o m t r a d e . 2 The (at four digits) and the term “ ‘medicaments”apply only to
advantage of this data is that it enables cross-country compari­ sub-chapters 30037 and 3004,8 indicating these two are
sons as it is based on an international classification, the Standard distinct from the other four sub-chapters. For this study,
International Trade Classification ( s i t c ) . Major international products coming under s i t c code 541 (which in the h s clas­
statistical publications, including the annual International sification are select products from chapters 26, 29 and the
Trade Statistics brought out by the World Trade Organisation products under chapters 3001, 3002, 3005 and 3006) are
( w t o ) , follow the s i t c and use c o m t r a d e data to identify considered bulk drugs and products coming under s i t c code
major exporters and importers. As countries need not strictly 542 (which in the h s classification are products under chap­
follow the s i t c for domestic purposes, there may be differ­ ters 3003 and 3004) are considered formulations. My inter­
ences in the figures reported by c o m t r a d e and government action with officials of the Bulk Drug Manufacturers’Asso­
sources. For example, while c o m t r a d e and International ciation (India), Hyderabad confirmed that h s 3003 and 3004
Trade Statistics report that India’ s exports in pharmaceuticals are considered as formulations by the pharmaceutical

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Table 1:HS Codes for Bulk Drugs and Formulations (six-dig it level) formulations, which accounted for 78% of the exports in 2009.
Bulk Drugs (SITC 541) Formulations (SITC 542) However, in bulk drugs, the country has had a negative trade
263623 293721 293941 294130 300620 300310 balance in many years.
293121 293722 293942 294140 300630 300320
Most of the leading exporters of pharmaceuticals are
293610 293723 293943 294150 300640 300331
domestic firms and they derive a substantial share of sales
293621 293729 293949 294190 300650 300339
from exports (Table 3).
293622 293731 293951 300110 300660 300340
293624 293739 293959 300120 300390 Table 3: Leading Exporters and Importers of Pharmaceuticals
(Excluding Raw Materials)______________________________________
293625 293740 293961 300190 300410
Exporters in 2008-09 Importers in 2008-09
293626 293790 293962 300210 300420 Company Exports % Company Imports %
293627 293810 293963 300220 300431 ($ million) Sales ($ million) Sales
293628 293890 293969 300230 300432 Ranbaxy Laboratories (F) 666.4 67.5 Rajat Pharmachem (1) 59.9 45.6
293629 293911 293991 300290 300439 Dr Reddy's Laboratories (1) 629.9 63.8 Aventis Pharma (F) 15.7 5.9
293690 293919 293999 300510 300440 Cipla (1) 597.3 51.7 Novartis India (F) 15.7 11.2
293711 293929 294110 300590 300450 A urobindo Pharma (1) 380.4 60.5 GlaxoSmithKline
293712 293930 294120 300610 300490 Pharmaceuticals (F) 13.4 3.0
Source: UNSD.9
Lupin (1) 344.6 52.8 W yeth (F) 12.8 14.6
M atrix Laboratories (F) 266.6 81.4 Fulford (India) (F) 11.4 24.1
industry. Table 1 gives a detailed h s classification of bulk Divi's Laboratories (1) 240.3 91.7 Organon (India) (F) 10.2 24.6
drugs and formulations (at six-digit level). Orchid Chemicals and Am ol
The study also uses, wherever relevant, data from the Indian Pharmaceuticals (1) 203.0 77.5 Pharmaceuticals (1) 8.6 57.2
Drug Manufacturers’Association (idm a ) and the Prowess Sun Pharmaceutical Cadila Healthcare (1) 6.0 1.5
Industries (1) 177.2 28.7
database of the Centre for Monitoring Indian Economy (cm ie ). Serum In stitu te o f India (1) 175.9 73.5 A b b o tt India (F) 5.9 3.3
Source: Prowess.
4 T ren ds in P h a rm a ceu tica ls Trade (I) = Indian, (F) = Foreign.

India ranks fifth in the world on the list of leading exporters of Ranbaxy and Matrix were flagship Indian pharmaceutical
pharmaceuticals in the International Trade Statistics report. companies until they were taken over by multinational corpo­
The 2009 report shows that India accounted for 1.4% of global rations (mncs) a few years ago.11There are a few more such
exports. This is remarkable given that India’ s ranking was firms that have substantial exports in their sales turnover.12For
sixth and its share in global pharmaceutical exports was 1% in this analysis, the taken-over companies are treated as a separate
Table 2: Export, Import and Balance of Trade in Pharmaceutical Products category. Figure 1gives the export intensity, defined as the ex­
($ million) _________ ports to sales ratio of mncs , domestic firms and the taken-over
BulkDrugs Formulations Total
Export Import BoT
firms. The taken-over firms are the most export-oriented and
Export Impori BoT Export Import BoT
mncs are the least export-oriented. While the taken-over firms
1994 101.6 251.0 -149.4 484.2 47.5 436.7 585.8 298.5 287.3
1995 141.2 348.1 -206.9 582.9 56.9 526.0 724.2 405.1 319.1 had an exports-sales ratio of 71% in 2008-09, it was only 11% for
1996 174.3 269.3 -95.0 639.7 37.4 602.3 814.0 306.7 507.3 mncs . That the mncs operating in India do not have significant

1997 222.6 324.2 -101.6 724.6 64.6 660.0 947.2 388.9 558.3 exports is contrary to the general understanding that foreign
1998 250.5 303.5 -53.0 683.2 80.7 602.5 933.7 384.3 549.4 firms will be more export-oriented. Firms investing abroad are
1999 265.3 290.2 -24.9 802.9 82.6 720.3 1,068.2 372.8 695.4 expected to show greater export competitiveness as their pres­
2000 341.8 281.1 60.7 805.1 92.8 712.3 1,147.0 373.9 773.1 ence in foreign market ensures flexibility, reliability and time­
2001 363.3 303.0 60.3 959.1 97.6 861.5 1,322.4 400.5 921.9 liness in dealing with global buyers, which is crucial for export
2002 451.7 404.0 47.7 1,157.1 141.9 1,015.2 1,608.7 545.9 1,062.8 success (Kumar and Jayaprakash 2007). This expectation was
2003 516.5 468.8 47.7 1,455.4 141.2 1,314.2 1,971.9 609.9 1,362.0
explicitly mentioned in the Industrial Policy Statement of 1991,
2004 482.5 493.9 -11.4 1,789.1 186.4 1,602.7 2,271.6 680.3 1,591.3
which initiated liberalisation of fdi rules in the pharmaceuti­
2005 543.0 662.4 -119.4 2,218.8 275.3 1,943.5 2,761.8 937.8 1,824.0
cal sector. The statement read, “ Foreign investment would
2006 644.5 789.3 -144.8 2,771.6 392.2 2,379.4 3,416.1 1,181.5 2,234.6
2007 900.8 1,101.2 -200.4 3,576.0 515.1 3,060.9 4,476.7 1,616.3 2,860.4 bring attendant advantages of technology transfer, marketing
2008 1,015.0 1,203.5 -188.5 4,807.7 666.0 4,141.7 5,822.7 1,869.6 3,953.1 expertise, introduction of modern managerial techniques and
2009 1,322.1 1,312.4 9.7 4,599.4 735.5 3,863.9 5,921.5 2,047.9 3,873.6 Figure 1: Exports-Sales Ratio
Source: COMTRADE. 8Q--------------------------------------------
the 2005 report. In the domestic export basket as well, the
share of the pharmaceutical sector has been increasing - from
2.8% in 2005 to 3.3% in 2009.10India does not have significant
imports of pharmaceuticals and the country does not figure in
the list of leading importers in the w t o report. Table 2 shows
trends in the export and import of pharmaceutical products
since 1994.
The Indian pharmaceutical sector shows a steadily growing
positive trade balance. The surplus has been contributed by
64 MAY 5, 2012 VOL XLVII n o 18 DBQ Economic & Political weekly

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new possibilities for p rom otion o f exports.”From 2001, the requirem ents from the us, Italy and Germany, but, over the
year in w hich 100% f d i w as p erm itted in the pharm aceutical years, China has replaced these coun tries as the m ajor supplier.
sector, the exports-sales ratio o f m n c s has g ro w n on ly m a rgin ­
ally - from 7% to 11% b e tw ee n 2000-01 and 2008-09. 5 E x ports o f Bulk D ru gs a n d F orm u la tion s
The d ry in g up o f the p ipelin e o f n ew d ru gs and the em p h a­ India’
s pharm aceutical industry has in creasin gly b e co m e
sis placed on gen eric dru gs by a n um ber o f coun tries has forced export-oriented and the share o f exp orts in sales has steadily
m n c s to get into the gen eric bu sin ess as w ell.13 T hey have g ro w n from 15% in 1993-94 to 41% in 2009-10.17 The rates o f
o p ted for taking over lea d in g players in the gen eric segm en t gro w th o f ex p orts o f both bulk dru gs and form ulations su g g est
instead o f d o in g it the orga n ic way. This is p recisely w hy that the industry is d oin g better in the post-TRIPS p e rio d (after
the taken-over firm s in India are the m ost export-oriented. 2005). F igure 2 giv es the annual rate o f g row th o f bu lk dru gs
D aiichi too k over R anbaxy w h en the gov ern m en t o f Japan and form ulation s durin g differen t tim e periods.
d ecid ed to take m easu res that w ou ld help in crease the share o f Figure 2: Annual Rate of Growth in Exports during Different Periods (CAGR)
gen eric dru gs from 17% to 30% by 2012. Daiichi n ow has its
n ose in front in the ex p a n d in g g en eric m arket b eca u se it is get­
ting R an baxy’
s cheap, high-quality m an ufactu rin g facilities
(Joseph 2008). m n c s tak in g over g en eric firm s have n ot b een
lim ited to India. T hey have taken over d om estic d ru g co m p a ­
n ies in oth er coun tries as well, such as Sanofi Aventis taking
over M edley in Brazil and Zantiva in the C zech R epublic and
g s k taking over b m s in E gypt and Pakistan.14 A survey o f 50
top industry executives qu oted in the Financial Times rep orted
that 65% o f the executives con sid ered that their sector w as 1991-94 1995-2000 2001-05 2006-09
facin g a “
strategic crisis”and 67% saw diversification as a Source: COMTRADE.

poten tial solution.15 Sanofi Aventis has b e e n the lead in g co m ­ Tw o m ajor ch an ges in trends are seen in Figure 2. One, the
pany in diversification over the last few years, b o o stin g non- rate o f g row th o f exp orts o f bu lk d ru gs w as h igh er than that o f
patented d ru g sales from 5% to 12% b e tw ee n 2004 and 2009. form ulation s durin g the 1990s, but the o p p o site is true in the
In im ports o f pharm aceutical g o o d s (excluding raw m ateri­ current decade. Two, bulk drugs w hich sh ow ed a steady decline
als), the lead in g players are foreign firm s (Table 3). W hen in the gro w th o f exp orts b etw een 2001 and 2005, reversed the
firm s in the P row ess database are c a tegorised on the basis o f trend in the post-2005 period. Formulations, on the other
their ow nership, it is fou n d that foreign firm s have an imports- hand, exh ibited a steady g row th in exp orts throughout. On the
sales ratio o f 40% w h ereas the ratio for d om estic firm s is on ly w hole, it m ay b e con clu d ed that exp orts o f bu lk dru gs and
5% (in 2009). The taken-over firm s d o n ot have any im ports. form ulation s have b e e n g ro w in g at higher rates in the post-
There w as a ju m p in the im ports-sales ratio o f m n c s in 1995-96 2005 p e rio d than in the 10 years o f the post-1994 period.
(from 13% in 1994-95 to 24% in the next year) after the restric­ An im portan t factor con tributin g to the g row th in exp orts o f
tions on im p orts w ere elim inated. In 1994, the M odification to bulk dru gs in the last few years has b e e n the ou tsou rcin g o f
the D rug P olicy 1986 rem oved all the restrictions on the use o f a p i p rodu ction by m n c s . Table 5 (p 66) sh ow s selected cases o f
im p orted bu lk drugs. O ver the years, the im p ort duty also ou tsou rcin g by m n c s .

