MAYS, 2012 Vol XLVII No 18

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

A SAMEEKSHA TRUST PUBLICATION WWW.epW.jn

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

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

REVIEW ARTICLE Media Follies

■ Selected Writings ofAnuradha Ghandy
PERSPECTIVES
■ Dealing with a Deteriorating Statistical Base
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

SPECIAL ARTICLES
■ 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
NOTES
■ Government-led Microcredit

DISCUSSION
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
Economic&PoliticalwEEKLY
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.
CO M M EN T

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.
COM M EN TA RY
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
P E R SP ECT IV ES
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.
SPECIAL. A R TICLES
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
NOTES
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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 LETTERS
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.

I
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
EDITOR
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.
DEPUTY EDITOR
BERN ARD D ’
MELLO especially in the context of my long per­ Alleged Fake Cases:
WEB EDITOR
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
AN IKET ALAM
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
BHARATI BHARGAVA
to immediately. It also expresses its about the law are generally the losers
COPY EDITORS
concern about the health of Menon, even though they may be telling the
PRABHA PILLAI
JYOTI SHETTY supply of medicines to him and his early “truth, nothing but the truth” . How
ASSISTANT EDITOR
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.
S LESLINE C O R ER A
SU N EETH I NAIR The Maoists’ demands: The tribal people are especially handi­
CIRCULATION
(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
B S SH ARM A
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
KAMAL G FANIBANDA
and (2) All demands from items 2 to 9 excluded areas and even in the princely
GENERAL MANAGER & PUBLISHER
concern “ Fake Cases”of different types states. With the adoption of the Consti­
K VIJAYAKUMAR
in which countless categories of simple tution, all laws that were in vogue in
EDITORIAL
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
circulation@epw.in
given below: adapt and amend the laws took no
ADVERTISING
advt@epw.in
(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
E C O N O M IC A N D P O L IT IC A L W EEKLY
tions”of the Wild West in the us with the simple tribal and even their articulate
3 2 0 -321, A T O Z INDUSTRIAL ESTATE
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”
DIRECTOR
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
KANDIVALI (EAST), MUMBAI 4 0 0 IO I
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
epwrf@vsnl.com
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
in Dantewada district. All innocent people
must be released.
(iii) Nine Maoist Party workers, men­
tioned by name, have been jailed under
fake cases. They must be released.
(iv) Cases launched against an elderly
journalist and Asit Sen must be revoked.
It is important to note that the Maoists
are not begging for some favours. They
are openly alleging that fake cases have
been launched against named people. It
must be ensured that the simple tribal
people are not victims of the adage
“ justice delayed is justice denied” .These
people do not even know why they have
the tribals and committing crimes against
innocent officers and people's represent­
atives attending to their call of duty. We
wholeheartedly condemn these acts of
violence on the part of the Maoists.
If the Maoists care for the tribals and
if they have any respect for human
rights, they should release both, Alex Paul
Menon and Jhina Hikaka immediately
and unconditionally.
Ramachandra Guha, E A S Sarma,
Nandini Sundar
Baburao Ambadaskar:
On His Retirement
LETTERS
editions of the epw to be labelled, tied
up and then, of course dispatched to the
post. That was the busiest day. If you
asked Baburao for anything, for instance,
stuff to be photocopied, or for files full of
newspaper clippings that we needed for
our editorials or even just for dispatch
work not related to the “ big”dispatch
work, Baburao would brush you aside.
Not now. In his brusque earthy way but
after a while, you got used to it. Just like
on other days, you would listen to
Baburao’ s stories and get to know his
ways. The way he did not drink tea or
coffee. Or his stories about the Shiv Sena,
and Baburao was an active functionary

been kept in jail.
B D Sharma
Former Commissioner for s c / s t ,
Government of India
NEW DELHI
Maoist Intimidation
e condemn the attack by the Maoists
W on 21April near Kerlapal village in
Sukma district (in Chhattisgarh) in which
they killed two security guards and
abducted the Sukma district collector,
Alex Paul Menon. At the time of this
attack, Menon, accompanied by security
guards, was in the process of conducting
Gram Swaraj Abhiyaan across the district.
A few hours prior to the attack, Menon
had to traverse the rough terrain on a
motorcycle to reach the interior villages
near Badde Setti and Sam Setti. This
shows his concern for the tribals residing
in this remote area and his conscientious­
ness in attending to their problems. By
killing the security guards who were on
duty and kidnapping Menon, the Maoists
have betrayed their lack of respect for
human rights and democratic processes.
This incident has come on the heels of
a series of similar acts of abductions and
killings on the part of the Maoists during
the last few years in Chhattisgarh, Odisha
and Jharkhand. The abduction of Jhina
Hikaka, an mla on 24 March this year,
the abduction of Vineel Krishna, the then
district collector of Malkangiri district
last year, and the killing of the
Jharkhand police officer, Francis Induwar
in 2009 show that the Maoists have no
compunction in hurting the interests of
I
heard from a former colleague about of that party, campaigning for it, at
the prospective retirement of another times vociferous in the quiet morning,
former colleague: Baburao Ambadaskar. but strangely in that noiseless office with
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,
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
Baburao spent there. rushed clangorous traffic outside but
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
worked there, but he was there even ing and timelessly Mumbai.
longer. To place the man in a certain His voice could equally resonate
section, accord him an office space, and when he told you all the old epw stories
then detail the jobs he did, would be - of the then editor sleeping in the
greatly diminishing all that Baburao office, on the table, the day the issue was
really did, saw and talked about. But in a put to bed. Or of the many “ eminent”
way, he stood for, like all its former editors people who dropped by to the office, or
and some long-timers too, epw itself. the time the printing had to be done
I don’ t remember my first glimpse of fast, how crises were managed, how
Baburao, but he was always at the place occasions were celebrated.
where I would find him most mornings. He was, as another colleague once
There was the epw in its old office at put it, a “ pillar”of the epw, for he was
Fort, and you went up the elevator with indispensable in many ways and so the
its shaking grilled cage doors; once remark was not made entirely in jest.
through the door with the ubiquitous epw stood secure and firm in its ideals
red white logo of the epw, there would even as other magazines fell by. And
Baburao be, at his table on the extreme part of it was that its ideals and code of
left. He was the one, as he proudly said on honour embraced the every man, the
many an occasion, with the keys to the ordinary person, in whose name ideo­
office. He “ opened up”the office every logies are created, wars fought, govern­
morning at 8.30 sharp, without fail, like ments elected. The ordinary person always
he had done for 35years and more. Yes, we forgotten, remembered at certain m o­
knew this all right, for Baburao opened ments but indispensable. But the epw
the office up and R K Singh locked it for never forgot this, and this was so aptly
the night. A ritual that lasted for years reflected by Baburao’ s place in it. He
before retirement came calling, first for belonged to the office and in many
rk and now for Baburao. ways, the office belonged to him.
On Mondays, the place would be a Anu Kumar
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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may 5, 2012 v o l x l v ii n o 18 13253 Economic & Political weekly

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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
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
sion of military jingoism. There was aggressive flag-waving
nationalism in late 2009, when India’ s first (substantially)
domestically designed nuclear-powered submarine, the in s
Arihant, was launched for sea trials. There has been a similar
such unthinking applause with the successful test of the Agni-v,
India’ s first intercontinental ballistic missile (ic b m ).
With the trials/tests of the Arihant and Agni-v, a process that
began in the mid-1980s and received official blessings in 1999
with the formulation of the (Draft) Indian Nuclear Doctrine in
1999 is complete. The Indian state now has all legs of the nuclear
triad it has yearned for - an air, sea and land-based nuclear
weapon deterrent vis-a-vis China. Trials and tests do not mean
India’ s“ triad”is operational; but, make no mistake, India has
taken yet another step to the abyss of a nuclear catastrophe in
Asia. This is something our commentators and cheerleaders
have chosen to ignore.
The hawks in the strategic affairs establishment will quibble
that the Agni-v is really an intermediate range ballistic missile
(ir b m ) and not an ic b m (since it has a range of 5,000 km and not
5,500/6,000 km which is the usual minimum benchmark for
such missiles), that its mobile launch and movement on rail
lines will never succeed operationally. And that the Arihant does
not as yet have submarine-launched ballistic missiles. But these
are really trivial objections. What matters is the path India has
set out on and the milestones it has progressively crossed in the
development of the triad - delayed, expensive and ultimately
dangerous. With the development of the Agni-m (an ir b m with
a range of up to 3,500 km) in 2006 India already has missiles
that can “ hit”southern China. But holding an ic b m - and being
only the sixth nation to do so - is an important currency of power
in strategic affairs-speak and the successful test of the Agni-v
(whose range includes eastern and central Europe) is therefore
an important milestone on this self-destructive journey. This
journal has consistently argued that India’ s acquisition of nuclear
weapons and delivery systems is strategically disastrous, politi­
cally dangerous and morally indefensible (Agni-m: “ Fuelling a
Fire” , 12 May 2007, “ Destroyer of Peace” , 8 August 2009 and
Economic & Political w e e k ly QSS3 m ay 5, 2012 v o l x l v i i n o 18
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“Cry for India” , 26 September 2009). It is unfortunate that there
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
ments of delivery are only political weapons whose value lies in
the threat of their use, and not its actual deployment. The grow­
ing Agni missile programme has established the seriousness of
India’ s desire to play the 21st century version of the Great Game.
Over the past two decades, there has been a slow but steady pro­
jection of India’ s military might that began with the Maldives
operation in the 1980s and the (disastrous) intervention in Sri
Lanka in the late 1980s has now intensified. The navy is slowly
building its hardware and doctrines to make the Indian Ocean
truly its own and marking its presence from Aden to the South
China Sea, while the air force has been building capacities for
long distance operations. Newsletters of the Defence Research
and Development Organisation indicate that the ultimate ic b m
with a range of up to 10,000 km and which can reach the us - the
long rumoured Surya/Agni-vi - is on the drawing board.
It is significant that the international response to Agni-v has
been one of “ noting”the test - a far cry from the pressures and
condemnation of the late i98os/early 1990s. A us official under­
lined India’ s“ responsible record in non-proliferation”and chose
not to utter a word of criticism. When the spokesperson of the
us government effectively becomes your public relations agent,
it indicates that perhaps Agni-v has already acquired the ability
to hit multiple targets, at least politically, even though ostensi­
bly its only viable target is China.
The promoters of this fire-strewn path of increasing India’ s
nuclear military might argue that expanding the range of the
country’ s nuclear reach will help break what they call a “strategic
gridlock”with Pakistan. But in what must be an embarrassment
for them - not the first of its kind - within a week of the test of
Agni-v, Pakistan tested its Hatf-iv that can cover almost all of
India. Whatever India’ s global power ambitions, the prospects for
peace (or war) will forever be tied to its relations with Pakistan.
We can never forget that settling disputes with Pakistan across
the table is more important than building a nuclear arsenal.
The latest development in the Agni-missile programme will
draw to India all those Asian countries which feel threatened by
the economic and military power of China, while also making
7
EDITORIALS
itself useful to that old Pacific alliance of the us, Japan and
Australia. It remains an open question whether this will help
“stabilise”the Asia-Pacific region, as many strategists argue. It
surely does not bear repeating that military power does not lead
to stability but rather its opposite.
It also needs to be said again and again that the expansion of
India’ s nuclear military programme cannot contribute to peace.
The inability of nuclear deterrence to end disputes, build stability
and peace is well known but India is locking itself into a game
that has no winners. Sadly, India remains among those nation
‘
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
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
in the essential services. Despite protests about its anti­
democratic nature - that it violates the right of mass action for
collective bargaining by workers - almost all state governments
have enacted their own versions of this central draconian law
with slight variations. In the past few years, the law (it overrides
the Code of Criminal Procedure - the crpc - allowing for arrest
without warrant and a summary trial while also overruling the
Industrial Disputes Act, 1947) is being invoked as a political tool
of convenience by the various state governments to deal with
imbroglios created by their own corrupt and inept handling of
issues. Over the years, the number of essential services brought
under the state Acts have also increased in an atmosphere where
the cry on all sides is for “ reform”of labour laws (in essence,
withdrawal of the protective provisions given to “ pampered”
workers) to find our place in the global market.
Recently, the Maharashtra Essential Services Maintenance
Act, 2011 (the earlier one had expired in 2010) was passed in the
state’s upper house with a wider ambit. The government can
prohibit strikes, lay-offs and lockouts in any services for which
the state has the power to make laws and which it considers
essential to the community. A six-month jail term and Rs 2,000
awaits striking employees from these services while a one-year
jail term and a similar fine will be imposed on persons instigat­
ing or funding such strikes. The government can also widen the
ambit of the Act to include other services.
A look at how the different states have used it is illustrative.
In February, the Delhi government invoked it on all power com­
panies in view of the nationwide strike by central unions against
price rise, disinvestment of public sector units and anti-labour
policies. Late last year, 1,000 schoolteachers were herded into jail
by the Chhattisgarh government which invoked the law against
2,00,000 contract teachers demanding regularisation and bet­
ter pay. In Andhra Pradesh, truck and lorry owners supplying
petrol, diesel and l p g were brought under the Act when they
threatened to strike against imposition of value added tax (vat ),
8 may
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states which are blighted by an almost total absence of any
domestic questioning and opposition to its nuclear, military and
strategic policies. The monochrome domestic response to Agni-v
shows that the supposed distinction between support for civil
and military nuclear power and between civil and military uses
of the space programme is a charade. This absence of domestic
critique, forgotten now in the glow of success, will cost the
republic dear as history shows that no polity with such unques­
tioning support for its military expansion has managed to keep
its democratic and civic liberties safe for long.
earlier this year. In Maharashtra, the director of secondary and
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.
The point to be noted in all these cases is that those going on
strike had threatened to do so after they found that their long
pending demands and protests were being ignored. It is almost
an axiom that unless some sort of strong or dramatic public pro­
test is resorted to, neither the administration nor the mainstream
media will pay attention to genuine grievances and injustice.
Generally, the mainstream media too tends to focus on legitimate
demands only when a large number of protesters stage some form
of mass action or individuals resort to extreme acts like attempts
at self-immolation to draw public attention. In the recent ongoing
agitation by Mumbai’ s autorickshaw drivers for increase in fares,
the media tended to focus more on the inconvenience to passen­
gers, the bogu s tariff cards carried by the drivers and the “ fixing”
of meters to show higher rates. There was no coverage of the
“other side”in this sorry mess - the corrupt regional transport of­
fice (r t o ) personnel who are as much part of the rackets and ex­
tort their “ share”, the ignoring of passenger complaints in lieu of
a bribe, the state govemmenf s skewed transport policy and turn­
ing a blind eye to the city’ s nightmarish traffic situation.
In 2003, following the Tamil Nadu governm ent’ s dismissal of
3,50,000 striking government employees, the Supreme Court
ruled that the latter had no right to strike. It went on to say that
when there is so much unemployment and qualified people are
eagerly waiting for government employment, “ strikes cannot be
justified on any equitable ground” . Whether it is the garment
industry, the automobile factories, the call centres or shopping
malls, young employees on contract are working long hours for
miserable wages and without any of the protective provisions of
the labour laws. Unionisation is difficult due to the peculiar work
conditions and any attempt is met with summary dismissal in a
situation where informalisation of labour is growing rapidly.
The curbing of the democratic rights of one section of society is
hardly ever an isolated act. It is symptomatic of how the ruling
class views the right to protest and how it deals with dissension.
It is a warning that we ignore at our own peril.
5, 2012 v o l x l v ii n o 18 I33S3 Economic & Political weekly
 COMMENT