ca m e d ow n drastically.16 F oreign com pa n ies are keen to ou tsou rce their p rodu ction
Major changes have taken place in the destinations o f exports for con ta in in g costs. India has b e co m e a favourable destin a­
and the sou rces o f imports. In 1991, the S oviet U nion w as the tion as it has the largest n um ber o f FDA-approved plants out­
single largest export destination. However, w ith the disinteg­ side the us. In 2005, India had 60 FDA-approved plants
ration o f the Soviet Union and the g ro w in g com peten ce o f Indian w h ereas its com petitor China had on ly 22 (Pricewaterhouse-
firms, the focu s gradually shifted to the h igh ly rew ardin g (low- C o o p e rs 2005). W e d o n ot have in form ation on h ow m any o f
volum e, high-margin) regulated markets, esp ecia lly the u s the o u tsou rced a p is are un der patent p rotection to w arrant
(Table 4). In im ports, India u sed to sou rce the bu lk o f its reach in g con clu sion s on the im pact o f n ew in tellectu al p ro p ­
erty rules on outsourcing.
Table 4: Top Five Destinations of Exports and Sources of Imports in 2009
(bulk drugs and formulations combined)____________________________________
H ow ever, the co m p o s itio n o f e x p o rts sh o w s that form u ­
Destinations Exports Imports lation s a ccou n t for m o re than four-fifths o f p h a rm a ceu tica l
$Million %Total Sources $Million %Total exp orts. W h ile bu lk d ru g s have sh o w n an in cre a se in rate
Exports Imports
o f g ro w th o f e x p o rts in the post-2005 p eriod, th eir share in
USA 1,320.7 22.3 China 708.2 34.6
e x p o rts has co n siste n tly d e clin e d sin ce 2000 (30% in 2000
Russian Federation 266.0 4.5 Switzerland 345.0 16.8
to 17% 2008). This raises the q u estion w h eth er the a cc e le ra ­
U nited Kingdom 251.4 4.2 USA 225.1 11.0
tion in the g ro w th o f e x p o rts o f b u lk d ru g s in the recen t past
South Africa 193.5 3.3 Germany 117.9 5.8
Nigeria 180.6 3.0 Denmark 89.6 4.4 has had any sig n ifica n ce for the p h a rm a ceu tica l industry.
Others 3,709.3 62.6 Others 562.1 27.4 Table 6 (p 66) g iv e s the top 10 e x p o rt d estin a tio n s for bu lk
Source: COMTRADE. d ru g s an d form ulation s.

Economic & Political weekly DECS m a y 5 , 2 01 2 v o l x l v i i n o 18 65

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Table 5:Outsourcing by MNCs skin medicine Valtrex under 180-day mar­

IndianPartner MNC OutsourcedProducts ket exclusivity, which enabled the com­
Cadila Healthcare Altana (Germany) Two intermediates for Altana's under-patent pany to secure 74% of the $1,400 million
molecule Protonix (pantoprazole)
market before the expiry of exclusivity.19
Boehringer Ingelheim (Germany) Gastrointestinal and cardiovascular products
Mayne (Australia) Intermediates for oncology products
The launch of generic Aricept (an Alzhe­
Hikal Degussa (Germany) Pharmaceutical intermediates and APIs imer’ s drug, patent held by Eisai Co) after
Nicholas Piramal Advanced Medical Optics (USA) Neutralising tablets and sterile FFS packs its patent expired on 25 November 2010 is
(product name not disclosed) expected to earn Ranbaxy about $200 mil­
Allergan (USA) APIs For Levobunolol (Betagen) and lion.20 Similarly, Atorvastatin, the generic
Brimonidine (Alphagan and Alphagan-D)
version of Lipitor, the single largest selling
AstraZenica (Sweden) APIs
Pfizer (USA) APIs
prescription drug in the world, is expected
Dishman Pharma Solvay (Belgium) Six projects. Main one being for starting to fetch Ranbaxy more than $2 billion in
material and advanced intermediate for the coming five years. Table 7 (p 67) gives
Tevetan (eprosartan maleate)
some recent cases in which Indian compa­
AstraZeneca (UK) Intermediate for Nexium (esomeprazole)
nies have obtained 180-day exclusivity in
GSK(UK) Intermediates and APIs
the us.
Merck (USA) Intermediate for Losartan (to be supplied
to its contract manufacturer in Japan) Only a few companies, particularly Ran­
Shasun Chemicals GSK(UK) API for Ranitidine baxy and Dr Reddy’ s, had a n d a s in their
Eli Lilly (USA) APIs for Nizatidine, Metohexital and names till recently. Companies like Cipla
had a n d a s in the names of their marketing
Reliant Pharma (USA) APIs
partners in the us. This situation has
Alpharma (USA) APIs and generics
changed dramatically in recent years and
Boots (South Africa) APIs
Lupin Fujisawa (Japan) Cefixime
more companies are engaged in securing
Apotex (Canada) Cefuroxime Axetil, Lisinopril a n d a s . From 161 a n d a s filed by four com­
DMS (USA) APIs for cephalosporings panies - Ranbaxy, Dr Reddy’ s, Wockhardt
Ipca Merck (USA) APIs and Lupin - in the last quarter of 2003, the
Tillomed (UK) Atenelol number went up to 701 a n d a s filed by 17
Biocon Bristol Myers Squibb (USA) APIs
companies in the second quarter of 2007
Source: KPMG (2006) and Linton and Nicholas (2007).
(Chaudhuri 2007). a n d a approvals held by
The us has become the most desired export destination for Indian firms as a percentage of total approvals went up sharply
both bulk drugs and formulations. However, formulations from 7% in 2001 to 21% in 2006 and 30% in 2008.21
account for the lion’ s share of exports to the us - 87% in 2009. To Companies also work on developing a non-infringing pro­
market a generic drug in the us, a company needs to file an ab­ cess for a n d a filing. Matrix Laboratories was the first Indian
breviated new drug application ( a n d a ) . When filing an a n d a , company to develop a non-infringing process for manufactur­
the company has to certify that its product is not infringing ing citalopram. The company was able to reap huge benefits
any patent rights or that a patent is invalid (para iv certifica­ with its sales of the product amounting to Rs 5,600 million till
tion). If it successfully proves that a patent is invalid or if it is 2005-06. Another commercially successful example is the
the first to get approval for the generic version, it gets market cefotaxime process developed by Lupin (Chaudhuri 2007).
exclusivity for 180 days during which no other generic com­ a n d a s and drug master files ( d m f s ) data from the f d a give

pany is permitted to enter the market. This exclusivity is avail­ indications of the extent to which Indian firms are seeking
able under the Hatch-Waxman Act. A successful first a n d a can opportunities in the us market. The leading 10 firms in India
bring immense profits to a company. For example, Dr Reddy’ s, got 537 a n d a approvals in the last decade, of which one-fourth
the first Indian company to market fluoxetine 40 mg in August carried 180-day market exclusivity. Details of a n d a s and d m f s
2001 under 180-day exclusivity saw its sale of generics increase
Table 6: Leading Export Destinations in 2009
from Rs 304 million in 2000-01 to Rs 4,066 million in 2001-02. BulkDrugs Formulations
Sale of fluoxetine was 81% of its total generic sales and Country $Mn %Exports Country $Mn %Exports
about half of its operating profit in 2001-02 (Chaudhuri 2007). US 167.4 12.7 US 1,153.3 25.1
Ranbaxy was the first to obtain 180 days exclusivity for this Brazil 74.5 5.6 Russian Federation 259.9 5.7
drug, but could not launch the product on time as the patent Turkey 43.8 3.3 UK 227.3 4.9

holder managed to obtain an injunction against it.18Patent liti­ China 42.2 3.2 South Africa 186.9 4.1

gation under para iv is highly risky as failure would mean a Bangladesh 40.9 3.1 Nigeria 146.7 3.2
Egypt 39.3 3.0 Ukraine 105.7 2.3
loss of several years of hard work and huge legal expenses.
Thailand 35.9 2.7 Germany 97.5 2.1
Encouraged by the success of Dr Reddy’ s, a number of firms
Congo 35.3 2.7 Vietnam 92.8 2.0
have taken steps to register themselves as first movers in generics, Spain
34.5 2.6 Sri Lanka 86.7 1.9
often gaining a huge market share. Ranbaxy, in November Nigeria 33.9 2.6 Kenya 83.4 1.8
2009, introduced the generic version of GlaxoSmithKline’ s Source: COMTRADE.
66 MAY 5, 2012 VOL x l v ii n o 18 O Economic & Political weekly

T h i s c o n t e n t d o w n l o a d e d f r o m o n T u e , 06 N o v 2018 23 :58:13 U T C

A l l u s e s u b j e c t t o h ttp s:/ / a b o u t.jsto r.o rg / term s
Table 7: Selected Drugs for Which Indian Companies Have 180-Day Market for bu lk d ru gs is b e lo w unity, in dicatin g a lack o f com parative
Exclusivity in the US_________________________________________________
advantage. W e saw that the share o f bu lk dru g s in ph arm a­
Indian Company Year ofLaunch Brand Innovator Innovator
Sales/Year {$ Mn) ceu tical ex p orts b e g a n to d e clin e after 2000. Two, the r c a

S unandG lenm ark 2007 Trileptal Novartis 700 in d ex for form ulation s sh ow s a d e clin e until 2005 and a
Dr Reddy's 2008 Im itrex GlaxoSmithKline 1,000 gradu al acceleration from 2006. A nd the in d ex never fell
Sun 2008 Protonix Altana 2,300 b e lo w one.24 It is really startlin g that the com parative
Lupin 2008 Ramipril Bayer 800
advan tage in dicator for form u lation s sh o w ed an upw ard
Sun 2009 Effexor XR W yeth 2,300
m ov em en t in the post-2005 period. T his is con trary to w hat
Ranbaxy 2009 Flomax B o e hrin ge rlng e lhie m 1,300
Ranbaxy 2010 Lip ito r Pfizer 8,000
had b e e n an ticipated b y many. In glob a l ran k in gs o f r c a for
Ranbaxy 2010/11 A ricept Eisai 1,600 form ulations, India ranks seco n d after S w itzerlan d a m o n g
Glenmark 2010/11 Zetia Schering-P lough/M erck 1,200 the top five pharm aceu tical ex p o rtin g countries. India’
s rank­
Glenmark 2010/11 Tarka A b b o t/S a n o fi Aventis 72 in g has con sisten tly b e e n seco n d to S w itzerlan d sin ce 1994.
Glenmark 2010/11 Cutivate Nycomed 37 T he r c a in d ex for form u lation s sh o w e d a su d d en d e clin e in
Source: Compiled from company reports and media reports.
2009. T his m ay have b e e n b e ca u se o f a d e clin e in the ex p ort
filed in the u s by the top 10 Indian pharm aceutical com p a n ies o f form u lation s in 2009 p rim arily b e ca u se o f the seizu re o f
are given in Table 8 (p 68). Indian g en erics in E u ropean p orts w h ile in transit for a lle ge d
The bu lk o f th ese activities w ere carried out by three firms, in frin gem en t o f patent rights.25 T he seizu res have ad d ed to
Aurobindo, R anbaxy and Dr R ed d y’
s. R anbaxy and Dr R eddy’
s the co st o f e x p orters as they have had to lo o k for alternative
stand out for their aggressiv e approach to ch a llen g in g patents trade routes to avoid E u ropean ports.
and obtain in g m arket exclusivity. A large Figure 3: RCA of Pharmaceuticals
3.5 -------------------
percentage o f Ranbaxy’
s (57%) and Dr Reddy’
(37%) a n d a approvals had market exclusi­
vity against the average o f 23% for all the
leadin g firms. Para iv filings involving patent
litigations are a high-risk, high-return strat­
egy. A failure could result in h uge losses and
lega l expenses. The lea d in g firm s also have
a large n um ber o f d m f filings, an in dication
o f their interest in the u s market. T h ese 10
firm s accou n t for nearly h alf o f all d m f fil­
in gs m ade by all pharm aceutical firm s from
An analysis o f revealed com parative ad­
u.u ■
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
vantage (r c a ) su ggests that India’
s advan­
——— BulkDrugs 0.5 0.5 0.6 0.7 0.8 1.0 1.2 1.4 1.3 1.6 1.4 1.4 1.3 1.0 0.8 0.9 0.9 0.8 0.7
tage lies in form ulation s (Figure 3). The r c a ^ ^ — Formulations 3.1 2.1 2.1 2.0 2.0 2.0 2.0 1.7 1.6 1.6 1.4 1.2 1.2 1.1 1.1 1.1 1.2 1.3 1.0
is an in dex o f the ex p ort p erform a n ce o f a Source: COMTRADE.

coun try w ith resp ect to a particular co m m od ity w h ich ca p ­ The ch a n ge in ex p ort d yn am ics has had a d irect b e a rin g on
tures the com parative advantage o f that com m odity. The r c a the p ro d u ctio n d yn am ics o f the p h arm aceu tical industry.
o f a particular co m m od ity is m easu red by the share o f that in ­ Figure 4 sh ow s that there has b e e n a d e clin e in the g ro w th o f
dustry in the cou n try’
s total exp orts relative to the cou n try’
s bulk drugs produ ction in the post-2005 period - it declin ed from
share in total w orld exports. The r c a in dex m ay take values aroun d 15% d u rin g the pre-2005 p e rio d to 9% in the post-
from zero to infinity, w ith values greater than unity in dicating 2005 period. The form ulations segm en t show s an acceleration
the existen ce o f an r c a . in p ro d u ctio n du rin g the post-2005 p e rio d co m p a re d to the
The r c a index for i* product for j<thcountry in year t is defined as, previou s periods.
RCA W = [(XyW«/Xi0W«)/(X0jWW/X00WW)]
Figure 4: Growth (CAGR) in the Production (at Current Prices)
Xyw ® = E xport o f ith p rodu ct by the j th cou n try to the w orld in
the year t.
Xiow (t) = Total ex p ort o f the ith p rodu ct by all coun tries in the
w orld in the year t.
X0jw (t) = Total exp ort o f the coun try j to the w orld in the year t.
X00w (t) = Total ex p ort o f all p rodu cts by all coun tries in the
w orld in the year t.
Figure 3 giv es tw o in dication s o f the ch a n gin g d yn am ics o f
the Indian pharm aceutical industry. One, the r c a in dex for
bulk dru gs sh ow s an upw ard m ovem en t until 2000 and a 1990-91/1994-95 1995-96/1999-2000 2000-01/2004-05 2005-06/2008-09
d eclin e since 2001. Since 2004, the value o f the r c a in dex Source: IDMA.

E con om ic & Political w e e k ly QDC3 m ay 5, 2012 v o l x l v i i n o 18 67

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Table 8: ANDA Approvals, First-Time Generic Approvals (180-Day Exclusivity) and DMF Filings in the US by Leading to concentrate on the p rodu c­
tion and exp ort o f form ulations
Company 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Total DMF#
w hile e n ga gin g in im ports to
Aurobindo 0 0 0 0 0 0 2 1 7 2 9 1 27 1 19 3§18 3 17 0 99 11 144
source cheap raw materials.
Dr Reddy's 5 1 4 2 3 0 3 3 6 2 14 4 13 2 13 1 17 4 11 6 83 31 153
5 15 5 6 2 3 3 1 81 46 101 It app ea rs that bu lk dru gs
Ranbaxy 3 1 11 1 3 15 9 14 14 6 3 1 7
Sun 0 0 0 0 0 0 0 0 0 0 7 0 10 3 21 2 17 5 12 0 67 10 70 are n o m ore a m ajor area o f
Wockhardt 0 0 0 0 4 0 0 0 4 1 6 0 13 1 18 0 14 1 5 0 64 3 43 fo cu s o f the In dian p h arm a­
Glenmark 0 0 0 0 0 0 0 0 0 0 4 0 9 2 5 0 9 1 19 3 46 6 45 ceu tical in du stry and it has
Lupin 0 0 0 0 3 0 2 2 5 0 6 3 7 2 4 1 1 0 12 3 40 11 100 a d o p te d a differen t strategy
Orchid 0 0 0 0 0 0 0 0 9 0 9 0 4 1 3 0 3 2 2 0 30 3 77 in the bu lk d ru g s seg m e n t
Matrix 0 0 0 0 0 0 1 0 0 0 0 0 1 0 2 1 3 1 10 1 17 3 139 in the post-TRIPs era. Bulk
Cipla 0 0 0 0 0 0 0 0 0 0 0 0 2 0 4 0 3 1 1 0 10 1 90
d ru g s as an e x p ort ca te g ory d o
Total 8 Hi 15 5 25 9 22 11 46 10 61 10 100 18 92 9 92 21 92 14 537 125 962
n ot en joy a com pa rativ e a d ­
Figures in the shaded columns indicate first-time generic approvals; # Type II DMF.
Source: US FDA.22 va n ta ge an ym ore th ou gh the
An exp an sion in ex p orts o f bu lk dru gs and a declin e in p ro ­ rate o f g ro w th o f e x p orts has accelera ted in recen t years.
duction indicate m ore im ports. Firms are in creasin gly im port­ P rod u ction for co m p a n ie s in fore ig n cou n tries has b e e n an
in g bulk drugs, their in term ediates and fine ch em icals against im p ortan t factor that has m ain ta in ed the p ace o f exports.
relying on in digen ou s p rodu ction as they u sed to do. Data on T he g ro w th in in d ig en o u s p ro d u ctio n o f bu lk d ru g s has d e ­
the im port o f raw m aterials from the P row ess database sh ow s clin e d in the post-2005 p e rio d and the in du stry is in cre a s­
that the share o f raw m aterials im p orted in sales turnover in gly m e e tin g its requ irem en ts o f bu lk drugs, in term edia tes
grew from 9% in 1990-91 to 11% in 2000-01 and 14% in 2008-09. and oth er raw m aterials th rou gh im ports.
There are differen t levels o f value addition in bu lk dru gs T he d estin a tio n s o f e x p o rts o f form u la tion s (region-
m anufacturing and the Indian bu lk dru gs industry see m s to w ise) have ch a n g ed in a m ajor w a y in the last tw o d e ca d e s
focus on the h igh er en d o f the value chain. The abolition o f the (Table 9). T he share o f E u rop e d ra stica lly d e clin e d from
ratio param eter lin k in g the p rodu ction o f form ulation s to in di­ ab ou t tw o-th irds in 1991 to a q u arter in 2009. O n the oth er
genously p ro d u ce d bu lk dru gs from ba sic stages and redu c­ hand, A frica and A m erica are in cre a sin g ly b e c o m in g m ajor
tions in im port duty have ea sed constraints on im p orts o f bu lk e x p o rt destin ation s. M ore than 80% o f the e x p o rts to
drugs and oth er raw materials. T he im p ort duty on orga n ic A m erica are d e stin ed for N orth A m erica, e sp e cia lly the us.
chem icals, in clu d in g bu lk drugs, w a s re d u ce d fro m 120% in Tables 9 and 10 sh o w that e x p o rts to Asia and its su b reg ion s
1990-91 to 7.5% in 2007-08.26 A n oth er im p ortan t factor co n ­ have fallen in this decade. E xp orts to ib s a p artn ers (Brazil
tributing to the d e clin e in d o m e stic p ro d u ctio n has b e e n the and South Africa) have sh o w n a g r o w in g trend. Overall,
im plem en tation o f S ch edu le M ( g oo d m an u factu rin g p ra c­ the drivers o f p h a rm a ceu tica l e x p o rts have b e e n N orth
tices) o f the D rugs and C o sm etics Act sin ce July 2005. As a A m erica, A frica and the ib s a partners. S ou th A m erica and
con sequ en ce, a n u m ber o f sm all and m e d iu m en terprises Asia, in clu d in g the su b reg ion s an d r e g io n a l arran gem en ts
(s m e s ) m an ufacturing bu lk d ru gs have had to shut d ow n oper- w ith in Asia, se e m to b e relativ ely less sign ifican t to p h a rm a ­
Table 9: Region-wise Share in Exports of ations. The s m e sector has ce u tica l exports.
Formulations b e e n a m ajor p rodu cer o f
Table 10: Share in Exports (Formulations) - Selected Regions and Groupings
Year Europe Africa America Asia Oceania
bu lk dru gs in India. Year NAmerica SAmerica WAsia SAARC BIMSTEC ASEAN IBSA
1991 63.8 8.0 7.1 20.6 0.6 The bu lk d ru gs s e g ­ 1991 6.6 2.5 7.4 7.3 7.4 4.5 0.1
1992 51.3 16.7 7.3 23.7 1.0
m ent is h igh ly co m p e ti­ 1993 6.9 5.3 8.6 8.0 8.6 5.3 1.6
1993 48.6 15.8 8.4 26.2 1.1 1995 8.4 6.0 8.0 7.4 8.0 8.7 1.2
tive w ith a large num ber
1994 45.8 15.1 8.9 29.6 0.7 1997 6.8 6.1 8.3 8.0 8.3 8.0 2.3
o f players, m aking returns
1995 41.1 16.2 10.8 31.2 0.6 1999 6.9 6.8 9.3 7.9 9.3 10.6 2.5
1996 41.5 15.5 10.8 31.5 0.8 very low. The Hathi C o m ­
2001 14.2 5.1 8.6 7.4 8.6 8.6 3.7
1997 39.8 17.4 10.2 31.9 0.8 m ittee (1975) had w ork ed
2003 22.2 4.6 7.5 7.6 7.5 6.8 3.4
1998 28.2 21.3 12.4 37.0 1.1 out the capital invested- 2005 13.2 6.4 6.7 6.7 6.7 6.6 4.7
1999 31.8 19.3 11.3 36.1 1.5 turnover ratio for bulk 2007 25.1 3.9 5.6 5.2 5.6 5.8 5.3
2000 31.2 22.6 12.3 32.4 1.5 dru gs and form ulations 2009 26.2 4.0 5.2 4.5 5.2 6.4 5.9
2001 28.2 21.1 20.3 29.1 1.3 m anufacturing. It esti­ Source: COMTRADE.