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

51>eBronomicittetog
3 Journal of Current economic anti ftalftical SffaltO
VOL XIV, NO 18, MAY 5, 1962
WEEKLY N OTES
Pakistan’
s Propaganda Gambit
The objective of all Pakistani diplomatic
manoeuvres on the Kashmir issue has been
two-fold: first, to keep the issue alive and pre­
vent a situation from arising where a stale­
mate might leave her with no alternative but
based on the existing position, and second, to
make the maximum propaganda capital out
of India’s well known stand against third
party intervention in the dispute. This is
apparent from the two “ alternative”proposals
made by Mr Zafrulla Khan. If any doubt existed
that Pakistan’ s real purpose in raising the
Kashmir issue in the UN Security Council
once again was to try and score off India in
propaganda rather than to sincerely seek a
solution of the long-standing dispute, it dis­
appeared with the speech of Pakistan’ s chief
delegate at the UN.
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
is supported by the official observations... In the
first place, the insistence on the presence of a
third party is an attempt to bring in mediation,
to which India is opposed, by the back door.
Secondly, the talks are to be directed at ulti­
mately dealing the way for a plebisrite to which
Pakistan dings as the only acceptable solution.
The outcome of the present discussions
in the Security Council is therefore, readily
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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 COM M ENTARY
Media Follies
and Supreme Infallibility
SUKUMAR MURALIDHARAN
The Supreme Court has taken
steps to lay down a code for
media reporting. This attempt at
prior restraint on the media is a
dangerous move with precedent
from authoritarian polities. In a
context where the judiciary has
been lax in defending the media
from attacks which seek to curb
its freedom, such unilateral
moves will not remedy bad
reporting but rather make
conditions worse for the media to
play its role. The way to cure the
ills of a media corralled within
corporate and political interests
is to give it greater freedom
from curbs.
Sukumar Muralidharan (sukumar.md@gmail
com) is a freelance journalist based in
New Delhi.
10
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erhaps because the media touches
P several lives, everybody feels
entitled to express an opinion on
it and offer attentive and solicitous
counsel. Or perhaps it is because of all
the signs it displays of arrested develop­
ment, of a failure to grow out of impetu­
ous adolescence into mature adulthood.
For these among diverse other reasons,
the Indian media has had a surfeit of
counsel in recent times on how it should
conduct itself, some indulgent, some
stern, some acerbic and scolding.
These informal lessons in fidelity to
fact and moral rectitude never seemed
likely to threaten the relative autonomy of
the Indian media. There have been occa­
sions when the social dialogue through
the media has led to the perilous possi­
bility of a withdrawal of citizen consent
to the State - as with how the media
brought home to the news consumer,
images of the terrorist siege of southern
Mumbai in November 2008 and the
Anna Hazare movement of 2011.
Unsurprisingly, in both instances, there
were loud murmurs in official circles
that statutory regulation over the media
was long overdue. Yet the threats were
held in abeyance: in the former case, be­
cause the media industry brought in what
seemed a comprehensive self-regulatory
code and mechanisms to enforce it; in
the latter, because the ire of elected rep­
resentatives was easily diverted to the
injudicious and intemperate language
Anna H azare’ s acolytes had used. The
principal offenders were easily identifia­
ble and the role of the media in transmit­
ting and amplifying their message was
forgotten because the political establish­
ment seemed disinclined to open two
fronts in the battle to salvage a badly
bruised image.
Matters may have remained at this
uneasy stalemate had not the media
m ay 5, 2012
All use subject to https://about.jstor.org/terms
then gone on - with its boisterous and
bumptious conduct - to irk the highest
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
robed eminences in the judiciary than
those who muddy themselves seeking to
win popular endorsement through the
electoral process. In part, this is a reflec­
tion of the power to punish for contempt,
a weapon that the judiciary holds in re­
serve, much like legislative privilege re­
mains uncodified and susceptible at all
times to arbitrary interpretation.
Despite the deference it has always
enjoyed, the Supreme Court decided at
some point, that it had just about had
enough. This fervour for reforming me­
dia practices was provoked by the com­
plaint lodged by a senior advocate, over
reports in February which gave out
details of a plan that the finance and real
estate conglomerate, Sahara, had sub­
mitted to the market regulator - the
Securities and Exchange Board of India
(s e b i ) - on how it intended to secure
investor interest on a bunch of public de­
posits. The matter was in appeal before
the Supreme Court, following a June 2011
order by s e b i , upheld by the Securities
Appellate Tribunal (s a t ) in October, or­
dering Sahara to refund some Rs 17,400
crore to the public after evidence emerged
of the deposits being unauthorised and
since being diverted to undeclared uses.
As it began hearing the appeal, the
Supreme Court was told by the counsel
for s e b i that Sahara had floated a newly
minted financial instrument - which it
called the optional fully convertible de­
benture (o f c d ) - through two group
companies that did not have adequate
capital to service liabilities incurred. On
20 January, the Supreme Court directed
the Sahara group to explain within
three weeks how it intended to ensure
the security of the funds mobilised. Two
options were given: to either furnish a
bank guarantee for the sum involved, or
set aside a sufficient quantum of other­
wise unencumbered assets. Evidently,
the Sahara group chose the latter option
and set out a list of its assets together
v o l x l v ii n o 18 13329 Economic & Political weekly

with their valuations in a communication
to s e b i , which would in the normal course
have found its way to the Supreme Court
registry, to be placed before the bench
hearing the case.
Sahara felt aggrieved when some
details of this supposedly privileged
communication were broadcast by a
news channel. Petitioned for redress,
the Supreme Court sternly reprimanded
s e b i for its breach of propriety without
really seeking the identity of the offend­
ing official. It then went on - without a
clear warrant - to seek a written com­
plaint which it intended to use as basis
for evolving norms on media reporting
of matters under judicial consideration.
From a public interest point of view,
the reaction of the Supreme Court was
strange and mystifying. Considered in its
bare essentials, the Sahara-SEBi matter
was one rife with several asymmetries.
On the one side was a regulator distracted
by a multitude of cases in an environment
of extreme market volatility and lax
standards of corporate accountability. On
the other was a corporate entity with a
large advertising budget and ample re­
course to other forms of “ hidden persua­
sion” : such as a long-term sponsorship
deal for the Indian cricket team. At stake
were the savings of an estimated 24 mil­
lion investors who had, on the basis of
media reports and the efforts of Sahara’ s was very clear: rules involving punitive
sales force, chosen to put funds into a sav­
ings instrument of uncertain provenance.
When the media narrative is itself, in
ever increasing part, constructed under
the stimulus of the advertising outlays
provided by the corporate sector - and
by the undeniable allure of cricket as
an environment within which to frame
the most lucrative advertisements -
there is reason to believe that it may not
afford sufficient protection to investor
interests. The larger context is of a vola­
tile market where fortunes are made
and unmade in days and savings multi­
plied or wiped out. And within this con­
text, the principal sponsor of Indian
cricket had also introduced a financial
instrument of rather befuddling com­
plexity, and insisted that it was outside
s jurisdiction in not being a “
s e b i’ security”
in any defined sense. The only redress
available in the circumstances was a
Economic & Political w e e k l y B 3QI m a y 5, 2012
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slow-moving judicial process which
could ultimately be relied on to do the
right thing, but could not secure against
potential damage to investor interests in
the interim.
Beyond SC Jurisdiction
Clearly, every glimmer of light let into
the obscure world of high finance would
serve a purpose in raising public aware­
ness. The putative damage that the
Sahara cause suffers in the judicial
forum is to be offset against the public
interest served. Unsurprisingly, while
eager to seek restitution for his client,
the senior counsel representing Sahara,
Fali S Nariman proved amply sceptical
of the judicial ambition to leverage his
specific and purely contingent complaint
into an overarching set of rules govern­
ing the rights of the press. The argument
was very simple: press freedom was a
guarantee under the fundamental rights
and any abridgement proposed in the
principle would involve a conflict with
the “basic structure”of the Constitution.
Enacting a specific law for the press,
moreover, was not within the jurisdic­
tion of the Supreme Court. To the argu­
ment from the bench that the Supreme
Court was not embarking upon the path
of legislation, but merely laying out a
comprehensive set of rules, the riposte
sanctions against the press would be
equivalent to laws, which were beyond the
powers of the Supreme Court to lay down.
By this time, a Supreme Court bench
headed by the Chief Justice of India,
S H Kapadia, had swept up all com­
plaints received about media practice
over recent, remembered history and as­
sembled them into a common docket. In
August 2011, senior counsel Harish Salve
had protested before the Supreme Court
about reports appearing over two suc­
cessive days, which grossly misrepre­
sented his arguments in a matter under
active judicial consideration. Appearing
for Vodafone in a matter involving pot­
ential tax liability after its takeover of
the Indian assets of another global tele­
com player, Hutchison Whampoa, Salve
argued that his client had done no more
than prudent tax planning or “ avoid­
ance” . This had been rendered in reports
v o l x l v i i n o 18
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COMMENTARY
attributed to the news agency, the Press
Trust of India (p t i ), as “
tax evasion”
.
The agency in question responded to
the judicial stricture by issuing a retrac­
tion and an apology. Informally, the p t i
management also sent word that the re­
porter who had bungled his rendering of
the fundamentals of taxation, had been
taken off the Supreme Court beat.
Another matter that the Supreme
Court chose to resurrect involved senior
counsel K K Venugopal’ s complaint to
the bench in January 2010, that his argu­
ments on behalf of a senior bureaucrat
whose appointment as chief vigilance
commissioner was under judicial re­
view, had been characterised as “ ab­
surd”by the Times Now channel. The
Supreme Court had asked for a written
complaint which was reportedly not sub­
mitted following an apology from the
news channel.
Prior Restraint on Media
In resuming its consideration of these
seemingly settled matters, the Supreme
Court has clearly signalled that ex post
remedies - apology, retraction and ad­
ministrative correction by impugned
media organisations - are of little use
when media freedom becomes a poten­
tial hazard to the administration of jus­
tice. What is required, in the perception
of the highest judicial bench, is a set of
rules that would impose prior conditions
on modes of media reporting.
In part because of the expansive scope
of the agenda the Supreme Court had
taken on, its hearings stepped very
rapidly beyond the narrow confines of the
grievances of senior lawyers and wealthy
corporate litigants. Another family of
cases was drawn into the orbit, related
explicitly to the rights of individuals fac­
ing criminal trials. These included media
coverage of the Aarushi Talwar double
murder of May 2008, which was seen to
have prejudged the guilt of the parents of
a murdered child. Also brought within
the hearings was a petition moved against
the weekly newsmagazine India Today,
for publishing a purported interview with
one of the accused in the string of urban
terrorist strikes of 2008. The person con­
cerned - who fought the recent munici­
pal elections in Delhi from jail - had been
11
picked up by the police after the Septem­
ber 2008 “ encounter”at Batla House in
Delhi, in which two others from his puta­
tive “terrorist cell”were eliminated. India
Today’ s story, which appeared at a time
when the arrested person was being
denied family access and legal counsel,
was seen to be doctored in accordance
with the diktat of the police force and
to seriously undermine his chance of a
fair trial.
The logic of the judicial quest for a
media domain free of error impelled a
further expansion of the hearings, into a
consideration of a civil society organisa­
tion’s petition seeking restraints on the
telecast of content with explicit images
of sex and violence. Having assembled
this unwieldy docket, the Supreme
Court was told by a galaxy of senior law­
yers that it was engaged in a futile quest.
Shanti Bhushan suggested that the most
constructive course for the chief justice
would be to dissolve the bench, as a
predecessor, A N Ray, had done when his
effort to write the doctrine of the “ basic
structure”out of the constitutional scheme
floundered in 1975. Other senior lawyers
- Anil Divan and Rajeev Dhavan - were
emphatic in underlining the lack of a
constitutional mandate for the Supreme
Court’ s effort to narrowly define and cir­
cumscribe Article 19, which guaranteed
the right to free speech.
Senior advocates P P Rao and K KVenu-
gopal provided qualified endorsements
of the Supreme Court endeavour. Rao
pointed out that the mandate of the Press
Council of India (p c i) established the
principle of self-regulation by the print
media, which needed to be extended to
the electronic media. Venugopal offered
the opinion that the rights assured by Ar­
ticle 19 could conceivably be regarded as
less than absolute when there was a per­
ceived conflict with the rights to life and
liberty, guaranteed under Article 21. The
p c i, in an institutional intervention, af­
firmed that the positive value of a code of
conduct would stem from its moral rath­
er than punitive force.
A crucial element that was missed out
in this ensemble of legal wisdom is the
distinction between prior restraint and
post facto correction. Prior restraint of
any sort on the right to free speech is
considered to be the indispensable prop
of an authoritarian political dispensation
- indeed as the first step towards censor­
ship. Post facto correction in accordance
with clearly defined legal norms, in con­
trast, is an indispensable element in any
democratic system, where liberty is exer­
cised with responsibility.
Gagging Public Debate
Unfortunately, just as the Supreme Court
was hearing arguments about its intent
to introduce a media code, the Lucknow
Bench of the Allahabad High Court issued
a decree which seemed suspiciously like
a prior restriction. Hearing a petition
from ironically enough, a “ right to infor­
mation”activist based in Lucknow, the
bench banned any form of media cover­
age on the 16 January military exercises
conducted by units of the Indian army
based in Hisar in Haryana and Mathura
in Uttar Pradesh. These had been reported
in an overblown and highly colourable
fashion by the Indian Express on 4 April
2012, as evidence of serious strife bet­
ween the military command and the
civilian political leadership.
In the furore that ensued after the
Indian Express report, the newspaper was
held guilty at worst, of extreme gullibility
and poor editorial judgment. The source
of the alarmist report was identified -
accurately by all accounts - in elements
within the intelligence services, which
had established a dubious alliance with
sections of the higher military command