2002 28.5 22.3 22.2 25.6 1.1 m ated 1:1 for bulk drugs The ren ew ed v igou r w orld w id e to en force in tellectu al p ro p ­
2003 27.7 19.1 27.1 24.8 1.0 at its best and 1:2.6 for erty rights w ill have im plication s for the Indian pharm aceuti­
2004 30.8 20.1 25.1 22.8 1.0
form ulations on an aver­ cal industry given that A frica is a m ajor ex p ort focus. Recent
2005 33.2 20.8 20.3 24.1 1.5
age, w hich in som e cases anti-counterfeit initiatives at various levels - the W orld Health
2006 29.6 23.1 25.5 20.6 1.2
w ou ld be as high as 1:7.2. O rgan isation (w h o ), the Anti-Counterfeiting Trade A g ree­
2007 27.7 21.5 31.4 18.2 1.2
2008 31.5 23.3 27.7 16.3 1.3 Due to this, w ith the ratio m ent (a c t a ) and som e free trade agreem en ts (f ta s ) w ith the
2009 24.6 23.5 31.8 18.0 2.0 param eter no m ore in E uropean Union (e u ) - attem pt to elim inate the distin ction
Source: COMTRADE. force, firms in India tend b e tw ee n substandard (quality issue), coun terfeit (trademark

68 MAY 5, 2012 VOL XLVII NO l8 E con om ic & P olitica l w e e k ly

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issue) and generic (patent issue) drugs. In the process, legitim ate The in creasin g dep en d en ce on im ports o f bulk drugs, w hich
generics (for w hich no patent exists in the ex p ortin g country prim a facie seem s to be undesirable, n eeds to be seen in the
or im p ortin g country) have b een targeted under the counter­ con text o f the ch an gin g dyn am ics o f the industry. Im port
feit label. Such initiatives, su p p orted by ph arm aceutical lo b ­ dep en d en ce o f the pharm aceutical industry five d ecades ago
bies and the eu , have fou n d takers in d e v e lop in g countries, w as beca u se o f the lack o f m an ufactu rin g capabilities. The sit­
esp e cia lly in east Africa. The east A frican region has recen tly uation has ch an ged and the in creasin g d epen d en ce o f the
seen a few p olicie s and legisla tion s co m in g up to address the presen t tim e is not due to lack o f capabilities, but due to the
coun terfeit d ru g problem . Kenya ad o p ted the Kenya Anti- availability o f ch eaper interm ediates and bulk drugs in foreign
C ounterfeit Act in 200827 and T anzania and U ganda p ro p o se countries. The in creasin g export-orientation o f the industry
to en act sim ilar laws. The cu lm in ation o f all th ese initiatives has forced firms to look for ch eaper inputs to m aintain their
has b een a region a l anti-counterfeit p o licy and law - the East com petitive advantage in the international market. The in ­
A frican C om m u n ity P olicy on Anti-Counterfeiting, Anti- creasin g dep en d en ce on bulk drugs, interm ediates and other
P iracy and Other Intellectual P roperty Rights V iolations28 raw m aterials is an ou tcom e o f the shift in the orientation o f
and the East A frican C om m un ity Anti-Counterfeit Bill, 2010 the exp ort com p osition o f the industry - it is b e co m in g m ore
(M usungu 2010). and m ore form ulations-oriented, and that to o w ith the brand
The Kenyan law raised con siderable public debate on h ow India im a ge (good quality at a low price).33
such law s m igh t affect access to gen eric drugs. It states that W hen firms are orien ted tow ards the d om estic market,
co p ies or gen eric versions o f all produ cts having patent p ro tec­ there are few incentives to reduce the cost o f p rodu ction b e ­
tion in Kenya or elsew h ere can b e con sid ered “
coun terfeit”in cause about 50% o f the dru gs in the retail market in India are
case o f an intellectual p roperty dispute w ith the patent holder. un der a cost-based price con trol system (100% o f the dru gs
This m ay classify a genu in e d ru g ex p orted from India to Kenya w ere un der price con trol in 1970, w hich cam e d ow n to 90% in
as a counterfeit dru g if a com pan y that d o e s not hold a patent 1979, 70% in 1987 and 50% in 1995) that assures com pa n ies a
for that particular d ru g either in India or Kenya but in som e p redefin ed rate o f return. The incentives g o to p rom otin g
third coun try raises a dispute over it. The Kenyan law, h ow ­ produ cts rather than in n ovatin g to reduce cost, w hich explain s
ever, w as ch allen ged in the cou n try’
s high cou rt29 by three w hy high am ounts are spent on advertising and m arketing in­
p e o p le livin g w ith h iv /a id s on the gro u n d s that it w ou ld stead o f research and develop m en t (r & d ) by both m n c s and
adversely affect their access to affordable g en eric h iv drugs. Indian firms. T he Indian pharm aceutical industry spent 4.8%
The p etition ers h eld that the Act co n fu se d q uality and in tel­ o f its sales turnover on r & d in 2008-09 w hereas its spen d in g
lectual p roperty rights issues, thereby defin in g legitim ate on advertisem ents and m arketing w as 6%.34 As firms in creas­
g en eric d ru gs as counterfeits. Satisfied w ith the petition, ingly enter foreign markets, co st b e co m e s a critical factor and
Justice M w en doh issu ed in terlocutory orders on 23 April 2010 they im p ort ch eaper raw m aterials to curtail the co st o f p r o ­
su spen d in g the p ow ers o f the anti-counterfeit a gen cy to inter­ duction. As the industry gradually sheds its focu s on bulk
fere w ith the im port and distribution o f gen eric m ed icin es in dru gs in its external orientation, there is little to gain from the
Kenya.30 Indian pharm aceutical exp orters have ex p ressed brand India im a ge in the case o f form ulations and therefore no
con cern that legislation s like that o f Kenya cou ld seriously com pu lsion s for p rodu ction w ithin India.
affect the cou n try’
s exports.31 Figure 5: Ratio of Exports to Imports of Raw Materials
6 Im p o rts o f Bulk D ru gs a n d F orm u la tion s Taken-over Firms

T h e im p o rt su bstitu tion p o lic y a d o p te d b y the p h a rm a ceu ti­

cal se c to r su cce ssfu lly e lim in a ted a h ea vy d e p e n d e n ce on
im ports. Currently, the d e p e n d e n ce is a rou n d 11% o f the
p ro d u ctio n (Table 11). H ow ever, in the bu lk d ru g s segm en t,
the in du stry still has a h igh Table 11: ImportsProductlon Ratio
d e p e n d e n ce on im ports, Year BulkDrugs Formulations Total
w h ich a ccou n t for 40% o f 1991 32 5 9
1995 72 2 13
the p ro d u ctio n .32 T he h igh 1990-91 1992-93 1994-95 1996-97 1998-99 2000-01 2002-03 2004-05 2006-07 2008-09
2000 32 3 8 Source: Prowess.
im p ort-p rod u ction ratio is
2005 32 4 10
b e ca u se o f the in crea se in The v iew that the in creasin g em phasis b e in g placed on the
2006 33 5 11
the value o f im p orts as w ell exp ort o f form ulations is resulting in in creased im ports o f bulk
2007 41 5 13
as the d e clin e in the g ro w th 2008 11 drugs, interm ediates and oth er raw m aterials is further
35 5
o f d o m e stic produ ction . In 2009 40 5 11 stren gth en ed by the observation that there is a positive a sso ­
contrast, in form ulation s, source: c o m t r a d e and id m a . ciation b e tw ee n exp orts and im ports o f raw materials. The
im p o rts accou n t for o n ly 5% o f the p rodu ction . Unlike in the ratio o f exp orts to im ports o f raw m aterials show s that the
ca se o f e x p o rts w h ere form u lation s had a m ajor share (78% taken-over firms, the m ost export-oriented firms, have the
in 2009), bu lk d ru g s accou n t for the lio n ’
s share in im ports, h ighest ratio (Figure 5 ). And the m ncs, w hich are the least
o fte n e x c e e d in g tw o-thirds o f the total (Table 2). export-oriented, have the low est ratio.

E con om ic & Political w e e k ly KBSS 3 m ay 5, 2012 v o l x l v i i n o 18 69

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Leading producers of bulk drugs have recently entered the units have been shut down while others have cut down manu­
formulations business in partnership with foreign firms. facturing of loss-making drug categories.37India’ s dependence
Aurobindo Pharma, a major producer of bulk drugs, entered into on China is such that it does not have adequate domestic
agreements with AstraZenica in 2010 and Pfizer in 2009 for manufacturing capacity to meet the demand for intermediates
the supply of a number of formulations, which are expected to and bulk drugs if supplies from the neighbour cease for
fetch it $350-$500 million in the coming years.35To meet the unforeseen reasons.
demand, the company is increasingly engaged in the import of Cost advantage is the factor driving Indian manufacturers
raw materials. The share of imports of raw materials in the to shun indigenous production and engage in imports. For ex­
company’ s sales turnover increased from Table 12: Largest Importers of Raw Materials in 2008-09 ample, theophiline from China is 10%
31% in 2000-01 to 42% in 2008-09. Company Imports % cheaper compared to the cost of indig­
Table 12 lists the leading importers of $Mn inSales enous production. Chinese firms are
raw materials in the pharmaceuticals A urob in do Pharma 260.8 41.5 able to sell bulk drugs at lower prices
sector in India. Most of the top exporters Cipla 209.9 18.2 not only due to subsidies (for exam­
Ranbaxy Laboratories 152.8 15.5
of pharmaceuticals (finished goods; ple, power subsidies), but also due to
Dr Reddy's Laboratories 120.6 12.2
Table 3) figure in the list of top 10 im­ better technologies. For example, in
Lupin 108.2 16.6
porters of raw materials. fermentation (an essential process in
Panacea Biotec 99.6 58.6
T h ough w e d o not have p recise data M atrix Laboratories 74.0 22.6 the production of bulk drugs), Indian
to back this view, the available in dica­ Nectar Lifesciences 67.4 39.5 firms still use sugar whereas the tech­
tions su g g est that the industry is fo ­ Orchid Chemicals and Pharmaceuticals 61.5 23.5 nology in China enables its firms to
cu sin g on the higher en d o f the value Hetero Drugs 59.8 23.1 use cauliflower, which is much
chain in the p rodu ction o f bulk drugs. Source: Prowess. cheaper.38
T here are n o data available separately on the p rodu ction o f To revive the domestic production of bulk drugs, concerted
final bu lk d ru gs and their interm ediates. But the in crease in efforts need to be undertaken on various fronts. A task force of
im ports o f pharm aceutical raw m aterials and the fast grow th the Department of Commerce (2008) on the strategy for in­
o f exp orts o f a p i s in recen t years, esp ecially to the us, indicate creasing exports of pharmaceutical products suggested that
that im p orted raw m aterials and interm ediates are p ro ce sse d India create a policy environment that enables its small and
in FDA-approved plants into final a p i s and then ex p orted to cli­ medium chemical industry to position itself to address the
ents in the u s and oth er countries. This strategy m akes e c o ­ back-end needs of the pharmaceutical industry. Reviving the
n om ic sense, but it m ay place the industry in trouble if an a d e­ production of bulk drugs also needs new environment-friendly
quate supply o f raw m aterials can n ot b e guaranteed in the technologies. Basic drugs and pharmaceuticals are among the
lon g term. The threat b e co m e s m ore serious w hen 17 high-polluting industries identified by the Central Pollution
im p orts are sou rced from a Figure 6: Import of Bulk Drugs - Control Board. Technologies such as biocatalysts reduce the
sin gle coun try - an inter­ Leading Sources in 2009 number of chemical processes and hence the amount of pollu­
ruption in the supply from a tion. Although this technology is in use in food production and
sin gle cou n try can put the environmental management in developed countries, it hardly
w h ole industry in jeopardy. exists in drug production. Since the developed countries have
India’ s dependence on im­ systematically outsourced bulk drug production to developing
ports (for bulk drugs and countries such as India and China, we need not expect they
other raw materials) is in­ are going to pass on such technologies as well (Department of
creasingly shifting to a sin­ Commerce 2008).
gle country - China. In In formulations, however, the country did not face any
2009, imports from China spurt in imports with the change in the patent law. Imports of
accounted for 52% ($686 formulations continue to account for 5% of its production
million) of the total imports (3.9%) and this ratio was the same even before the t r i p s provisions
of bulk drugs (Figure 6). Source: COMTRADE. were fully implemented, m n c s have been the major importers
The report of the task force on the strategy for enhancing and Switzerland is the major source of supply, accounting for
exports of pharmaceutical products36has pointed out that the 39% in 2009. Though it may take some more time to know
Indian pharmaceutical sector has been sourcing its require­ how exactly the new intellectual property rights regime is
ment of chemical intermediates and bulk drugs in large quan­ going to affect imports of formulations, our patent law has
tities from China for some time; at times almost 60% to 70% of sufficient safeguards to prevent frivolous patents and ever-
our requirement of intermediates. A recent crackdown on the greening, which has been a major reason for the restricted
chemical industry in China to enforce environmental legisla­ operability of generic firms in countries such as the us. To the
tion resulted in a shortage of supply and a hike in prices, extent that India is able to prevent frivolous patents and
affecting not only the bottom lines of Indian companies but also Indian firms are able to produce generics, the threat of
the very existence of many firms. Due to shortage of raw mate­ increased imports of formulations is diluted. Importing generic
rials and their rising prices, about 50 bulk drug manufacturing formulations will not be a viable strategy for m n c s to compete

7° m ay 2012 VOL XLVII NO 18 DESS E con om ic & P olitical weekly

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with producers of generics in India. The f d a approved 305 remains at a relatively lower level. Africa being a major desti­
new medical entities ( n m e s ) between 1995 and 2004. Of nation of exports, an overzealous drive to enforce intellectual
these, patents for 298 had expired before 1995 and Indian property rights under the guise of an anti-counterfeit initiative
firms will be able to produce them. Of the remaining seven in the region, especially in east Africa, is a cause of concern for
n m e s , Indian firms had obtained marketing approval in the Indian pharmaceutical industry.
India for three before 2005.39The Indian Patents Act provides The change in the export orientation has resulted in a
that those drugs for which significant investment has gone change in the production structure. To maintain their price
into production and marketing will continue to be produced competitiveness in the international market, Indian firms have
and marketed with payment of royalties in case they (applica­ had to look at options for reducing cost, a compulsion they did
tion in the mail-box) get patents after 2005. In 2010, there not face when they were mainly focused on the domestic mar­
were only four n m e s that were candidates for patent protec­ ket. The drug price control system that covered a substantial
tion in India. If India continues to apply a high threshold part of the retail medicine market assured them a predefined
for patents, there will not be too many patented drugs for rate of profits. Hence the incentive was not directed towards
which domestic production cannot provide generic substi­ reducing costs but promoting products. As a result, imports
tutes. If generic substitutes are available, it is less likely that from cheaper sources of bulk drugs, their intermediates and
m n c s will import the drugs from their parent firms. There­ other raw materials began to increase, while domestic produc­
fore, the threat of a spurt in imports of formulations may not tion from basic stages began to decline. More than 50% of bulk
be a real in the near future. drugs and other raw materials are now imported from China. A
heavy dependence on a single country for raw materials puts
7 Conclusions the industry at risk. As imports of bulk drugs and other raw
The export orientation of the Indian pharmaceutical industry materials continue to grow, the industry continues to have a
has undergone a change with the amendment in the intellec­ negative trade balance in the bulk drugs category. However, in
tual property rights regime. There are two aspects to this. formulations, the industry has a substantial surplus, which off­
First, it has become more export-oriented in order to counter sets the deficit of the bulk drugs segment. Overall the industry
the threat of reduced domestic operability and to remain in thus has a trade surplus. In formulations, imports have not
business. Second, of the two export categories - bulk drugs surged because adequate safeguards have been built into the
and formulations - the focus has shifted to formulations. The Patents Act. These protections limit the number of patented
acceleration in the export of formulations has mostly been drugs in the country and also provide space for generic compe­
driven by the us, Africa and i b s a partners and the growth in tition. Imports of formulations, though very limited, are done
exports to neighbouring countries and to Latin America mostly by the m n c s .

n o tes ________________________________________________ a n im a s a n d t h o s e c o m i n g u n d e r t h e a y u rv ed a , 15 “D r u g s G r o u p s D iv e r s ify A w ay F r o m P a ten ts”

1 H e u s e d th e d a ta p r o v id e d b y th e D ir e c t o r a t e sidh a, u n a n i a n d h o m e o s y s t e m s h a v e b e e n Financial Times, 21 O c t o b e r 2010.
G e n e r a l o f C o m m e r c ia l I n t e llig e n c e a n d S ta tis­ e x c lu d e d f r o m its p u rv iew . 16 Im p o r t d u ty o f o r g a n ic ch e m ica ls, in c lu d in g
tic s (D G CI& S) u s in g t h e h a r m o n is e d s y s t e m 7 “M ed icam en ts (excluding g o o d s o f h ea d in g 3002, b u lk d ru g s, w a s r e d u c e d f r o m 120% in 1990-91
(HS) o f c o m m o d i t y c la ssifica tio n . H S c h a p t e r 3005 o r 3006) c o n s is t in g o f t w o o r m o r e co n stitu ­ t o 7.5% in 2007-08 (Jha 2007).
30 w a s u s e d t o c la s s ify f o r m u la t io n s a n d a list en ts w h ic h h a v e b e e n m ix e d t o g e t h e r fo r t h e r a ­ 17 B a s e d o n P r o w e s s data.
o f 359 p r o d u c ts (at eigh t- d ig it level) c o n s is t in g p e u t ic o r p r o p h y la c t ic u ses, n o t p u t u p in m e a s ­ 18 R a n b a x y w a s s u c c e s s fu l in c h a lle n g in g GSK ’ s
o f ite m s f r o m H S c h a p t e r s 15,17,28 a n d 29 w a s u re d d o s e s o r in fo rm s o r p a c k in g s fo r retail sale.” p a te n t o n C e ft in (antibiotic). G SK file d a su it in
u s e d t o c la s s ify b u lk d ru gs. 8 “M ed icam en ts (excluding g o o d s o f h ea d in g 3002, th e d is t r ic t c o u r t o f N e w J e r s e y in O c t o b e r
2 C O M T R A D E is th e t ra d e d a t a b a s e m a n a g e d b y 3005 o r 3006) c o n s is t in g o f m ix e d o r u n m ix e d 2000 a n d t h e c o u r t is s u e d a p r e lim in a r y in ­
U n ite d N a tio n s S ta tis tic s D iv is io n (SIDC). A ll p r o d u c t s fo r th e r a p e u tic o r p r o p h y la c t ic u ses, j u n c t io n th a t p r e v e n te d R a n b a x y f r o m m a rk et­
m e m b e r c o u n t r ie s o f th e UN r e p o r t e x p o r t a n d p u t u p in m e a s u re d d o s e s ( in clu d in g t h o s e in the in g its g e n e r ic v ersio n . H o w ev er, in 2001, R a n ­
im p o r t v a lu e s t o t h e U N SD b a s e d o n th e S ta n d ­ fo r m o f t r a n s d e r m a l a d m in is t r a tio n system s) b a x y c o m m e r c ia lly la u n c h e d its p r o d u c t a fte r
a rd In te rn a tio n a l T ra d e C la s s ific a t io n (SITC). o r in f o r m s o r p a c k in g s f o r r e t a il sale.” t h e C o u r t o f A p p e a ls fo r t h e F e d e r a l C irc u it v a ­
In India, th e D G C I& S is th e n o d a l a g e n c y 9 T h e c o r r e s p o n d e n c e b e t w e e n S IT C R e v 3 a n d c a t e d th e p r e lim in a r y in ju n ction . A fte r a fu ll
r e p o r t in g d a ta o n e x p o r t s a n d im p o rts. H S 2002. trial, th e d is t r ic t c o u r t r u le d th a t R a n b a x y ’ s
3 T h is v a ria tio n is d u e t o th e d if fe r e n c e s in y e a r 10 B a s e d o n C O M T R A D E data. p r o d u c t d id n o t in fr in g e GSK ’ s p a te n t a n d th a t
e n d in g s a s w e l l a s th e d if fe r e n c e s in p r o d u c t s 11 M a trix w a s ta k e n o v e r b y M y la n In c (USA) in R a n b a x y w a s n o t r e q u ir e d t o p a y a n y d a m a g e s .
in c lu d e d in th e cla ssific a tio n . F o r C O M T R A D E / A u g u s t 2006 a n d R a n b a x y b y D a iic h i (Japan) 19 “In n o v a t io n H a s H e lp e d D r u g F irm s T ak e o n
SITC, p h a r m a c e u t ic a l p r o d u c t s c o n s is t o f p r o d ­ in J u ly 2008. , Mint, 9 S e p t e m b e r 2010.
B ig P h a rm a ”
u c t s f r o m H S c h a p t e r s 26, 29 a n d 30 w h e r e a s 12 D a b u r w a s tak en over by F re s e n iu s K abi 20 “R a n b a x y G e t s N o d t o S e ll P o p u la r G e n e r ic in
f o r th e d e p a r t m e n t o f p h a r m a c e u t ic a ls it c o n ­ (S in ga p ore) in A p ril 2008 a n d S h a n ta B io te ch , Economic Times, 22 S e p t e m b e r 2010.
U S”
s is ts o f p r o d u c ts f r o m H S c h a p t e r s 15,17,28,29, b y S a n o fi A v en tis (France) in J u ly 2008. 21 S e e C h a u d h u ri (2007) a n d “U SFD A D o o r W id e
3 0 , 35, 38,56 a n d 96. 13 L eadin g g lo b a l ph arm aceu tical firm s are e x p ecte d , Business Standard,
O p e n fo r In d ia n P h a rm a C o s ”
4 E u ro p ea n M e d icin e s A g e n c y (2005), “
N ote fo r t o su ffer substantial e ro sio n in their sales fro m the 6 M a r ch 2009.
G u id a n ce o n D ata E lem en ts a n d S tan d ards fo r c o m p e t it io n t h e y w i ll fa c e f r o m g e n e r ic p r o ­ 22 h tt p :/ / w w w . fd a . g o v / D r u g s / D e v e lo p m e n tA p -
D ru g D iction a ries”, (EM EA/CHM yiCH/168535/ du cers. In d u stry e stim a tes in d ica te that in 2010, p r o v a lP r o c e s s / H o w D r u g sa r e D e v e lo p e d a n d
2005). 6 8 % o f th e sa le s o f m ark et le a d e r P fizer in clu d e d A p p ro v e d / D ru g a n d B io lo g icA p p ro v a lR e p o rts/
5 U SFD A (2001), “G u id a n c e fo r In d u stry : Q7A p r o d u c t s w h o s e p a te n ts w i ll e x p ir e in th e n e x t A N D A G en ericD ru gA pprovals/u cm 0 5 0 5 2 7 .h tm ;
G ood M a n u fa c tu r in g P ra c tic e G u id a n c e fo r th r e e years. F or E li Lilly, t h e risk f r o m g e n e r ic d ata fo r ANDA a p p r o v e s (not first-time generics)
A ctiv e P h a rm a c e u tic a l I n g r e d ie n t s ”
, C e n tre fo r c o m p e t it io n in th e n e x t th r e e y e a r s w i ll b e a s s in c e 2007 w a s a c c e s s e d fr o m h ttp://w w w .ac-
D r u g E v a lu a tio n a n d R e s e a r c h a n d C e n t r e fo r h ig h a s 6 6 % o f to t a l s a le s in 2010 (D h ar 2011). cessd ata.fd a.gov / scrip ts/ cd er/ d ru gsa tfd a/in d ex .
B io lo g ie s E v a lu a tio n a n d R esea rch . 14 D e p a r tm e n t o f In d u s tria l P r o m o t io n a n d P o lic y cfm ? fu se a c tio n = R e p o its . R e p o its M e n u ; a n d th e
6 A s th e D P C O is a im e d at p rice co n tro l o f e sse n tia l d iscu ssion p a p er on “
C o m p u lso ry L icensing”
, D M F d a ta w a s d o w n l o a d e d f r o m h ttp :/ / w w w .
m e d ic in e s, m e d ic in e s fo r th e tre a t m e n t o f 2010. fd a . g o v / D r u g s/ D e v e lo p m e n t A p p r o v a lP r o ce s s /