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to bring down a serving chief of staff of
the Indian army. In decreeing its ban on
any further reporting on the matter, the
Allahabad High Court held that the “ is­
sue of movement of Army troops is not a
matter of the kind which requires public
discussion at the cost of official secrecy
and the security of the country” . provisions of the law, such as “
The immediate impact of the order
was to prohibit considered analysis or
reporting on the public spat in the higher
military command and its possible rami­
fications for the integrity of defence pro­
curement decisions. A matter of legiti­
mate public concern, was through a pan­
icky and hypersensitive judicial order,
rendered into a state secret.
Reactions to the Allahabad High
Court order have not rendered the sce­
nario any clearer, p c i Chairman Justice
Markandey Katju, resolved to challenge
the order in the Supreme Court, but in a
talk show on primetime news - where he
frontally challenged a former army
chief, V P Malik, to “ grow up”- conced­
ed that it may have merit, even in peace­
time, when involving troop movements
in border regions.
This picture of what is right and wrong,
rendered by the p c i chairman, is rather
vacuous because it is innocent of fact.
Under a protocol agreed in 1988 to ensure
that mutual misconstrual does not end in
an outright shooting war, the first agency
to be notified of peacetime Indian troop
movements on the border would be the
Directorate of Military Operations of the
Pakistan army. Further, all media reports
on troop movements and peacetime mil­
itary exercises are based on attributable
briefings by spokesmen of the defence
forces. The Indian Express report of 4 April
was a conspicuous exception because of
its origin in an unsavoury contest be­
tween rival factions seeking to control
defence procurement procedures. To
ban media content on the matter is to
ban legitimate citizen engagement with
decisions on defence procurement,
made on the backs of loyal taxpayers.
Reasonableness of Restrictions
To retain any level of public support for
its project to enact a media code, the
Supreme Court would need to firmly put
down this effort by the Allahabad High
Economic & Political w e e k ly DECS m ay 5, 2012
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Court to silence legitimate debate. That
matter though, will not swim within the
span of attention of the highest bench,
till it is forcibly introduced. And in this
legal vacuum, several other modes of
silencing legitimate public debate have
flourished, which have utilised archaic
official
secrets” ,“ sedition”and various others.
“Reasonable restrictions”on the right
to free speech were introduced under
the first amendment to the Indian Con­
stitution. Yet till date, there is no clear or
consistent norm laid down by the judici­
ary on how “ reasonableness”is to be
assessed. In this conceptual vacuum, a
variety of abuses have flourished against
legitimate press reporting and exercises
of the right to free speech.
In June 2008, the commissioner of
police in the city of Ahmedabad, brought
charges of sedition and criminal con­
spiracy against two journalists and the
Times of India. This followed a series of
reports in the newspaper, noting serious
complaints against the newly appointed
police official and indicating that the in­
conclusive inquiries that had followed,
made him ineligible for the top post in the
city. The two journalists and the pub­
lisher were granted bail pending the full
hearing of the case. Evidently, the purpose
of the aggrieved police official was not to
punish, but to silence the public discourse.
It was a form of censorship through legal
injunction, which the Gujarat High Court,
as this article goes to press, has quashed,
though the longer term implications
remain to be determined.
K K Shahina, then a reporter with
the weekly newsmagazine Tehelka, was
charged with criminal conspiracy to in­
timidate witnesses, after a story she pub­
lished cast doubt at the prosecution of a
prominent Islamic cleric and political fig­
ure on terrorism charges in December
2010. Shahina’ s story was based on inter­
views with key witnesses cited in the
case made by Karnataka state police
against Abdul Nasar Madani, an Islamic
cleric who heads the People’ s Democratic
Party, active mainly in neighbouring
Kerala. Madani has been arrested and
charged by Karnataka police for conspir­
acy to detonate a series of low-intensity
bombs in Bangalore city in July 2008.
v o l x l v i i n o 18
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COMMENTARY
Shahina’ s story cited several of the wit­
nesses named by the Karnataka police as
saying that their testimony has been mis­
interpreted or distorted in making out
the charges against Madani. An example
of investigative reporting in short, was
transformed into the basis for criminal
prosecution against the journalist who
had done the hard work to bring this
abuse of power to light.
In May 2011, Tarakant Dwivedi, alias
Akela, then a reporter with Mumbai
city’s morning tabloid, Mid Day, was
arrested under India’ s Official Secrets
Act, after he reported on poor security
conditions in the metropolis’main rail­
way terminus. The Chhatrapati Shivaji
Terminus (referred to in common local
parlance as v t ), a hub of both suburban
and long-distance railway traffic, was
among the first targets to be hit in the
terrorist attack on Mumbai that began
on 26 November 2008. Soon afterwards,
the Government Railway Police (g r p ),
tasked with maintaining security at all
major facilities of the Indian Railways,
procured an array of sophisticated
weaponry to deal with extreme future
contingencies. On 28 June 2010, the daily
Mumbai Mirror published a report under
Akela’ s byline, headlined “ Leaks in c s t
Armoury Put New Anti-terror Arms under
Threat” . The report documented how
newly procured equipment was being
stored in a room with a leaky roof, mak­
ing their efficacy in an emergency situa­
tion highly questionable. Akela’ s arrest,
itself conducted under highly suspicious
circumstances, was believed to be direct
retribution for this reporting.
Silencing the media discourse is not
so much the issue here, as allowing it
more freedom and space. When the judi­
ciary proves unable to curb censorship
through criminal prosecution of public-
spirited journalism, but shows inordi­
nate concern over its own image as pro­
jected through the media, it ceases being
an institution acting for the larger good.
And it could well take into account the
dictum that the only remedy for the
abuse of free speech is to allow even freer
speech. There is no better antidote to the
irresponsible exercise of free speech by
the corporate media than to accord the
right to those who are denied it.
13
COMMENTARY
Myanmar
Is the Age o f Military Juntas Over?
MARWAAN MACAN-MARKAR_______________
What has occasioned the change
in Myanmar that has led to Aung
San Suu Kyi participating in
elections and entering
parliament? Are the generals who
have wielded power for half a
century ready to change the
constitution? An analysis.
Marwaan Macan-Markar (marwaan@ips.org)
is a Bangkok-based Sri Lankan journalist who
has been reporting from south-east Asia for the
Inter Press Service news agency since 2001.
14
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yanmar has reached a moment
M in its history that has given
rise to a rare burst of hope. It is
about time, one may say, after the suf­
fering its people have endured under 50
years of military dictatorship. And the
signs of reform unfolding in this south­
east Asian nation are quite unlike the
change the world witnessed during last
year’ s Arab Spring, where street protests
and days of public rage saw long­
standing dictatorships in Tunisia and
Egypt topple. What is happening in this
corner of Asia is more orderly, top-down,
and led by a former military man him­
self. And that this Myanmar story of
change has been embraced by the figure
who has become a barometer to under­
stand the extent of oppression is hard to
ignore. Yes: Aung San Suu Kyi, the coun­
try’ s most prominent dissident, has
given her blessings.
Just what it means for the Nobel Peace
laureate is amply evident. The 66-year-
old is finally enjoying her first political
honeymoon after a more than 20-year
life of sacrifice in a struggle to restore
democracy. It follows a thumping victory
at landmark by-elections on 1 April for
Suu Kyi and the party she leads, the Na­
tional League for Democracy (n l d ). The
43 seats the n l d won out of the 45 seats
contested in the 664-member bicameral
assembly affirmed the solid support
Myanmar’ s famous political prisoner
still enjoys. She was the ubiquitous face
of the party during the weeks of cam­
paigning. It was to hear “ Mother Suu”
that tens of thousands of voters were
drawn to n l d rallies. The n l d is now
poised to take its place as the largest
opposition party in the 440-member
Pyithu Hluttaw (Lower House), which is
dominated by the pro-military Union
Solidarity and Development Party (u s d p )
that was vanquished at the April poll.
It is a scenario that appeared improb­
able a year ago. And the presence of
MAY 5, 2012
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Suu Kyi and her n l d colleagues as law­
makers says much about where this
south-east Asian nation has arrived since
1990. That year saw the military rulers in
Burma, as the country was then called,
take an unprecedented political gamble:
hold the country’ s first general election
since a 1962 coup. It came in the wake of
a pro-democracy uprising led by univer­
sity students in 1988, which was brutally
crushed by government troops, resulting
in the deaths of 3,000 protesters. The
prospect of parliamentary democracy
returning to a Burma that once had a
thriving political culture gave rise to
many new parties, including the n l d .
And Suu Kyi, who had returned home in
1988 after being away for decades,
emerged as its natural leader.
But Suu Kyi’ s first foray into formal
politics proved too much for the mili­
tary. The n l d shocked the generals and
the pro-military National Unity Party
(n u p ) that contested the polls with the
outcome. It won a staggering 392 seats
out of the 485 that were up for grabs.
The n u p secured a mere 10 seats. And
Suu Kyi, who had by then been placed
under house arrest, was soon to learn
that political reform and a transfer of
power to civilian rule was furthest from
the minds of the generals. They refused
to ease their iron grip. And so began a
bitter chapter in the country’ s history
that saw Suu Kyi, the daughter of Bur­
ma’ s independence hero Aung San,
spend 15 years under house arrest. Her
supporters were not spared; hundreds
were thrown into jail in the years that
followed. The victims ranged from par­
liamentarians to Buddhist monks and
journalists to political activists. Their
nemesis was the reclusive “ Senior Gen” .
Than Shwe, the strongman of Myan­
mar’ s last junta.
Them Sein’
s Presidency
No wonder many expected a continua­
tion of Than Shwe’ s oppressive rule
when Thein Sein, a former general, was
elected by the country’ s parliament last
March as the first civilian head of state
in five decades. After all, President
Thein Sein had served as a prime minis­
ter in the Than Shwe junta. He had also
been a leading member of the u s d p ,
VOL XLVII NO 18 13353 Economic & Political w e e k ly