E con om ic & P olitical weekly E33S9 m a y 5, 2012 v o l x l v ii n o 18 71

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F o rm s S u b m is sio n R e q u ir e m e n t s / D r u g M a st e r - 34 B a s e d o n th e P r o w e s s d atab ase. Jha, R a v in d e r (2007): “In d ia n P h a rm a c e u tic a l
F ile s D M F s/ d e fa u lt.h t m # d o w n lo a d o n 21 F e b ­ 35 “
A u r o b in d o In k s P a ct w ith A s t r a Z e n ic a fo r In d u stry : G row th , In n o v a t io n a n d P r ic e s ”
, P hD
ru a r y 2011. , Economic
G e n e r ic s ” Times, 7 S e p t e m b e r 2010. t h e s is s u b m itt e d t o J a w a h a rla l N eh ru U n iver­
23 A c c o r d in g to FDA rep o rts, firm s f r o m In d ia h ad 36 S e e D e p a r t m e n t o f C o m m e r c e (2008). sity, N e w D elh i.
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Economic Times, 15 A u g u s t 2008.
24 O w in g t o d e v e lo p m e n t s o u t s id e India, 2009
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32 T h is a n a ly s is h as b e e n b a s e d o n C O M T R A D E Im p lic a tio n s fo r A c c e s s t o M e d ic in e s ” in Five M u su n gu , S isu le F (2010): “T h e P o te n tia l Im p a c t o f

d a ta o n im p o r t s a n d ID M A d a ta o n p ro d u c tio n . Years into the Product Patent Regime: India’ s th e P r o p o s e d E a st A frica n C o m m u n it y (EAC)
T h o u g h t h e s e d a ta a r e n o t str ic tly c o m p a r a b le Response, UNDP, N e w York. A n ti- C o u n te rfe itin g P o lic y a n d B ill o n A c c e s s t o
b e c a u s e th e y h a v e d iffe r e n t y e a r e n d in g s, th e G race, C h e r y (2004): The Effect of Changing Intel­ E s s e n t ia l M e d ic in e s ”
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33 In d ia la u n c h e d a m a s s iv e b r a n d In d ia c a m ­ t e m s R e s o u r c e s C en tre, L on d on . t io n f o r G r o w t h ”
, P w C , N e w D elh i.
p a ig n in A frica n c o u n t r ie s t o g a in th e ir c o n fi­ H ath i C o m m itte e (1975): “R e p o rt o f th e C o m m itte e in Sm ith , P a m e la J (1999): “
A re W e a k P aten t R ig h ts a
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72 may 5, 2012 v o l x l v ii n o 18 D3Q Economic &Political weekly

T h i s c o n t e n t d o w n l o a d e d f r o m o n T u e , 06 N o v 2018 23 :58:13 U T C

A l l u s e s u b j e c t t o h ttp s:/ / a b o u t.jsto r.o rg / te rm s

Assessing the Role of Perhaps one consequence of a dimin­

ished role for m f i s as credit providers for

Government-led Microcredit the poor may be an enhanced role for

the government. A closer look at the evi­
dence regarding the effectiveness of
institutions with significant government
J O R D I D E L A T O R R E , X A V IE R G IN E , T A R A V IS H W A N A T H __________________________________ involvement in providing access to credit
for the poor is clearly warranted.

Using survey data collected in 2007 he microfinance revolution that In this article we report findings from
from three districts in Andhra started 30 years ago has resulted, a survey conducted in three districts in
as of last count, in more than a p in 2007 designed to assess the per­
Pradesh, this article assesses the
3,500 microfinance institutions ( m f i s ) formance of rural credit cooperatives
performance of 72 primary that collectively serve almost 150 million and in particular the primary agricul­
agricultural credit cooperatives. It clients worldwide (Daley-Harris 2009). tural credit societies ( p a c s ) . p a c s are the
finds that these credit cooperatives Proponents of microfinance claim that lowest tier of the rural cooperative
by using innovative contract features, banking system. They focus primarily on
tend to be used as political
such as joint liability, frequent repay­ providing short-term (seasonal) credit for
instruments and, as a result, ments and escalating loan sizes, m f i s agricultural purposes and are regulated
borrowers prioritise all debt have managed to achieve high repay­ by the National Bank for Agriculture and
obligations to microfinance ment rates while serving a fraction of Rural Development ( n a b a r d ) . Accord­
the w orld’ s poor. Without proper access ing to the Reserve Bank of India ( r b i ) ,
institutions, informal moneylenders
to financial services, the poor have to there were 94,942 p a c s in 2008, each
and others, before primary rely on their own scarce resources and one serving seven villages on average,
agricultural credit cooperatives. uncertain incomes to invest in education, with a total membership of 131 million
The authors suggest that if the start new businesses or enhance the individuals, 79 million of which were
productivity of the land they cultivate. borrowers (Johnson and Meka 2010).
performance of these credit
Underinvestment in these crucial assets The experience of p a c s may prove
cooperatives does not improve, a tends to keep their overall productivity useful in shedding light on the debate
larger government role in the supply low, making it very hard for them to surrounding the role of government in­
of credit may undermine the culture escape the vicious cycle of poverty. tervention in access to credit for the
The recent crisis in Andhra Pradesh poor, especially in rural areas.
of repayment.
( a p ) , however, has called into question We find evidence that p a c s were
the role that m f i s play in providing ac­ used as political instruments. Borrow­
cess to financial services to the poor. The ers responded by prioritising all debt
crisis was triggered by an ordinance obligations ( m f i s , informal lenders, etc)
promulgated by the Government of a p , 1 ahead of repayment of p a c s loans. This
in response to allegations of over-indebt­ indicates that there is a weak culture
edness of clients due to careless lending around repaying institutions with sig­
practices and rumours of debt-related nificant government involvement. A
suicides among m f i borrowers. private sector solution that is shielded
While there may be some truth to these from government interference may be
allegations, partly a result of the rapid desirable to that extent.
We would like to thank Giovanna Pernushi growth that m f i s have experienced in re­ The article proceeds as follows. We
and Niraj Verma for valuable comments. The cent years, especially in a p , m f i s do serve first describe the data and the sources of
views expressed are those of the authors and an important segment of society, particu­ credit used by the sample of households
should not be attributed to the World Bank, its larly those who lack assets that can be interviewed. We then discuss p a c s man­
executive directors, or the countries
used as collateral. Repayment rates remain agement practices and the impact of
they represent.
low today, and if proper measures are not politics on the culture of repayment.
Jordi de la Torre (j.delatorreanglada@gmail.
successfully implemented, the micro­
com ) is with Georgetown Law. Xavier Gine
finance sector may wither or disappear Data
(xgine@worldbank.org ) is with the World
Bank and Bureau for Research and Economic altogether. If this were to happen, what Our data includes 72 p a c s from the
Analysis of Development. Tara Vishwanath then are the feasible credit alternatives? districts of Anantapur, Mahabubnagar
Qyishwanath@worldbank.org) is with the And will they contribute to the efficiency and Vizianagaram in a p with audited
World Bank.
of credit markets for the poor? recovery rates as of June 2004 between

Economic & Political w e e k ly 13259 m ay 5, 2012 v o l x l v i i n o 18 73

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Figure 1: Households' Preferred Sources of Credit (in %) Figure 2: Percentage of HH That Have At Least One Loan with...(in %)


Formal 50


SHG 20

All Marginal farmers Small farmers Large farmers All Marginal farmers Small farmers Large farmers
Source: Household survey conducted in three districts in AP in 2007. Source: Household survey conducted in three districts in AP in 2007.

25% and 75%. The data u sed in this A bout 6% o f h ouseh olds o w n ed less actual ch oice.4 The data sh ow that only
article are part o f the b a selin e co lle cte d than one acre, 40.2% had lan dholdin gs 6% o f h ouseh olds had a loan w ith an
for the assessm en t o f a G overn m en t o f o f less than five acres and the rem ainin g s h g , and perhaps as a consequence, they
India reform p ro gra m m e that fo llo w e d 54.3% o f h ouseh olds o w n ed m ore than w ere a lm ost never the preferred source
the re com m en d a tion s o f a Task Force five acres o f land. A m ong households with for credit (less than 2% o f h ouseh olds
led by A V aidyanathan w h ich su bm itted a p a c s borrower, alm ost 42% ow n ed m ore rank s h g s above other sources). This is
its report on revival o f rural cooperative than five acres. T hese h ou seh olds w ou ld n ot too surprising, as s h g s target the
credit institutions in February 2005. The be classified as large farmers, p rovidin g p oo re st h ouseholds in the community.
p rogram m e sought to transfer funds to little eviden ce that p a c s p rioritised M arginal farm ers exhibited a slightly
qu a lify in g p a c s so that accum ulated marginal and small farmers. This lack o f higher preference for s h g loan s than
losses w ou ld be w ip ed out, thereby m eet­ targeting w ould be consistent w ith cro ss­ sm all and large farmers, but they en ded
ing a m in im um capital to risk w eigh ted coun try eviden ce by Beck, Dem irguc- up b o rro w in g the least from this source
assets ratio (c r a r ) o f 7%. Kunt and Martinez-Peria (2008), w h o (less than 10% o f households).
W e ch ose a sam ple o f p a c s in each o f foun d no significant association betw een Inform al loans, quite surprisingly,
the three districts w ith repaym ent rates greater government ow nership o f banks w ere the preferred and m ost used
in 2004 ju st above and b e lo w the thresh­ and financial access across countries. source, by a large m argin a m on g all
olds o f 30% and 50%.2 The sam plin g However, p a c s adm inistrative data grou p s o f farmers. This is probably due
strategy oversam pled p a c s around the indicate that on ly 12% o f m em bers are to the higher flexibility they offer. Loans
triggers, resulting in a un iform distribu­ large farmers. So w hat explains this d is­ from p a c s w ere the preferred sou rce for
tion o f p a c s w ith repaym ent rates b e ­ crep an cy in the data? As it turns out, m argin al farmers, and in deed the d o m i­
tw een 20% and 60% that is very sim ilar p a c s adm inistrative data are based on nant source o f credit for m arginal and
to the distribution usin g all p a c s in that lan dh oldin gs recorded in the m em b ers’ the secon d source for sm all farmers, b e ­
range. The study, however, did n ot in­ passbooks, an official docu m en t that low inform al credit. In sum, the larger
clude any p a c s w ith repaym ent rates b e ­ p rovides in form ation about all plots reg­ penchant o f m argin al farm ers for s h g s

low 20% (com prising 12% o f all p a c s ), or istered in the nam e o f the member. But a did not translate into greater access rela­
above 60% (18.7% o f all p a c s ). h ou seh old m ay have m ore than one tive to sm all and large farmers, w h o also
W e then ch o se a represen tative sa m ­ passbook. A ccordin g to survey data, b orrow ed m ore heavily from form al and
ple o f b o rro w in g h ou seh o ld s and an ­ h ouseh olds o w n 1.74 p assb ook s on aver­ inform al sources.
oth er sam p le o f n on -borrow ers from age. This su ggests that about two-thirds T hese d ifferen ces in len din g m e th o d o ­
the v illa g es w h ere the p a c s operated. o f the m em bers classified as sm all and lo g y are e ch o e d in Table 1 (p 75), w hich
Sin ce w e had the p ro p o rtio n o f p a c s m arginal farm ers a ccordin g to their land reports the characteristics o f loan s for
m em b ers in each village, w e cou ld p assb ook s live in h ouseh olds w ith total the sam ple by credit source. The m ain
w eig h t re sp o n ses from the m em b ers lan dholdin gs o f m ore than five acres. differen ces lie in collateral requirem ents,
and n on -m em bers and rep ort su m m ary Henceforth, w e classify respon dents into interest rate, m aturity and average loan
statistics that w ere represen tative o f marginal, small and large farmers accord­ size. Both p a c s and form al sou rces o f
the v illa g es w h ere p a c s operated. ing to household landholdings rather than credit require collateral. In term s o f
In 2007, w e in terview ed 1,060 farm ­ individual passbooks. ch an ges in the interest rate, in form al
ers from 106 differen t villages, o f w hich loan s ch arge nearly tw ice as m uch as
847 w ere p a c s m em bers and 213 w ere Sources of Credit loan s from p a c s and also have a shorter
non-m em bers.3 The p opu lation in these Figures 1 and 2 report the preferred maturity. The problem w ith p a c s , h ow ­
villages w as m ostly en ga ge d in a gricu l­ sou rce o f credit and actual use by sou rce ever, is that the average loan size w as
ture (82.6%) and on ly about h alf o f at the tim e o f the survey in 2007. It sm aller (a m edian o f Rs 10,000 versus
h ou seh old h eads w ere literate. H alf is n otew orth y to observe the relatively Rs 20,000 for in form al sources), and
o f the h ou seh old s sam pled had total lim ited role o f self-help grou p s (s h g s ), collateral is required. Indeed, h alf o f the
lan dh oldin gs b e lo w 5.5 acres o f land. both as the preferred as w ell as the p a c s borrow ers said that they cou ld not

74 m a y 5, 2012 v o l x l v i i n o 18 13359 Economic & Political w e e k l y

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cover expenses in agricultural inputs average of three years of experience as by 5 to 10 percentage points in an elec­
with a p a c s loan plus cash at home. Most accountants. Presidents, on the other tion year, particularly in districts with
p a c s members borrow from other, hand, had higher qualifications, but high levels of electoral contestation. This
mainly informal, sources besides p a c s . secretaries played a more important role pattern was not found in non-election
Table 1: Loan Characteristics in the day-to-day years or in lending by private banks.
Formal Sources PACS SHG Informal Sources operations. Perhaps Cole also showed that this pattern
N um ber o f loans since A pril 2006 454 861 175 1,051 not surprisingly, the is costly as elections negatively affect
M edian borrow ed a m o u n t 20,000 10,000 7,000 20,000 quality of record­ loan repayment, and election-year credit
Mean borrow ed a m ou n t 44,565.0 15,734.3 8,725.1 26,522.4 keeping for more booms do not increase agricultural out­
Standard borrow ed a m ou n t 1,41,475.3 29,993.2 6,871.5 40,678.1
than 50% of p a c s put either. An explanation for why
M a tu rity (months) 15.55 24.32 14.80 17.11
was poor and only government-run lending institutions in
Annual interest rate (%) 20.10 16.85 19.07 31.71
5% of p a c s provi­ India are more generous during elections
Loans that require physical collateral (%) 91.41 98.14 4.00 8.09
Source: Household surveyconducted inthree districts inAPin2007.
sioned loan losses. comes from Cole, Healy and Werker
Formal sources include Basix/BhartiyaSamruddhi/ KBSBankor anon-governmental Questions about (2012), who used rainfall, public relief,
organisation (NGO). Informal sources referto friend/relative, local moneylender, landlord/ governance in the
employer, local grocery store, pawn broker and others. Physical collateral includes land,
and election data to examine the reac­
house, gold, crops or livestock. The rest of the loans required aguarantor, fund savings or survey presented tion of voters to the response of govern­
other collateral. clear evidence of ments to adverse shocks. They found that
This reliance on informal sources is misalignment between the perceptions voters only responded to government
consistent with the view that formal of members and those of p a c s commit­ relief efforts during the year immediately
lenders and p a c s in particular may ration tee members and presidents. The per­ preceding an election.5
credit. Two pieces of evidence from ception o f outside influence is a telling Unfortunately, as borrowers take ad­
the survey support this view. First, 60% example: between 20% and 30% of vantage of the lax enforcement of credit
of respondents would like to borrow members perceived that admission and contracts, the culture o f subsidies and
more from p a c s at prevailing rates if termination of members and credit deci­ frequent government relief undermines
they could. This percentage drops to sions were influenced by outsiders. In the culture of repayment. The data
40% when asked about moneylenders. contrast, no president or committee clearly show that farmers anticipated
Second, about half of the respondents member thought so. In addition, nearly with probability over 50% that a relief
that requested credit in 2006 were 40% of members thought that p a c s loan package that benefited p a c s (but not
rejected. Rejection rates among small decisions tended to favour certain mem­ m f i s or informal lenders) would be an­
farmers, at 60%, were higher than bers, while less than 10% of presidents nounced in case of a drought. Since
among large farmers (47%). Among and committee members thought so. farmers would not benefit from a relief
marginal farmers, rejection rates were Respondents were usually sceptical about package if they repaid the loan before
lower at 40% but so were credit requests. the motives of p a c s management. They the announcement was made, all farm­
Only half of the marginal farmers report believed, with a probability of close to ers had an incentive to wait (even after
asking for credit compared to 76% of 50%, that p a c s presidents do not look the loan due date) until the announce­
small farmers and 86% among large after members’interests, and they as­ ment (if any) was made.
farmers. Anecdotal eviden ce suggests signed a probability of 40% to the propo­ We also asked farmers about their
that marginal farmers request fewer sition that the president would abuse his perceived probability for different events
loans because they anticipate being power in his own interest. related to loan repayment, and their
rejected, so that only the better potential The first hint of the potential role of answers showed similar patterns (Table 2,
applicants apply, explaining the lower politics comes from looking at the politi­ p 76). For example, farmers perceived
rejection rates. cal connections that p a c s members and that in the event of a drought, their loan
management had relative to non-mem­ with a p a c s would be rescheduled with a
PACS Management bers. The data showed that close to 60% probability of 70%; this perceived prob­
and the Role of Politics of p a c s members had the same political ability dropped to 55% for commercial
We also inquired into the management affiliations as the head or ward member banks and to only 25% for m fis .
practices of p a c s . The evidence pointed of panchayat. In the case of presidents or The same pattern occurred with the
to a lack of proper incentives to improve committee members, this figure climbed perceived probability of loan forgive­
repayment. Secretaries of p a c s , for in­ to nearly 75%. Most committee niem- ness. Besides, p a c s appeared more likely
stance, were by and large remunerated bers had the same political affiliation as to issue loans in amounts lower than re­
using a fixed compensation scheme, unre­ the president. quested. (The difference between p a c s
lated to repayment or other performance Consistent with this finding, there is and m f i s was nearly 30%.) They were
measures. On average, these secretaries evidence that links the behaviour of also less likely to issue new loans even if
had only 1.5 years of formal education. government-run credit providers to the the previous ones were fully repaid.
They had been trained in accounting for electoral cycle. Cole (2009), for example, p a c s were to be trusted less with savings
less than two months, and had only an found that agricultural credit increased and more likely to deduct a share of the

Economic & Political weekly GEES may 5, 2012 v o l x l v ii n o 18 75

T h i s c o n t e n t d o w n l o a d e d f r o m o n T u e , 06 N o v 2018 23 :58:16 U T C

A l l u s e s u b j e c t t o h ttp s:/ / a b o u t.jsto r.o rg / term s

loan as a bribe, m f i loans, on the con­ provided by existing research is only registries exhibit a strong correlation with
trary, were perceived as 18 percentage partial and incomplete. higher ratios of private credit to g d p .
points less likely to suffer this problem. We have, however, some good indica­ Interestingly, information infrastructure,
Besides, loans from p a c s were perceived tions of where the right path might lie. such as credit registries, matter more com­
as less likely to be repaid even if a good Providing good institutions, such as pared to creditor rights in poorer coun­
tries than in rich countries.
Table 2: Perceptions on Credit and Repayment
PACS Comm. Bank MFI PACS-Comm.Bank PACS-MFI Comm.Bank-MFI The experience of India
Perceived p ro b a b ility of...(1 to 10) in the 1990s also gives in­
Repayment rescheduled if d ro u g h t 6.986 5.552 2.425 1.434*** 4 .5 6 1*** 3.127*** sights into ways the govern­
Repayment forgiven if d ro u g h t 6.532 4.696 2.079 1.836*** 4 .4 5 3 *** 2.6 1 7*** ment can work to ensure
Loan am ou n t low er than requested 6.358 4.996 3.446 1 .3 6 2*** 2.9 1 2*** 1 .5 5 0*** that access to credit is avail­
New loan after fu ll repaym ent 4.756 6.263 6.772 -1 .5 0 6*** -2 .0 1 5*** -0 .5 0 9 **
able to those who need it the
Share deducted fro m loan as bribe 4.722 2.889 2.862 1 .833*** 1 .8 6 0 *** 0.027
most. Visaria (2009) shows
Share capital/savings misused and lost 4.677 2.423 3.539 2 .2 5 5 *** 1.139*** -1.116***
that the new expedited
Repayment o f loan in case o f d roughts b u t good harvest* 4.696 6.095 6.502 -1 .3 9 9 *** -1 .8 0 6 *** -0.407*
mechanism introduced for
Rank o f repaym ent o f loan if n ot enough
funds to repay all (1 to 3)* 2.514 1.876 1.610 0 .6 3 8 *** 0 .9 0 4 *** 0 .2 6 6 *** loan contract enforcement
An asterisk (*) indicates that the sample is restricted to those with more than one source of credit. resulted in sizeable increases
Source: Household survey conducted in three districts in AP, India in 2007.
in loan recoveries, as market
harvest followed a drought than were efficient, speedy and fair courts is an participants were able to bypass the in­
either loans from commercials banks area where only the government can efficient court procedures then in place.
or M F IS. play an active role. Also, governments Also, consistent with the evidence we
Finally, respondents were asked to can provide much needed registries of presented in this paper, Caprio and
provide a ranking of lenders they would credit information, liens and property Honohan (2004) advocate the impor­
pay first if they had an outstanding loan ownership, and make sure the legislation tance of ensuring the independence of
from different lenders but did not have is reliable and that property rights and bank supervisors from the political
enough money to meet all repayment responsibilities of companies and finan­ sphere, and of the supervised entities
obligations. As it turns out, p a c s loans cial institutions are properly defined. Re­ themselves, in order for banks to pro­
always appeared last in the repayment forms in these areas may be difficult to mote social welfare and not their own
priority list, behind all other loan types. accomplish in the short term. But there are or that of their officials.
The first in the list was always a loan many other dimensions where progress In sum, in this paper, we have pro­
from an m f i . Thus, the frequent an­ comes at lower costs. Djankov, McLiesh vided some evidence showing that gov­
nouncement of relief measures appears and Shleifer (2007) use a panel of aggre­ ernment-controlled p a c s may suffer
to undermine the culture of repayment. gate data for 129 countries over 25 years from weak governance and poor man­
to confirm that creditor rights and the agement practices and may be prone to
Conclusions existence of (public or private) credit capture by politicians. This is consistent
If an expanded role for government has
to be the solution, care should be taken
to ensure that the effects of government
intervention have the intended conse­
quences. There is strong evidence point­ INDIA AND THE ILO
ing to the crucial importance of govern­ March 5,2011
ment institutions for the functioning of
the financial sector in general and access
India and the ILO in Historical Perspective - Sabyasachi Bhattacharya,
J Krishnamurty, Gerry Rodgers
to credit in particular. However, instead
of replacing private agents in the market, India, the ILO and the Quest for Social Justice since 1919 - Gerry Rodgers
governments can make a more valuable Indian Officials in the ILO, 1919-c 1947 - J Krishnamurty
contribution by securing an adequate Employment in Development: Connection
environment for private credit institu­ between Indian Strategy and ILO Policy Agenda - 7 5 Papola
tions to flourish and by improving insti­ Fundamental Principles and Rights at Work: India and the ILO - Kamala Sankaran
tutional mechanisms in ways that fur­ For copies w rite to:
ther the availability of credit to poor Circulation Manager,
individuals. The range of policies that Economic and Political Weekly,
would contribute to this goal goes beyond 320-321, A to Z Industrial Estate, Ganpatrao Kadam Marg, Lower Parel,
the scope of this article. Building these Mumbai 400 013.
institutions involves decision-making with email: drculation@ epw.in
long-time horizons, and the guidance