which won 219 seats for the Lower
House in a fraud-plagued 2010 general
elections that the n l d boycotted. And he
did stand to benefit from another peculi­
arity of Mynamar’ s 2008 constitution:
the bloc of 110 non-elected military
offices guaranteed seats in parliament,
ensuring the pro-military faction having
329 seats. So when the bespectacled
Thein Sein began his term last March as
the head of a quasi-civilian administra­
tion, Burmese political activists were
quick to refer to him as a “ puppet”of
Than Shwe. His inaugural speech was
similarly derided despite its progressive
tone that hinted at the politics of inclu­
sion and the spirit of reform.
Yet six months into Thein Sein’ s ad­
ministration, the tone of reform was
hard to ignore. It challenged the conven­
tional wisdom that had prevailed for
decades in describing the politics of
Myanmar - one of absolutes, a clear
black vs white scenario, a tussle bet­
ween the evil generals and a living saint
fighting for democracy. While the presi­
dent’ s assurances could have been dis­
missed as cosmetic, how could the words
of Suu Kyi be avoided? Who better than
her could judge the sincerity of Thein Sein
as a reformer? And she certainly ap­
peared convinced when, in mid-Septem­
ber, she told journalists: “The past situa­
tion is the past. The current situation is
the current one and there has been some
progress.”They are lines that have come
to define the role she has assumed as an
ally to the quiet spoken Thein Sein as he
presses ahead with change.
The picture that has subsequently
emerged to explain the country’ s jour­
ney towards openness is one that should
be familiar to Asians. It is shaped more
by personalities than institutions; it is
based on faith, trust and confidence
shared by the leading lights in the politi­
cal firmament - in this case Suu Kyi and
Thein Sein. And political insiders point to
a day last year, 19 August which is pivotal
to understand the beginnings of this
alliance. For not only had Suu Kyi been
extended a rare invitation to participate
in an economic seminar in Naypidaw, the
new capital, on that date. Not only did she
accept to travel to Naypidaw to mingle
for the first time in public with members
E con om ic & P olitical w e e k ly BBSS
of the Thein Sein administration, but
there was also a private dinner she had
been invited to. It was hosted by the
president in his residence. The tone at
that dinner and the assurances that
Thein Sein had promised are said to
have convinced Suu Kyi to deliver the
line to her supporters that Myanmar
was moving beyond the age of juntas.
But it was not a sea change that was
easily accepted. There were sceptics
among Suu Kyi’ s followers. Commentar­
ies in the media outlets run by Myanmar
exiles expressed concern. Is “ The Lady” ,
as Suu Kyi is also called, being fooled
into an embarrassing political compro­
mise? Some western analysts even dis­
missed Suu Kyi and her knowledge of
her countrymen. These views often
touched on benchmarks to gauge the
sincerity of the Thein Sein administra­
tion. Amnesty for the nearly 2,000 polit­
ical prisoners languishing in the 44 jails
and labour camps was one of them. The
ending of the country’ s crippling media
censorship was another. And then there
were the freedoms for the n l d : to be
able to function openly as a party, in­
cluding Suu Kyi being eligible to contest
the April by-elections along with other
n l d candidates.
Support from Dissidents
By March, Thein Sein had fortified Suu
Kyi’s faith in him by delivering on a
raft of pledges. Over 1,000 political
prisoners had been released, media
were given more freedom and the
formal return of the n l d was evident in
the presence of its ubiquitous symbol,
the party’ s flag - a fighting yellow
peacock with a white star on a red back­
ground. The reactions of prominent
dissidents released from prison - known
as the 88 Generation Students Group -
described the new Myanmar they were
returning to after years in isolation.
At a press conference, they declared in a
statement: “ (The 88 Generation) will
participate to the fullest extent with the
government led by the president, parlia­
ment, military, political parties and ethnic
minority groups for the emergence of de­
mocracy, peace and development” . A
similar spirit of reconciliation emerged
following talks between the government
m ay 5, 2012 v o l x l v i i n o 18
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COMMENTARY
and rebel groups from Myanmar’ s eth­
nic minorities who have been waging
separatist wars for decades. “ Over the
course of the past year, rapid progress
has been made in reaching preliminary
ceasefire agreements with nearly all
ethnic armed groups in the country” ,
noted the Brussels-based think tank, the
International Crisis Group, in a mid-
April report, titled “ Reform in Myanmar
- One Year On” .
It is inevitable that questions would be
posed to understand a man being com­
pared with Mikhail Gorbachev, Is Thein
Sein the principle architect of Myan­
mar’ s reforms? What motivated him?
Were there signs of his moderate outlook
even during the years he served under
the last junta? Not all questions have
been properly answered; there are gaps
that remain beyond the reach of some of
Myanmar’ s most informed analysts. But
of what has seeped out from military
records from his past and the decisions
made while serving the strongman Than
Shwe, Thein Sein cuts a figure driven
more by propriety than power. “ He had a
reputation for being obedient, a good
manager, modest and less ambitious and
less corrupt than other officers in the
army” , says Win Min, a Myanmar aca­
demic specialising in the country’ s mili­
tary affairs. Of his army experience, less
is known. Yet he had demonstrated a
streak of assertiveness later in life when,
as the prime minister for the recalcitrant
Than Shwe, he pressed for international
assistance to be permitted into Myan­
mar to aid the victims of the devastating
cyclone Nargis, which struck in May
2008, killing over 1,50,000 people. This
move was not lost on the likes of the late
Nay Win Maung, a prominent figure in
an emerging civil society movement in
the country. He had described Thein
Sein as “ smart”and “ pragmatic”in an
exchange with us embassy officials in
Yangon. The contents of that discussion,
which made it to a confidential cable
that the diplomats sent to Washington in
June 2008, was subsequently revealed
in the WikiLeaks exposures. It stated:
“Nay Win Maung said it was Prime
Minister Thein Sein who had appealed to
Than Shwe to secure the Senior General’ s
permission to allow international and
15
COMMENTARY

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
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Yet to draw from all this that Myanmar’ s
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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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 COMMENTARY

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
Muslims
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’
Performance
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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 COMMENTARY
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 “
nega­
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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COMMENTARY
Koodankulam’ s Reserve
Water Requirements
V T PADMANABHAN, R RAMESH, V PUGAZHENDI
There is not enough reserve
water inside the Koodankulam
nuclear power plants complex for
cooling the reactor cores and the
spent fuel pools.
We are extremely grateful to the peer reviewer
for the criticisms and suggestions on an
earlier draft.
V T Padmanabhan (ytpadman@gmail.com) has
been studying the health effects of ionising
radiation and hazardous chemicals since 1982.
R Ramesh is a Coimbatore-based family
physician who is also a scholar of geology and
oceanography. V Pugazhendi, a family
practitioner at Sadras, near Kalpakkam
nuclear complex, has been researching the
health status of the downwinders. The authors
are members of the expert committee
appointed by the Peoples’ Movement Against
Nuclear Energy.
20
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he Nuclear Power Corporation of
T India Ltd ( n p cil) constructed two
1,000 megawatts (electric) Mw(e)
pressurised water reactors (pw rs) at
Koodankulam in Tirunelveli district of
Tamil Nadu. The first unit was to be
commissioned in December 2011. Local
communities stalled the commissioning
of the reactor as they feared that the
reactor complex would threaten their
lives. An analysis of the official docu­
ments reveals that there is not enough
reserve water inside the campus for
cooling the reactor cores and the spent
fuel pools (csfps).
Koodankulam Nuclear Power Project
(k k n p p ) requires fresh water as a moder­
ator and as a coolant. There are three
types of coolants. The primary coolant
removes the heat generated by nuclear
fission from the reactor core. Part of the
heat in the primary coolant is trans­
ferred to the secondary coolant, which is
converted into steam that runs the
turbine. The de-mineralised, de-ionised
fresh water used as a moderator and
primary and secondary coolants are in
close loop and are condensed by seawater
(condenser coolant) drawn from and
disposed off in the Gulf of Mannar.
About 30% of the heat generated in the
reactor core is transferred to primary and
secondary coolants and the remainder is
absorbed by seawater. Since the spent
fuel will contain radioactive decay heat
from the fission products, a reactor core
needs to be cooled by de-mineralised
fresh water even when no electricity is
being generated. Likewise, the spent
fuel pool (s f p ) will also have to be
cooled till fuel rods are reprocessed or
the radioactive materials in the spent
fuel rods decay sufficiently so that the
heat generated is low enough to be dissi­
pated by air circulation. The fresh water
requirement (evaporative loss) of one
reactor is 2,832 cubic metres (m3) during
operation and 400 m3in shutdown mode.
may 5, 2012
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The potable water requirement is 1,272 m3
per day. The total industrial and domestic
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
pleted, the spent fuel in s f p will also
need to be cooled.
Historical Background
k k n p p was given conditional clearance
in 1989. According to the Environmental
Impact Assessment (e ia ), fresh water for
industrial purposes was to be brought
from Pechiparai reservoir, 65 km north­
west of the site on the river Kodayar, in
Kanyakumari district. “ At project site, it
is proposed to construct a reservoir with
a capacity to store seven days require­
ment of process and drinking water (of
capacity approximately 60,000 m3 for
two units). This reservoir is planned to be
located at an elevation of 35 metre which
is much above the safe grade elevation
of the reactor building”(n e e r i 2003).
While giving its nod to the project, the
Atomic Energy Regulatory Board (a e r b )
made the following conditions regard­
ing fresh water:1
•Facility to store at site adequate quantities of
water should be provided to meet the make­
up requirements of uninterrupted cooling of
core and other safety related systems on a
long-term basis.
• Facilities engineered at site should meet
the requirements even in the event of pos­
sible disruption of piped water supply from
Pechiparai dam.
•The safety of the 65 km long pipeline from
Pechiparai dam should be ensured by appro­
priate security arrangement.
•In the unlikely event of the breach of the
dam, alternative sources of water supply
should be available for the site within a rea­
sonable time.
• n p c i l should conceptualise schemes at
the Detailed Project Report (d p r ) stage for
utilisation of the water from Upper Kodayar
reservoir for such an eventuality.
Water Source and Reserve
Before preparing the detailed project
and the environmental impact assess­
ment, n p c il neither conducted any
study of the assured availability of water
in the reservoir nor did it inform the peo­
ple who have been using the water from
the 120-year-old dam. According to a
study, “the district had faced 52 years of
v o l x l v ii n o 18 DBm Economic & Political weekly