76 m ay 5, 2012 v o l x l v i i n o 18 E con om ic& P olitica lw E E K L Y

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with cross-country evidence that em­ and Their Money, S H G s are an e x a m p le o f a D aley-H arris, S a m (2009): “State o f th e M icr o c r e d it
“p r o m o t e r ”a p p ro a ch . S u m m it C a m p a ig n R e p o r t ” ( W a sh in g to n DC:
phasises governance and institutional M ic r o c r e d it S u m m it C am paign ).
5 T h e in te r n a t io n a l e v id e n c e s h o w s th e s a m e
issues as critical in explaining differ­ p a ttern s. D in ? (2005), f o r e x a m p le , d e m o n ­ Din?, S e r d a r (2005): “P o liticia n s a n d B anks: P o liti­
c a l In flu e n c e s o n G o v e r n m e n t- O w n e d B an k s in
ences in the performance of public s tr a te s th a t in c r e a s e d le n d in g b y g o v e rn m e n t-
o w n e d b a n k s r ig h t b e f o r e e l e c t i o n s is n o t s p e ­ E m e r g in g C o u n t r ie s ” , Journal of Financial
sector interventions. c ific t o In d ia b u t c a n b e o b s e r v e d in d a ta fr o m Economics, 77 (2): 453-79.
22 d e v e l o p i n g c o u n t r ie s. K h w a ja a n d M ia n D jank ov, S im e o n , C a r a le e M cL iesh a n d A n d re i
(2005) a ls o fin d th a t in P ak ista n , p o lit ic a lly S h le ife r (2007): “P rivate C r e d it in 129 C o u n ­
n o t e s __________ ___________________________ c o n n e c t e d f ir m s a r e a b le t o s e c u r e la r g e r an d ^ , Journal of Financial Economics, 84(2):
t r ie s ”
1 T h e o r d in a n c e r e q u ir e d th a t r e p a y m e n t c o l ­ c h e a p e r lo a n s f r o m s ta t e - o w n e d b a n k s a n d 299-329.
le c t io n s o c c u r at p a n c h a y a t o f f ic e s a n d r e t r o ­ d e fa u lt o n t h e s e lo a n s m u c h m o r e th a n o t h e r G o v e r n m e n t o f A P (2010): “T h e A n d h ra P ra d e sh
a c tiv e ly w a iv e d lo a n s i f t w ic e t h e p r in c ip a l n o n - c o n n e c t e d firm s. M icr o fin a n ce In stitu tio n s ( R e g u la tio n of
h a d a lr e a d y b e e n rep a id . It fu r th e r r e q u ir e d M o n e y le n d in g ) R u le s 2010” , G overn m en t ord er
r e g is tr a t io n o f M F Is w ith d is t r ic t a u th o ritie s, M S N o 356, Andhra Pradesh Gazette, e x tra
s u b je c t to c a n c e lla tio n at a n y t im e (G overn m en t o r d in a r y issu e, 19 O cto b er, P a n ch a y a t R aj
o f AP 2010). a n d R u ra l D e v e lo p m e n t (RD-I) D e p a rtm e n t,
B eck, D em irgu c- K u n t a n d M a rtin ez- P eria (2008): H y d eraba d .
2 PACS w ith r e p a y m e n t ra tes b e lo w 3 0% d id n o t
“B an k F in a n cin g fo r S M E s a r o u n d th e W orld : J o h n so n , D o u g a n d S u sh m ita M e k a (2010): “ A ccess
q u a lify fo r fu n d in g , PACS w ith r e p a y m e n t
D rivers, O b sta c le s, B u s in e s s M o d e ls, a n d L e n d ­ t o F in a n ce in A n d h ra P ra d e sh ” , In stitu te fo r
ra tes b e t w e e n 3 0 % a n d 50% w o u ld r e c e iv e
in g P r a c t ic e s ”
, W o r ld B an k P o lic y R e s e a r c h F in an cial M a n a g e m e n t a n d R e se a rch C en tre fo r
o n e -th ird o f t h e fu n d s in itia lly a n d on e -th ird
W o r k in g P a p e r 4785, W a s h in g t o n DC. M icrofinance, Chennai, a cce sse d o n 13 A pril 2012:
fo r e v e r y 10% im p r o v e m e n t in rep a y m en t,
w h ile PACS w ith re p a y m e n t ra tes a b o v e 50% C ap rio, G e r a r d a n d P a trick H o n o h a n (2004): “C an h ttp :/ / w w w .cen tre- fo r- m icro fin a n ce.com /w p-
w o u ld r e c e iv e a ll th e fu n d s im m ed ia tely . th e U n sop h istica ted M arket P ro v id e D iscip lin e? ” con ten t/u p loa ds/attach m en ts/ csy / 695/CMF_
in H u n te r C W illia m , G e o r g e G K au fm an, C la u ­ access_t0_Finance_in_A ndhra_Pradesh_2010.pdf
3 W e u s e str a tifica tio n w e ig h t s t o r e p o r t p o p u l a ­
tio n a v era ges. d io B o r io a n d K osta s T sa tsa ro n is (ed.), Market K hw aja, A s im Ija z a n d A t if M ia n (2005): “D o
Discipline across Countries and Industries L e n d e r s F a v o u r P o litic a lly C o n n e c t e d F irm s?
4 A n o th e r g o v e r n m e n t in itia tiv e th a t is o ft e n
( C am b rid ge, MA: M IT Press), 349-62. R e n t P r o v is io n in a n E m e r g in g F in a n cia l
s e e n a s a v ia b le a lte rn a tiv e t o m icr o fin a n ce , e s ­
p e c ia lly in AP, is th e self- h elp g r o u p (SHG) C ole, S h a w n (2009): “F ix in g M ark et F a ilu res o r M a r k e t” Quarterly Journal of Economics,
m o d e l b a s e d o n t e a c h in g c o m m u n it y m e m b e r s F ix in g E le c tio n s? A g ric u lt u r a l C r e d it in In d ia ”
, 120 (4): 1371-411.
h o w to p r o v id e a n d m a n a g e fin a n cia l s e r v ic e s American Economic Journal: Applied Econo­ R u th erfo rd , S tu a rt (2000): The Poor and Their
a m o n g th e m se lv e s. P o o r w o m e n c o m e t o g e t h e r mics, 1(1): 219-50. Money (R u gby: P ra c tic a l A c tio n P u b lish in g).
in a g r o u p th a t m e e t s p e rio d ica lly , e a c h c o n ­ C ole, Shaw n, Healy, A n d re w a n d E ric W erk er (2012): V isaria, S u ja ta (2009): “L e g a l R e fo r m a n d L o a n
trib u te s s a v in g s t o a g r o u p a c c o u n t th a t is th e n “D o V oters D e m a n d R e s p o n s iv e G o v e r n m e n t s? P ay m en t: T h e M ic r o e c o n o m ic s I m p a c t o f D e b t
on -len t to m e m b e rs. T o u s e th e te r m c o in e d b y , Journal
E v id e n c e fr o m In d ia n D is a s t e r R e l i e f ’ R e c o v e r y T rib u n a ls in , American
In d ia ”
S tu a rt R u th e r fo rd in h is 2000 b o o k , The Poor of Development Economics, 97(2): 167-81. Economic Journal: Applied Economics, 1(3): 59-81.


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On Publicly-Financed Health consuming/seeking inpatient care re­

mains unchanged at the time of these

Insurance Schemes two cross-sectional n s s o surveys (a var­

iation in proportion calls for the need to
make a standardised comparison of o o p
Is the Analysis Premature? expenditure estimates).
Now let us examine what proportion
of households in India was covered by
T R D IL IP the r s b y in 2009-10. There are two data
sources available in the public domain

It is a methodological flaw to he Rashtriya Swasthya Bima which provide data on the coverage by
conclude from data which Yojana ( r s b y ) as on March 2012 r s b y for the latter period in which this

covers 28 million households in evaluation was performed. Jain (2011)

shows a rise in the incidence of
India, which constitutes approximately reports that 22.5 million households had
out-of-pocket medical expenses 11% of the total number of households in enrolled for r s b y by the end of Decem­
that the Rashtriya Swasthya the country. The scheme is expected to ber 2010, which constitute 9% of house­
Bima Yojana is ineffective. A ultimately provide health insurance pro­ holds in India. The p h f i (2011) study re­
tection against hospitalisation to about ports that 80 million beneficiaries were
response to Sakthivel Selvaraj,
130 million people in the country. There covered under the r s b y , which trans­
Anup K Karan, “
Why Publicly- is a need to re-examine the manner in lates to around 7% of the country’ s pop­
Financed Health Insurance which a national scheme of this magni­ ulation. So will this r s b y coverage of
Schemes Are Ineffective in tude has been evaluated by Selvaraj and 7-9% be enough for the n s s o consumer
Karan ( e p w , 17 March 2012) and was expenditure survey to capture the r s b y ’s
Providing Financial Risk
certified as a failure in terms of provid­ impact on o o p expenditure on hospita­
Protection”(e p w , 17 March 2012). ing financial risk protection against lisation in Indian households? The an­
catastrophic healthcare expenditure by nual hospitalisation rate in India is 25
households in India. The reported analy­ per 1,000 population ( n s s o 2006). Due
sis which does not go beyond very basic to this sample size constraint, the authors
descriptive statistics at the highly aggre­ are in no position to attribute the in­
gated national level, is regrettably crease in o o p expenses (Table 2 of their
replete with methodological flaws. article) and that in the proportion of
T he authors have co m p a re d the households facing catastrophic expenses
N ational Sam ple Survey O ffice ’
s (n sso) (Table 4 of their article) to the inability
co n su m er exp en ditu re survey data for of the r s b y to provide financial protec­
2004-05 (pre-RSBY period) and 2009-10 tion against risk of hospitalisation.
(post-RSBY period) and fou n d an in­ Inpatient care is consumed by a small pro­
crease in m ean p er capita h ou seh old out- portion of households in a year and hence
of-pocket (oop) h ospitalisation e x p en d i­ the authors will have to wait for the cov­
ture and in the prevalen ce o f catastroph ­ erage of r s b y to reach at least 30% in
ic health exp en ditu re due to hospitalisa­ order to apply such methodologies. Such
tion. T he in crease in these indicators b e ­ high coverage levels are needed for com­
tw een th ese tw o-tim e poin ts w as direct­ parison, as programme statistics indi­
ly attributed to the lack o f effectiv en ess cate that one out of eight households
o f the rsb y in p rov idin g financial risk among r s b y beneficiaries are reporting
p rotection to the households. Such cru de hospitalisations during a one-year refer­
and un-standardised com p a rison s are ence period. Further Dror and Vellakkal
p erm issib le o n ly if the authors can en ­ (2012) have shown that the coverage of
sure that: (1) a substantial p ro p o rtio n o f r s b y within the b p l households had

the h ou seh olds w as cov ered b y the rsb y touched 28% as on 31 March 2011. The
du rin g this inter-survey period, so that midpoint which the 2009-10 n s s o data
diliptr@hotmail.com ) w a s p a r t o f
T R D i l ip (1 the n sso con su m er expen ditu re survey refer to is 1 January 2010 and r s b y
t h e t