drought and drought-like situations
during 1901-89. The run-off in the dam
during 1963-90 was 15% to 37% less
than the expected average” (Ramesh
2006). As o f now, there is neither a pipe­
line from the dams nor an on-campus
reservoir with 60,000 m3 of water at
k k n p p . Instead, the campus has four
desalination plants.
Desalination Plants: There are three
different technologies for desalination.
They are (a) reverse osmosis (r o ),
(b) multi-stage flash (m s f ), and (c) mul­
tiple vapour compression (m v c ). The
Bhabha Atomic Research Centre (b a r c )
has extensive experience in seawater
desalination using r o and m s f techno­
logies and no expertise in m v c techno­
logy. Six desalination plants were con­
structed at k k n p p . The first two units
built by b a r c in the k k n p p township
based on r o with a combined capacity of
1,200 m3per day take care of the needs
of the township. The other four plants,
based on m v c technology, were built by
an Israeli company at a cost of Rs 115
crore. As this is the first m v c desalina­
tion plant in India, expertise for han­
dling major problems within a short
time may be difficult.
Reserve Water: The daily output of three
operating plants (one plant on reserve)
will be 7,680 m3, sufficient to meet the
industrial and potable water require­
ments of two reactors and the residents
in the complex. The campus has a re­
serve of 11,445 ni3 of water in 12 tanks
(Krishnamurthy et al 2011a). Of this,
2,000 m3is in fire-water tanks and 1,425
m3 is in tanks for domestic use located
outside the k k n p p island. The daily re­
quirement of potable water is 1,200 m3.
Leaving aside the fire and potable water,
k k n p p has a reserve of 8,020 m3, suffi­
cient enough to cool two operating reac­
tors for about one-and-a half days. If
there is a problem with water supply, the
reactors will have to be shut down and
the reserve will last about 10 days.
Committee on Water Reserves
According to Muthunayagam et al (2011)
“the inventory available in various tanks
is adequate for cooling requirement of
Economic & Political weekly Q3Q may 5, 2012
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reactor plant for at least 10 days in case
of power failure from the grid even
though the regulatory requirement is
only seven days.”The regulatory require­
ment, according to a e r b is for 30 days
and not for seven days: “ if the minimum
water supply required for long-term heat
removal from the core cannot be en­
sured under all circumstances, then the
site shall be deemed unsuitable. Avail­
ability of adequate quantity of water to
maintain the reactor under safe shut­
down state for at least thirty days needs
to be ensured under all circumstances”
(emphasis added).2
The Expert Group is silent about the
following issues.
(i) Drinking Water Requirement of the
Campus: The reserve water available in
two tanks meant to store potable water
is 1,425 m3, whereas the daily require­
ment is 1,272 m3. Even if the consump­
tion is reduced when the supply chain
breaks down, the reserve may not last
for more than two-three days. (Since the
industrial water is laced with elements
like boron and chemicals, they cannot
be used for drinking.)
(ii) Failure of Desalination Plants Due
to Causes Other Than Grid Failure: The
expert committee considered grid failure
alone as the only probable event. If the
grid fails, the reactors will shut down
automatically and hence the coolant
requirement will be about 800 m3 for
two reactors. (All reactors rely on grid
power for maintaining their safety related
pumps and instrumentations as the grid
is more reliable than the reactors.) A de­
salination plant is a complicated machine
for cleaning and sterilising a chemically
and biologically complex medium. That
machine can also fail due to wear, tear
and corrosion or due to an attack of
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v o l x l v ii n o 18
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COMMENTARY
marine organisms like jellyfish, called
fouling agents by the industry. With
global warming, jellyfish is poised to
recapture the empire they lost some
600 million years ago. Their intrusion
in desalination plants, ships and power
plants has been on the increase during
the past couple of years. In July-August
2011, nuclear power plants in Japan,
Scotland and Israel were shut down
due to their ingress, a feat that half a
century of anti-nuclear activism could
not achieve. “ The plants logically have
filters (called flumes) to keep marine
life out, but a possibly global jellyfish
bloom is proving too much for these
filters to handle”.3
(iii) Longer-term Outage of Desalination
Plants: Though there are several desali­
nation plants in India and b a r c is a
leader in this field, there is no expertise
for m v c desalination technology in
India. All the plants in India are based
on either r o or m s f technology. In the
case of a major defect, experts may have
to be brought in from Israel. What if the
desalination plants are not brought on
line within 10 days? A desalination plant
at Minjur near Chennai broke down in
2008 and it took 45 days to repair. The
experts had to be flown in from the
Netherlands.
(iv) Reactor shutdown and the Iodine Pit:
If the desalination plants break down,
the reactors also will have to be shut
down. Unlike other machines, a nuclear
reactor cannot be restarted immediately
after the shut-down, because of the
phenomenon called the iodine pit/xenon
poisoning.4The start-up may be delayed
by three days.
The first project proposal stated that
there will be a reservoir with a capacity
of 60,000 m3 of water brought from
epw.
Pechiparai. aerb gave “the clearan ce for
excavation in O cto b er 2001 subject to
com plian ce o f stipulations like restric­
tion on surface m in in g o f lim eston e and
d esign o f em ban k m en t for w ater storage
reservoir as ultim ate heat sin k”
.5 E xca­
vation w ork for a reservoir w as started
in 2004. It is n ot kn ow n as to w hy co n ­
struction w ork o f the reservoir w as not
com pleted. Both aerb and the Expert
Group o f the central gov ern m en t are
silent on this issue. If the reservoir w ere
there, they cou ld have stock ed 60,000
m 3 o f w ater from four desalin ation
plants (lying idle for the past three
years) in six days.
The World of Virtual Water
Q u otin g npcil and dae sou rces several
stories have ap peared in the national
m edia sh o w in g that the reactors have
en ou gh reserve water. Excerpts from a
report that ap p ea red in Times o f In dia:
(19 O cto b er 2011):
In case of an accident or a natural disaster,
the cooling of the core is top priority and
drawing lessons from the Fukushima sce­
nario,... India’s plants are now supplied
by alternate water sources that will not be
vulnerable to disruption. ...“N ot depending
on on-site water sources alone, water pipe­
lines from remote locations will supplement
and provide fail-back apparatus. ...India has
ramped up safeguards at its atomic power
plants with three layers of power back ups,
water pipes drawn from off-site locations ,
elevated water towers and options for inject­
ing nitrogen to prevent explosions”(empha­
sis added) (Deshpande 2011 ).
kknpp d o e s not have p ip es draw n
from off-site location s or elevated w ater
towers. O ther cam p u ses d o have such
p ip elin es and also h igher on-cam pus
reserves o f fresh water. M adras A tom ic
P ow er Station (maps ) w ith tw o heavy-
w ater c o o le d and m odera ted reactors
w ith an in stalled capacity o f 440 Mw(e)
has 28,400 m 3 o f fresh w ater and the
cam pu s is au gm en tin g its w ater reserve
w ith an additional reserve o f 750 m 3 as
re co m m en d ed by the Fukushim a Task
Force (Krishnamurthy et al 2011b). Tara-
pur A tom ic P ow er Station (taps ) w hich
uses light w ater as m odera tor and c o o l­
ant has an on-cam pus reserve o f 3,868
m 3 o f fresh w ater (Bhattacharjee et al
2011). The reserve w ater per mw o f in ­
stalled capacity is 12 m 3 in taps as
against 5 m 3 in kknpp.
Conclusions
npcil did not d o its hom ew ork regarding
the availability o f fresh w ater at or near
the reactor site b efore sign in g a contract
w orth Rs 13,000 crore w ith the Russians.
T hey con stru cted the kknpp cam pus in
violation o f the term s and con dition s
laid d ow n by the aerb . npcil and ele­
ments w ithin the Governm ent o f India
have been spreading misinformation
about the safety o f the reactor com plex.
Since the back-up for coolan t w ater is
insufficient, the co m m issio n in g o f the
reactor w ill b e a dan gerou s gam ble.

Durham
University
0 0 0 - fl
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u0
Shaped by the past, creating the future
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'./R
11
TTB
Institute of Advanced Study
2 0 1 3 /1 4 Fellowships

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

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NOTES_________________________________
1 AERB, letter no: CH/AERB/KK/8 4 8 6 /8 9 dated
10 November 1 98 9 .
2 AERB Code of Practice on Safety in Nuclear
Power Plant Siting, http://www.aerb.gov.in/
T/ documents/regprocess.pdf
3 http://news.yahoo.com/jellyfish-invasions-shut-
down-three-nuclear-power-plants-03 io i 6757 .html.
4 Xenon135 is a fission product which is a neutron
guzzler. While the reactor is operational, there
are two sinks for this isotope. One is its beta de­
cay to i 35 Cesium and the other is the neutron-
activation decay to Xe136. Since there is no neu­
tron in the shut-down mode, Xe135 builds and
prevents reactor start up. Xe135 was also
involved in the Chernobyl accident.
The Right-to-Public-Services Laws
A S H O K K U M A R S I R C A R __________________________
Eleven state governments have
enacted Right-to-Public-Services
laws in the last couple of years
without any pressure from the
centre. All except one of these
states are in the Hindi heartland
which is known for its fractured
polity. These enactments are
perhaps an attempt to regain the
faith of the middle class in the
political and bureaucratic system.
While there are limitations in
their conceptualisation and
implementation, the enthusiasm
of the respective state
bureaucracies in pushing for these
laws is encouraging. A number of
measures suggested herein could
help reduce the shortcomings in
the legislation.
Ashok Kumar Sircar (<ishok.sircar@apu.edu.in)
is with the Azim Premji University, Bangalore.
Economic & Political w e e k ly OB59 m ay 5, 2012
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COMMENTARY
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
pdf Indian Nuclear Power Plants Pressurised Heavy
Water Reactors at Madras Atomic Power Station” .
Muthunayagam, A E et al (2011): “ Safety of
REFERENCES___________________________ Koodankulam Nuclear Power Plant and Impact
Bhattacharjee, S, K R Anil Kumar, P K Malhotra of Its Operation on the Surroundings” , report
and V S Daniel (2011): “ Safety Evaluation of by Expert Group Constituted by Government of
Indian Nuclear Power Plants BWRs at Tarapur India, December.
Atomic Power Station (TAPS-1&2)” . National Environmental Engineering Research
Deshpande, Rajeev (2011): “ Indian N-plants Step Institute (2 0 0 3 ): “
EIA for KKNPP 1 and 2 Reac­
up Safety Measures”, Times of India, 19 October. tors” , pp 2 -4 5 .
Krishnamurthy, S, U S Khare, K R Anilkumar, Suresh Ramesh, R (2 0 0 6 ): “ KKNPP and the Pechiparai
Kumar Pillai, R K Gupta (2011a): “ Interim Reservoir of Kanyakumari District” , paper sub­
Report of Task Force on Safety Evaluation of mitted to the Ministry of Environment and
the Systems of KKNPP Post-Fukushima Event” . Forest, Government of India.
and state levels on the lines of the Central
and State Information Commission.
Initiated By State Governments
Starting with Madhya Pradesh in 2010,
another 10 state governments ( s g s ) have
rrespective of its nature, one of the so far enacted the Right-to-Public-Serv-
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
Therefore, assuring these services with­ designated officers accountable, (d) a
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
as renewing the pledge that a govern­ and fine for delay/denial in service.
ment makes to its citizenry, and is cer­ These s g s are of Rajasthan, Delhi, Jam­
tainly laudable. However, the recent mu and Kashmir ( j& k ) , Bihar, Punjab,
endeavour of a number of state govern­ Uttar Pradesh, Himachal Pradesh, Utta­
ments to provide service guarantee is rakhand, Karnataka and Jharkhand.
noticeable in a number of ways: this More s g s are at various stages of enact­
article attempts to look at it from the ing similar laws and Kerala and Harya­
perspectives of politics and governance na are very close to promulgation. The
in India. model for all these Acts has common
Following the initiatives of several characteristics. The departments are
state governments and the response, the free to declare a few or all of their serv­
central government too has now pro­ ices to come under its purview. A depart­
posed the “ Rights of Citizen for Time- ment that wishes to declare that a serv­
bound Delivery of Goods & Services and ice would come under the legislation
Redressal of Their Grievances Bill 2011” must designate a responsible officer to
drafted on similar lines. This is slated for provide the service, a first appeal officer
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.
policy cum regulatory body like the Griev­ Since the services that come under
ance Redressal Commission at central this Act are dependent on departmental
v o l x l v i i n o 18 23
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COMMENTARY
w illingness, their n um ber varies from as
low as 15 in Uttar Pradesh to 124 in
Rajasthan. Kerala’
s p ro p o se d legislation
covers on ly 13 services. The services m ay
include d ocu m en ts (certificates-licenc-
es-permits), cash (pension, stipends)
and kind (electricity-water connections).
The nature o f these services can b e cla s­
sified as regu latory (trade licence),
adm inistrative (birth, caste certificate),
basic (water, electricity), and w elfare
(pension, stipend) services.
W hat is m ost striking about these Acts
is that they are all initiated by state
governm ents. This is in stark contrast to
the pleth ora o f rights-based legislation s
in the last d e ca d e or more, w hich cam e
prim arily out o f a large n um ber o f civil
society orga n isa tion s’ad v oca cy efforts
w ith the u n ion gov ern m en t and Parlia­
ment. The Persons w ith Disabilities (p w d )
Act 1995, Right to In form ation (r t i ) Act
2005, Forest Rights Act (f r a ) 2006,
M ahatma Gandhi National Rural Em pl­
oym en t Guarantee Act (m g n r e g a ) 2005,
D om estic V iolence (d v ) Act 2005, Child
Labour (Abolition and Rehabilitation)
Act 2006, and R ight to E ducation (r t e )
Act 2009, can all b e classified as central
legislation s p u sh ed for by civil society.
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 ­
acted as central Acts w ith a clear m an ­
date for the states to im plem ent b y fram ­
in g appropriate rules. T he states had no
choice. In som e notable cases, the central
gov ern m en t is p rov idin g m ajor financial
resou rces to im plem en t th ese Acts, the
m ost celebrated o f w h ich is the m g n r eg a
and r te . However, in the cases o f the r t i,
p w d , dv Acts, the states have the o b li­
gation to finance their im plem entation.
Yet to Make an Impact
The rights-based legislation s en acted by
the u n ion gov ern m en t have a few fea­
tures in com m on : in all cases, the citizen
is giv en a lega lly ju sticiab le entitlement,
for w h ich the state gov ern m en t (or pan-
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
cases. The seco n d feature o f th ese le g is ­
lations is that alm ost all o f th ese are
24
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m ak in g an attem pt to address the co n ­ However, the provision s o f the Act like
stituency o f the poor, excluded, vu ln era­ supply o f w ork w ithin 15 days o f demand,
ble and m arginalised. The rti m ay in ­ u n em ploym en t allow an ce if w ork is not
trinsically be an exception, th ough its p rovided in that time, w a ge paym ent
gen esis surely w as the rural poor. The w ithin 15 days, etc - (features that require
disabled, ch ild labourers, w om en, trib- im provem en t o f internal efficien cy and
als and oth er forest dwellers, the illiter­ accountability) have not w ork ed in any
ate and h un gry are all con stituen cies large m easure. The im p lem en tation o f
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
stream. The third feature is that the le g ­ the country. Except perhaps the r t i,
islations by the very nature o f their co n ­ oth er such legislation s have not really
stituen cy focu s on, ex p ect and dem an d m ade the adm inistration ordinarily
o rga n ised con stitu en cy action w hich accountable. A basic qu estion can be
can brin g su ccess in realisin g the rights. legitim ately raised now. D o such rights-
The exp erien ce o f actual im plem en ta­ b a sed legislation s that e m p ow er citizen s
tion o f these rights-based legislation s w ith econom ic, socia l and civil rights
tells us a differen t story. W hile these have the poten tial to ch an ge the ch arac­
legislation s have certain ly raised public ter and nature o f the public adm inistra­
expectations, dem an d and orga n ised tion and its structural accountability?
con stitu en cy action, they have n ot tran s­ In contrast to these central legisla ­
lated into any internal ch urn ing w ithin tions, the rtps Acts have tw o distinctive
the public adm inistration. Neither have characters. One, all o f them are rights
they im proved the internal efficiency, b a sed legislation s o f the states, en acted
accoun tability or tran sparen cy o f the solely due to the state g ov ern m en ts’ow n
system. It has also not im proved d o w n ­ initiatives, w ithout any im p osition from
w ard accoun tability o f the departm ents/ the union government. Two, none o f these
authorities tow ards these con stitu en ­ Acts in any state are the results o f any
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
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
w ork on d em an d has had m ix ed results. m ake their o w n public adm inistration
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MAY 5, 2012 VOL XLVII NO l8 Economic & Political weekly

internally accountable as well as
towards the citizenry. It may be inferred
that from a purely civil society discourse
via central legislations, rights-based leg­
islations have now seeped into the dis­
course of the state legislature and state
bureaucracy. However, in doing so, the
concept of public services and rights
have taken a reductionist, inequitable
climb down.
Enthusiastic Bureaucracy
For example, public services in all these
cases are defined as entitlement to
documents, and cash and services in
kind as explained above. Public services
that are linked to enhancement of
human capital (nutrition-food-health-
education-security), financial capital
(employment-wage-loan-relief) are not
legislations, the first appeal lies with an
officer at the district level, and the sec­
ond appeal with an officer at the state
level thus limiting the ability of the poor
to access the institutions of first and
second appeal.
All these limitations notwithstanding,
it is encouraging to note the enthusiasm
of the state bureaucracy in pushing for
its implementation. This is manifested
in the fact that all these state govern­
ments are taking proactive steps to digi­
tise parts or the whole of the service
delivery system connected with these
services, with clear internal control and
transparency built in it. One good ex­
ample is Bihar, where the designated
monitor can track each application by
name on her computer screen. Other
software versions being piloted else­
COMMENTARY
economic indicators. A notable excep­
tion is Kerala. For over a decade and half
now, it has already devolved many serv­
ices to local governments ( l g s ) and al­
most in tandem, built a fruitful relation­
ship between them and wom en’ s com-
munitybased organisations through the
Kudumbashree programme. Therefore,
it is now proposing only 13 services to be
brought under this Act. The other notable
point about Kerala is that all the services
devolved to l g s are meant to enhance
human, social and financial capital. An­
other encouraging exception is Haryana
which has taken almost all the actions
conceived under the Act without actual­
ly enacting any legislation, and has
achieved comparable results. Thereby it
has raised a more basic question: are the
r t p s required at all, if similar results

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

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

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COMMENTARY

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

Economic&PoliticalwEEKLY
REVIEW OF WOMEN'S STUDIES
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

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

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Kick-starting a Second Green
Revolution in Bengal
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
Two decisions taken by the
Government of West Bengal, one,
to facilitate easier extraction of
groundwater, and the other, the
application of a fixed connection
fee for an electricity connection to
farmers could well lead to a
quantum leap in agricultural
production.
Aditi Mukherji (ia.mukherji@cgiar.org) is at the
International Water Management Institute,
New Delhi Office; Tushaar Shah is at the IWMI,
Anand Office and Partha Sarathi Banerjee is an
independent researcher based in Kolkata.
Economic & Political weekly QB29 may 5, 2012
This content downloaded from 192.190.180.53 on Tue, 06 Nov 2018 23:58:03 UTC
ate last year the Government of
L West Bengal took two policy deci­
sions not widely publicised by the
media or commented upon by the
academia. They are decisions which will
change the lives of millions of small and
marginal farmers in the state by improv­
ing their access to groundwater and in
the process may as well kick-start a new
green revolution.
First, the Water Resources Investigation
and Development Department ( w r i d d ) ,
vide a memo dated 9 November 2011,
changed a provision of The West Bengal
Groundwater Resources (Management,
Control and Regulation) Act 2005. Now
farmers located in 301 or so “ safe”
groundwater blocks and owning pumps
of less than 5 horsepower ( h p ) and tube
wells with discharge less than 3om3/hour
will no longer need permits from the State
Water Investigation Directorate ( s w i d ) .
This will effectively put all farmers
except those located in 37 semi-critical
blocks outside the purview of the Act.
Earlier, farmers needed these permits to
apply for electricity connections from
the West Bengal State Electricity Distri­
bution Company Limited ( w b s e d c l ) .
This process of procuring s w i d certifi­
cates was fraught with rent-seeking and
corruption and at the receiving end were
small and marginal farmers.
Second, the w b s e d c l on its part has
also passed a policy resolution by which
it will give new electricity connections
to farmers against a payment of a fixed
connection fee ranging from Rs 1,000 to
Rs 30,000 per connection depending on
the connected load. This means that
farmers will no longer have to individu­
ally pay the full cost of wires, poles and
transformers based on the distance from
the network, as they were required
before. But through a uniform connec­
tion fee, the utility will still be able to
cover the full cost of new connection
on an average. The farmers will also
v o l x l v ii n o 18
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COMMENTARY
continue to pay a metered tariff for their
electricity consumption - a tariff that is
unsubsidised and indeed a little higher
than average cost of supply.
Why Are These Changes
Important?
In order to understand the full implica­
tions of these two policy changes, we need
to understand agriculture, groundwater
and electricity situation in West Bengal
and how it is different from the dominant
discourse of over-exploitation and scar­
city that we often read about (Janakarajan
and Moench 2006; Moench 2007; Sarkar
2011; Mukherji 2006). After posting im­
pressive agricultural growth rates of 6%
and above per annum in the late 1980s
and early 1990s (Saha and Swaminathan
1994), West Bengal’ s agricultural growth
has stagnated at 1-2% per annum since
then (Sarkar 2006). Production of summer
boro paddy is showing a declining trend.
While the costs of cultivation (especially
irrigation costs) have increased several
times, the market price of paddy has
either stagnated or risen less steeply than
the cost of production - thereby hurting
-farmers’profit margins. For example,
from 2000 to 2008, the index value of
cost of labour and fertiliser has gone up
from 100 to 136 and 115 respectively,
while irrigation costs have increased
from 100 to 223 at 1999-2000 constant
prices. High irrigation costs are a direct
result of farmers’ dependence on expen­
sive diesel for pumping groundwater
and low rates of electrification in the
state. Now let us briefly discuss ground-
water and electricity policies in West
Bengal since the mid-1990s and the
overall impact they have had on the
agriculture in the state.
Low Rates o f Pump Electrification and
Groundwater Utilisation: West Bengal
has the lowest rates of pump electrifica­
tion for irrigation in the country. Here
only 15% of pumps run on electricity
as against a national average of 67%
( g o i 2011). The w r i d d memo recognises
that an s w i d permit was one of the key
reasons for low rate of pump electrifica­
tion. This is also confirmed by several
other studies (Mukherji 2007) and by a
recent survey by the International Water
27
Figure 1: Number of New Electrical Pump Connections Given to Farmers in West Bengal (1979 to 2009)
12,000 --------------------------------------------------------------------
0 I--- 1------- 1 I !-! 1 !--- 1
1979 1982 1985
Source: WBSEB (and now WBSEDCL), various years.
Management Institute and Delhi School
of Economics (iw m i -dse 2010 survey,
Meenakshi et al 2011). This memo also
recognises that groundwater utilisation
in the state is only 42% of its potential and
less than 10% of the blocks are in a semi-
critical stage of groundwater development
and therefore there is scope for further
groundwater development. Before this
new order came in, it was usual for sw id
officials to reject up to 60-75% of all
applications for a permit even in safe
groundwater blocks without citing any
reason. For example, till September 2010,
some 23,000 farmers had applied for
permits and only 8,500 got them. That
this process was fraught with rent-seek­
ing and corruption was openly acknow­
ledged even by groundwater officials
in the state.
The iw m i -dse 2010 survey found that
a majority of the farmers who did not
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
electric tube wells, even though opera­
tional cost of such electric pumps are a
fraction of diesel pumps. Quite predicta­
bly, the number of new electricity con­
nections for tube wells had fallen drasti­
cally over the years (Figure 1). Indeed,
West Bengal has the lowest number of
electric pumps in India - lower than the
adjoining states of Bihar (18%) and Orissa
(27%) and much lower than in Punjab,
Andhra Pradesh and Karnataka even
though overall groundwater endowment
per unit of land is much higher.
Dieselisation o f Irrigation Economy
and High Costs o f Cultivation: Lack of
access to electricity pushed farmers to
28
! 1
--- 1 ! ---1 -r— r ~ r - '- r- - ,— ■
1 r v 1 , > I- < " ? '1 1 >
1988 1991 1994 1997 2000 2003 2006 2009
use diesel tube wells for irrigation - even
at the cost of ever declining profit
margins due to high diesel prices and
stagnant output prices. This affected
boro cultivation. Boro paddy is one of
the most profitable crops in Bengal and
is therefore a preferred crop of farmers.
It was a rapid increase in area and pro­
duction of boro paddy in the 1980s and
early 1990s that unleashed the green
revolution in West Bengal (Harriss 1993;
Palmer-Jones 1995). Since 2001, accord­
ing to government data, the area under
boro paddy has remained constant at
14 lakhs hectares, though remote sens­
ing data shows that this area has de­
clined substantially from 2001 to 2007
and recovered somewhat in 2010. While
data on actual area under boro paddy is
debatable, what is quite clear is that
farmers with electric pumps have much
lower cost of cultivation than farmers who
CENTRE FOR STUDIES IN SOCIAL SCIENCES,
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Applications are invited from eligible candidates for admission to
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and from the office of the Centre.
Last date of receiving applications is May 28, 2012.
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depend on diesel pumps - even though
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
government for providing free electricity
to farmers.
Contraction in Groundwater Economy:
The overall impact of these two restric­
tive policies was a reduction in the
number of groundwater wells from 6.48
lakhs in 2001 to 5.19 lakhs in 2006 (goi
2001 and 2011). This is a paradox given
that the same minor irrigation census
shows that in 80% of the villages,
groundwater is available within less
than 10 m. Groundwater data provided
by sw id shows that groundwater levels
recover sufficiently after the monsoon
season due to high rainfall and alluvial
nature of the aquifer (Figure 2, p 29). If
there is any place in India where ground-
water can be deployed as a poverty
alleviation tool without significant impact
of long-term sustainability of the re­
source, it is in these water-rich areas
like West Bengal. Indeed, there is ade­
quate evidence to show that higher the
v o l x l v i i n o 18 E33Z1 Economic 8c Political w e e k ly
 COMMENTARY

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

Darjeeiint

JJalpaiguri

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
laman
■ 1 9 .0 0 -1 1 .9 9 ■ I 9.00-11.99
MB >12.00 ■ I >12.00

Twenty Four Parganas

laorajKolkata

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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COMMENTARY
- but at the cost of electricity sector
(Shah et al 2003). Will the same happen
in West Bengal? Prima facie, it seems
not, especially as long as the Govern­
ment of West Bengal does not change its
policy of metered supply to agriculture
and charges farmers the full cost of
supply keeping in mind that night-time
supply to agricultural consumers is priced
lower than full average cost of supply
because there are no other takers of
electricity in those time slots. Under the
current tariff regime, farmers in Bengal
are full revenue-paying customers like
any other and increase in such a custom­
er base should not affect the finances of
the utility adversely. However, increased
agricultural consumption brings with it
its own set of challenges such as load
management, monitoring of a spatially
dispersed clientele, power thefts and
matching electricity supply with peak
irrigation demand. West Bengal can
learn from other states such as Gujarat
(Shah and Verma 2008) and Punjab
(Mukherji et al 2011) and take proactive
steps to manage the energy-irrigation
nexus. Such steps may include segrega­
tion of agricultural and domestic feeders
in rural areas, intelligent rationing of
power supply to match peak irrigation in
the summer boro season, high voltage
distribution systems (h vds) for improv­
ing the quality of power supply to agri­
culture, etc. Until 2008-09, West Bengal
was a power-surplus state, since then its
generation capacity has suffered due to
lack of proper upkeep of its generation
capacity. This can be rectified with addi­
tional investments, which anyway needs
to be undertaken for the long-term via­
bility of the sector.
Conclusions
In this short note, we have discussed
two recent policy changes by the Gov­
ernment of West Bengal - policies that
will have a profound impact on agricul­
ture in the state. By removing compul­
sory s w i d certification and providing
electricity connections against a fixed
connection fee, the Government of West
Bengal has finally realigned different
interests in order to serve the interests of
poor farmers in the state. These policy
decisions are not only pro-farmer, but
30
This content downloaded from 192.190.180.53 on Tue, 06 Nov 2018 23:58:03 UTC
also serve the interests of w r i d d and
geologists were entrusted
w b s e d c l . s w id
with the task of providing s w i d clear-,
ance to millions of small and marginal
farmers in the state - a job for which
they were neither staffed nor well
equipped. This, quite predictably, led to
rent-seeking and arbitrary decisions,
thereby hurting the small and marginal
farmers they were supposed to serve.
Now the s w i d staff will be responsible
for providing permits to bulk users of
groundwater (such as industries and
municipalities) and this will lead to a
substantial reduction in their workload.
These measures also serve the interest
of w b s e d c l . In West Bengal, farmers
pay a metered tariff that reflects full
average cost of supply. Unlike most other
states like Punjab, Haryana, Karnataka
and Andhra Pradesh where farmers get
free electricity, farmers in Bengal do not
receive any tariff subsidy. Nor do they
demand any, for that matter. Therefore,
for w b s e d c l , farmers are revenue pay­
ing customers as any other and they are
now more than happy to increase their
customer base and improve their cash
flows. Finally, with ease in electrifica­
tion procedure, farmers of West Bengal
will be able to make intensive use of
groundwater for increasing their agri­
cultural production. This will also con­
tribute to poverty alleviation in a state
that is home to 214 lakhs of poor and
of these 84% live in rural areas. These
initiatives will also give concrete shape to
the central governm ent’ s policy directive
of encouraging food production in eastern
India without compromising ground-
water resource sustainability.
r e f e r e n c e s _______________________________
Central Electricity Authority (2010 ): http://www.
cea.nic.in/god/dpd/pumpset_energisation.pdf
downloaded on 15 February 2011 .
GOI (2001 ): Report of the 3rd M inor Irrigation Cen­
sus, Ministry of Water Resources Development,
Government of India, New Delhi.
- (2011): Report of the 4th M inor Irrigation
Census, Ministry of Water Resources Develop­
ment, Government of India, New Delhi.
Harriss, J (1993 ): “ What Is Happening in Rural
West Bengal: Agrarian Reforms, Growth and
Distribution” , Economic & Political Weekly,
2 8 (24 ): 1237 -47 .
Janakarajan, S and M Moench (2 0 0 6 ): “ Are Wells a
Potential Threat to Farmers’ Well-being? Case
of Deteriorating Groundwater Irrigation in
Tamil Nadu” , Economic & Political Weekly,
4i(37): 3977-87.
MAY 5, 201
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Meenakshi, J V, A Banerji, A Mukherji and A Gupta
(2011): “Does Marginal Cost Pricing of Electri­
city Affect Groundwater Pumping Behaviour of
Farmers? Evidence from a Natural Experiment
in West Bengal” , final project report submitted
to 3 ie by International Water Management
Institute.
Moench, M (2 0 0 7 ): “ When the Wells Run Dry
But Livelihood Continues: Adaptive Responses
to Groundwater Depletion and Strategies
for Mitigating the Associated Impacts” in
M Giordano and K G Villholth'(ed.), The A gri­
cultural Groundwater Revolution: Opportuni­
ties and Threats to Development (UK: CABI
Publishers), pp 173-92 (Comprehensive Assess­
ment of Water Management in Agriculture
Series No 3 ).
Mukherji, A (2 0 0 6 ): “Political Ecology of Ground-
water: The Contrasting Case of Water Abun­
dant West Bengal and Water Scarce Gujarat,
India” ,Hydrogeology Journal, 14 (3 ): 3 9 2 -4 0 6 .
- (2 0 0 7 ): “The Energy-Irrigation Nexus and
Its Impact on Groundwater Markets in Eastern
Indo-Gangetic Basin: Evidence from West
Bengal, India” , Energy Policy, Vol 35 (12):
6413 -3 0 .
- (2 0 0 8 ): “
Spatio-temporal Analysis of Markets
for Groundwater Irrigation Services in India,
1976-77 to 1997 -9 8 ” , Hydrogeology Journal,
16 (6 ), 1077 -87 .
Mukherji, A, U Amaresinghe, A Sarkar, A Das and
N Chanana (2011): Agriculture, Groundwater
and Energy Nexus in Punjab: 1970 to 2008,
report submitted to the World Bank by the
International Water Management Institute.
NSSO (1999 ): 54th Round: Cultivation Practices in
India, January 1998-June 1998, Department of
Statistics and Programme Implementation,
Government of India, August, New Delhi.
Palmer-Jones, R W (1995 ): “ Understandings of Re­
cent Agricultural Growth in Bangladesh and
West Bengal” , paper presented at the Work­
shop on “ Agricultural Growth and Agrarian
Structure in Contemporary West Bengal and
Bangladesh” , 9-12 January, Centre for Studies
in Social Sciences, Calcutta.
Revelle, R and V Lakshminarayana (1975): “ The
Ganges Water Machine” , Science, New Series,
Vol 188 (4188 ): 611-16 .
Saha, A and M Swaminathan (1994 ): “ Agricultural
Growth in West Bengal in the 1 9 8 0 s: A Disag­
gregation by Districts and Crops” , Economic &
Political Weekly, 19 (13): A2 -A1.
Sarkar, A (2 0 0 6 ): “ Political Economy of West
Bengal: A Puzzle and a Hypothesis” , Economic
& Political Weekly, 41 (4 ): 341 -4 8 .
- (2011): “ Socio-Economic Implications of Deplet­
ing Groundwater Resource in Punjab: A Com­
parative Analysis of Different Irrigation
Systems” , Economic & Political Weekly, 4 6 (7):
59-66.
Shah, T (2 0 0 7 ): “
Crop Per Drop of Diesel: Energy
Squeeze on India’ s Small Holder Agriculture” ,
Economic & Political Weekly, 4 2 (39 ): 4 0 0 2 -0 9 .
Shah, T and S Verma (2 0 0 8 ): “ Co-Management of
Electricity and Groundwater: An Assessment of
Gujarat’ s Jyotirgram Scheme” , Economic &
Political Weekly, 4 2 (39 ): 5 9 -6 6 .
Shah, T, C Scott, A Kishore and A Sharma (2 0 0 3 ):
“Energy-Irrigation Nexus in South Asia: Im­
proving Groundwater Conservation and Power
Sector Viability” , Research Report # 7 0 , Inter­
national Water Management Institute, Colombo,
Sri Lanka.
State Water Investigation Directorate (2010 ): “ Water
Level Data from Monitoring Wells from 199 0 to
2008” , data shared in soft copy.
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Annual Reports, West Bengal State Electricity
Board, Kolkata.
v o l x l v ii n o 18 laAVi Economic & Political weekly

The Emerging Environmental
Burden from Pharmaceuticals
GEETHA MATHEW, M K UNNIKRISHNAN
The enormity of pollution due to
pharmaceuticals in India has
caught the attention of
researchers all over the world.
This was due to the near
extinction of vultures in the
Indian subcontinent in the 1990s
caused by diclofenac and a recent
study in 2007 by Swedish
scientists on pharmaceutical
effluents in Patancheru in
Hyderabad. The massive
outsourcing of pharmaceutical
production by the west has made
third world nations like India a
victim of unbridled opportunism.
As the west wakes up to the
environmental implications of
“
pharma pollution”
, Sw eden’
s
Medical Products Agency
recommends a reduction in
outsourcing and revisions in
pharma manufacturing practices.
Would these exhortations reduce
pharmaceutical pollution in India
or would they adversely impact
India’
s advantages in the global
drug market?
Geetha Mathew (geeth_math@yahoo.co.iri) and
M KUnnikrishnan (mkunnikrishnan@gmail com)
are with the Manipal College of
Pharmaceutical Sciences, Manipal University,
Karnataka.
Economic & Political w e e k ly BBSS m ay 5, 2012
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obody ever anticipated prescrip­
N tion drugs to pollute the world,
except perhaps at the point of
manufacture. Pesticides were the only
recognised environmental pollutants
employed in healthcare. The menace of
pollution from the use of dichlorodi-
phenyltrichloroethane insecticide ( d d t )
began to be appreciated only in the late
1960s and eventually culminated in its
ban in the United States (us), as late
as in 1972. Until recently, prescription
drugs were thought to be environmen­
tally benign, owing to the relatively
small manufacturing volumes and the
extensive safety guarantees associated
with the licensing.
In the early 1990s, the Indian subcon­
tinent witnessed a dramatic reduction
(approximately 95%) in the population
of its vultures. Ten years later the culprit
was identified as diclofenac (an anti­
inflammatory drug). Vultures feeding on
dead cattle, dosed with veterinary for­
mulations of diclofenac, died en masse
on account of kidney failure (Oaks et al
2004). This is the first recorded event
that linked prescription drugs with the
extinction of a species. This being a
recent phenomenon, the possibility of
drugs polluting the world remains largely
unknown, even among the educated.
If the extinction of vultures sounded
the first warning bells about pharma­
ceutical hazards of the environment, the
second trigger, which came from a report
by Swedish scientists, took the world by
storm. From effluent samples collected
from Patancheru (a Hyderabad suburb;
the w orld’s pharmaceutical manufacturing
hub), the Larsson study (2007) identified
a number of drugs in alarming quantities.
Among the 59 active pharmaceutical
ingredients (a p i ) tested, 21 were detected
at levels greater than imicrogram/L.
More than 11 drugs were detected at the
highest level ever on the planet. Waste
water from Patancheru showed 150
v o l x l v i i n o 18
All use subject to https://about.jstor.org/terms
COMMENTARY
times the highest levels of pharmaceuti­
cals detected in the us. Ciprofloxacin (an
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
therapeutic blood level). The discharge
load of ciprofloxacin has been estimated
to be greater than 45kg per day. The
antibiotics lomifloxacin, ofloxacin, nor­
floxacin, etc were detected at levels which
are toxic even to plants and algae. It was
estimated that if the drugs extracted
from the effluents were sold as tablets, it
would fetch approximately Rs 65 lakh
per day (Larsson et al 2007).
Scale of the Environmental Burden
Drugs are considered among the most
non-biodegradable in the environment
(Stuer-Lauridsen et al 2000). Most drugs,
being insoluble in water, are not effec­
tively washed away by rain. Therefore,
drug residues tend to build up in the
environment and eventually accumulate
in the bodies of terrestrial and aquatic
organisms (Halling-Sorensen et al 1998).
Many drugs not only resist their own
degradation, but also interfere with the
microbial degradation of other substances
in sewage. This is because antibiotics
kill friendly microbes which decompose
organic waste. Another major concern is
that microorganisms exposed to extra­
ordinarily high concentrations of anti­
biotics evolve into extremely dangerous
pathogens. The competitive struggle for
survival in effluents containing a cocktail
of antibiotics would eventually favour
the selective survival of the deadliest
microbes resistant to many antibiotics
(Kummerer 2001). This has already
resulted in the emergence of many multi­
drug resistant microorganisms in effluents
exposed to environmentally-relevant
levels of antibiotics (Larsson et al 2007).
Microbial resistance to antibiotics is a
global concern because jet travel pro­
motes the rapid spread of epidemics.
Thus, pollution anywhere becomes a
problem everywhere.
Waste water effluents may be from
three different sources - municipal, in­
dustrial and hospital (Tsoumanis et al
2010). Incomplete metabolism, improper
disposal or insufficient removal by the
31
COMMENTARY
treatment plants are the main causes for
the release of pharmaceuticals into the
environment (Bergheim et al 2010).
Even small quantities of drugs can po­
tentially harm aquatic life (Bound and
Voulvoulis 2005). For instance, ethinyl
estradiol (a hormonal drug) found in
effluents, has resulted in feminisation of
fish downstream of sewage plants (Larsson
et al 2007). Effluents from Patancheru
Enviro Tech Ltd ( p e t l ) , Hyderabad,
India, produced up to a 40% growth
reduction in tadpoles, even at very low
drug concentrations (Carlsson et al 2009;
Fick et al 2009; Larsson and Fick 2009).
Even at very high dilutions, pharma­
ceuticals in effluents stimulated expres­
sion of genes (Gunnarsson et al 2069;
Kristiansson et al 2011)..
Even the most developed countries
are not entirely free from the environ­
mental burden of pharmaceuticals. Even
in developed countries, pharmaceuticals
have been detected in surface, ground
and drinking water (Fram and Belitz
2011). The Associated Press reported
that traces of pharmaceuticals have
been found in drinking water supplied
to around 4.6 crore Americans (Larsson
et al 2007).
Excretion via urine and faeces is the
primary route by which drugs enter the
environment (Daughton and Ruhoy
2009) . Antibiotics have been detected in
livestock and hospital effluents (Sim et
al 2011). Although separate treatment of
hospital waste water would reduce a p i
load, it may not reduce high-risk a p i s be­
cause faeces and urine are also sources
of a p i (Escher et al 2011). Drugs discarded
in municipal solid wastes and dumped
in landfills could undergo degradation,
adsorption, or leach into waterbodies. A
study reported drugs at levels of 7.4 to
45mg/kg in solid waste (Musson and
Townsend 2009). Municipal waste water
treatment plants are an abode of anti­
biotic-resistant bacteria (Novo and Manaia
2010) . Even well regulated drugs such as
narcotics have been found in significant
quantities in rivers, waste water treat­
ment plants and hospital effluents
(Lin et al 2010).
Unused prescription drugs, which accu­
mulate as a result of altered disease states,
missed doses, changes in prescription,
32
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expiry, etc are often discarded un­
scientifically (Thormodsen et al 1997).
Popular routes of disposal such as
garbage, toilet, sink, etc, result in signi­
ficant environmental burden (Bound
and Voulvoulis 2005).
Pharmaceuticals having multiple uses
have a greater propensity of polluting
the environment. Antibiotics are rou­
tinely used as feed supplements in poul­
try, fish or pig farms. Pig house dust was
found to contain five antibiotics in a
combined concentration of i2.smg/kg
(Hamscher et al 2003). In a recent study
in the us, pigs given low doses of anti­
biotics had gut bacteria that were resist­
ant to antibiotics, confirming that the
routine practice of feeding antibiotics
to livestock leads to emergence of anti­
biotic-resistant bacteria (Looft et al
2012). The evolution of the methicillin-
resistant staphylococcus aureus ( m r s a ) ,
also known as pig m r s a or livestock-
associated m r s a , which infects people
with direct exposure to livestock, has
also been traced back to antibiotic use in
livestock (Preidt 2012).
The West Is Waking Up
India pays scant attention to pollution.
Around 70% of all available water in the
country is polluted; 7.3 crore working
days each year are lost due to water­
borne diseases.1India has also earned
notoriety with the intractable multidrug
resistant New Delhi metallo-beta-lacta-
mase-i ( n d m - i ) -producing superbugs.2
being named after the Indian capital
(Kumarasamy et al 2010). The alarm
bells sounded by the Larsson study (Pa­
tancheru incident) is probably responsi­
ble for triggering worldwide research
on pharma pollution. India can take
“credit”for having provided two sam­
ples of calamity (vulture extinction and
Patancheru) for the world to study.
Andhra Pradesh accounts for 80%
of the drugs manufactured in India.
However, the Indian pharmaceutical
industry is highly fragmented with
approximately 34% of the total market
share being accounted for by the top
10 companies and more than 1,300
companies supplying the rest, petl
Hyderabad, for instance, receives about
15 lakh litres of waste water/day, from
m ay 5» 2012
All use subject to https://about.jstor.org/terms
90 bulk drug manufacturers. The clari­
fied effluent is finally discharged into
streams which merge with Godavari and
solid waste is used as landfill (Larsson
et al 2007). The Patancheru disaster
was inevitable because smaller com ­
panies have very inadequate effluent
treatment plants.
Many pharmaceutical firms are
migrating to the greener terrains of
Himachal Pradesh, Punjab, etc to enjoy
tax concession; further expanding the
reach of pollution. In Toansa Village
(Punjab), groundwater has been found
polluted up to 100 feet depth (Ghosh
2006), highlighting the implications of
pharma migration to greener terrains.
The us introduced federal guidance3
for disposal of prescription drugs in Feb­
ruary 2007. It recommends discarding
unused pharmaceuticals to household
trash, after mixing the pharmaceuticals
with an inert substance and concealing
the contents from view. Following the
Montreal protocol-1987 (Leach 2007),
us Food and Drug Administration ( f d a )
is currently phasing-out chlorofiuoro-
carbons (propellant in inhalers) and re­
placing it with alternatives which do not
deplete the ozone layer. The us f d a ’s
recent order to restrict antibiotic cepha­
losporin in livestock production is
expected to contain the spread of drug
resistance (Levy 2012).
In the west, hospitals follow scientific
safety guidelines for the appropriate
sorting and disposal of unused/expired
drugs (Faure and Rizzo Padoin 2003).
Prudent options such as community, city,
and state collection events, government-
funded projects, etc are also being offered
(Glassmeyer et al 2009). Sweden recom­
mends return of unused medicines to a
pharmacy. Patient education at least partly
remedies the problem of unscientific
drug disposal (Seehusen and Edwards
2006). A formalised protocol for drug
disposal and destruction worldwide has
become essential today (Tong et al 2011).
However, many countries including India
have no standard medication disposal
protocols yet.
Opinion is divided on donating unused
prescription drugs. Donations can often
cause harm because such drugs may have
expired or lack prescribing information.
v o l x l v i i n o 18 DES9 Economic & Political w e e k ly

World Health Organisation says storage
and handling of unused drugs is a strain
on resources, pose logistical bottlenecks
and create environmental hazards (Gold
1995)- Reports suggest that unused
drugs and human excreta should be
treated as chemically hazardous waste
(Mayer 1992). This policy may not be a
good idea for poor countries like India.
Apathy towards Pollution in India
Pollution has never been a major con­
cern of the public administration in
India, except when there is a public out­
cry. The enormity of pharma pollution
began to get noticed with the Larsson
study. Experts had already recommended
a policy shift from pollution control to
pollution prevention (Kathuria 2001).
However, the timing of creation of the
Environment Cell under the department
of pharmaceuticals linked to the Minis­
try of Environment and Forests ( m o e f ) ,
in November 2008, suggests that the
Larsson study was the triggering event.
In India, industrial effluents are han­
dled by end-of-pipe treatment, which,
like common effluent treatment plant,
results in residual persistent organic pol­
lutants and toxic metals in the treated
water. The common treatment of efflu­
ents from heterogeneous industries
results in a mixture of chemicals with
unpredictable toxicology (Kathuria 2001).
The antibiotics in the effluents can kill
the very same bacteria that breakdown
toxic wastes.
The near extinction of vultures led to
a ban of veterinary formulations of
diclofenac in 2006. However, a survey
(November 2007 to June 2010) revealed
that 36% of 250 veterinary and general
pharmacies in 11 Indian states continued
to sell veterinary formulations of diclo­
fenac. Moreover, 30ml vials of diclo­
fenac intended for human use are being
sold for veterinary use. Only Jharkand
has seen some rise in vulture population
due to increased awareness from contin­
uous media campaigning (Sudhi 2011).
Globalisation to Blame?
The Hatch Waxman Act (Mossinghoff
1999), which promoted generics, has led
to the outsourcing of pharmaceutical
production to third world nations like
Economic & Political weekly ODBCS may 5, 2012
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 192.190.180.53 o n T u e , 06 N o v 2018 23 :58:05 U T C
India and China. Globalisation and out­
sourcing has made India a major producer,
meeting 40% of w orld’ s and 90% of
domestic drug needs. This highly know­
ledge-intensive industry is expected to
grow at a rate of 21% by 2013-14. Cygnus
Business Consulting and Research esti­
mate that by 2013, India will be the second
largest bulk drug manufacturer in the
world (Peethambaran 2011).
Around 31% of drugs in the Swedish
drug market originate from India. Fin­
ancial reasons now dominate environ­
mental concerns. The high growth in
volumes of pharmaceuticals has brought
in its wake, concerns about the environ­
mental burden of pharmaceutical waste.
The Central Pollution Control Board and
the m o e f has ranked pharmaceutical
industry as one among the 17 highly
polluting4industries in India.
Outsourcing of production to low sal­
ary countries is an attractive option for
the west, and is good business for both
the parties concerned, but at the cost of
the environment (Larsson and Fick
2009). In effect, the west is exporting
their environmental problems to India.
The lack of awareness on the a p i source
is a major reason for the west ignoring
the implications of outsourcing. “ We
have no reason to believe that the mar­
ket situation, and thus the ethical
responsibility, is markedly different in
other western countries”(Larsson and
Fick 2009:162).
Green chemistry minimises by-product
waste and replaces the worst reactions
with green technology. Non-biological
methods using ozone, u v + h 2o 2 or acti­
vated carbon, etc, are better for treating
antibiotic-containing effluents (Larsson
and Fick 2009). Many routine chemical
reactions in pharma manufacture can be
replaced with green but expensive alter­
natives. Pharma giants win awards for
their innovations in green technology
but outsource their production to India.
Unbridled free market capitalism is forc­
ing companies to cut costs at the expense
of the environment.
China’s biggest antibiotics producer has
been accused of releasing effluents with
10 times the admissible limit of chemical
oxygen demand. However, the Chinese
pharma companies enjoy government
v o l x l v ii n o 18
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
COMMENTARY
support while pollution is taking away
India’ s competitive edge in a p i s . The
small-scale industries in India need
Rs 3-4 crore for effluent treatment alone.
The cut-throat competition could even­
tually destroy the competitive advan­
tage of Indian pharma.
Pharmaceutical Research and Manu­
facturers of America, representing major
us drug makers, said “ we cannot com­
ment about Indian pollution because
Patancheru plants are making generic
drugs and their members are branded” .
Generic Pharmaceutical Association
said “ issues of Indian factory pollution
are not within the scope of the activities
of our group” .5
Environmental pollution should be
an internationally shared responsibility.
The massive outsourcing of pharmaceu­
tical production, owing to globalisation,
has made India a victim of unbridled
capitalistic opportunism.
Concluding Remarks
Every pill eventually ends up in the envi­
ronment. Around 95% of the antibiotics
are excreted unaltered (Boehringer 2004).
Approximately 54% of people throw
medicines into trash (Choi 2007). The
general water treatment plants are ill-
equipped to handle pharmaceuticals.
Thus, “ drugs pollute the world twice,
firstly in the bodies of those who take
them and secondly, in the rivers and
oceans where the toxic residues inevit­
ably accumulate”(Adams 2009).
The diclofenac and the Patancheru
episodes have their origin in India and
have served as critical landmarks that
exposed the scale and scope of a hither­
to unknown phenomenon called phar­
ma pollution. Both these events high­
light the pivotal role of academics as
whistle-blowers. The proactive role
played by academics further emphasises
the need to involve them while framing
policies in manufacture and prescrip­
tion of medicines.
The 71st International Pharmaceutical
Federation ( f i p ) World Congress in Hy­
derabad, India, in September 2011 en­
gaged a special session on the environ­
mental implications of pharmaceutical
manufacture (Unnikrishnan 2011), in
which a team of Europeans, regretted the
33
situation emerging in the third world.
Sweden’ s Medical Products Agency
Report recommended reduction in out­
sourcing and good manufacturing prac­
tices’( g m p ) revisions to control emissions
(Taylor 2011). The new European Union
regulations would have to specify and
prioritise proven hazards, e g, antibiotics
and hormone disrupting agents. The pro­
posed revisions in g m p are a warning note
to the a p i exporters of the third world.
n o tes ________________________________________________
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h tt p :/ / w w w .w a te ra id . o rg / d o cu m e n t s / p lu g in _
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2 N e w D e lh i m eta llo - b e ta - la cta m a se - i (NDM-i)
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“D is p o s a l P r a c t ic e s fo r U n u se d M e d ic a tio n s
a r o u n d th e W o r ld ” , Environment International,
37:292-98.
T so u m a n is, C M, D L G io k a s a n d A G V le s sid is
(2010): “M o n it o r in g a n d C la s s ific a tio n o f W a ste
W a ter Q u a lity U sin g S u p e r v is e d P a ttern R e c ­
o g n it io n T e c h n iq u e s a n d D e t e r m in is tic R e s o lu ­
t io n o f M o le c u la r A b so r p t io n S p e c t r a B a s e d o n
,
Talanta, 82:575-81.
U n n ik rish n a n , M K (2011): “E n v ir o n m e n t a l R e g u la ­
t io n o f P h a rm a c e u tic a l P r o d u c tio n in India,
w ith S p e c ia l E m p h a s is o n In te rn a tio n a l C o l­
, Abstracts-FIP-International Phar­
la b o r a t io n ”
maceutical Federation, 7 S e p te m b e r, a c c e s s e d
o n 24 F e b ru a ry 2012: h ttp :/ / w w w .fip .org/ a b str
a c t s? p a g e = a b st r a ct s & a c t io n = it e m & it e m = 6 6 3 i
Econom ic& Politicalw E E K L Y
available at
K C Enterprises
3-6-136/6, Street No 17
Himayathnagar
Hyderabad 500 029, Andhra Pradesh
Ph: 66465549
v o l x l v ii n o 18 0DES3 Economic & Political weekly
T ow ards a Revival o f R evolutionary Ideas
H IR E N G O H A I N
I
t is a daunting undertaking for a
reader with negligible personal ex­
perience of class struggle at the grass­
roots level to review the selected writings
of a dedicated communist leader who not
only commented thoughtfully and inci­
sively on theoretical issues crucial for
Marxists in India, but also accomplished
such feats as organising five thousand
construction workers of Khaparkheda
thermal power plant near Nagpur and
leading them in a strike that lasted three
months in the face of the clout of giant
construction companies and brutal police
repression. This selection includes not only
discussions at length of specific features
of Indian society that complicate class
struggle and attempts by Indian Marxists
to address them, but also concrete and
insightful analyses of various struggles
and incidents of class conflicts. The task
is a privilege and heavy responsibility.
One however wishes that the editors
had read the proofs of the last 50 pages
or so more carefully and corrected such
obvious slips of the pen as “James Stewart
Mill” (p 157) that trip up the reader.
Otherwise it is a selection that shows
the wide variety of the author’ s interests
and experience.
Agreement and Disagreement
Let me however at the outset indicate
certain basic points of agreement and
disagreement with Ghandy’ s approach to
the issues discussed. First, I agree entirely
with the author of these essays that par­
liamentary politics has been of little help
of lasting worth in addressing the basic
problems of the working masses of the
country, and there is a very great danger
of fascist mobilisation out of disillusion­
ment. Hence the urgent need for alterna­
tive non-utopian strategies that do not
lead to momentary palliatives or slow
demoralisation. That itself demands a
trenchant critique of earlier theories of
Indian society and state that have failed
Economic & Political weekly B 359 may 5, 2012
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R E V I E W A R T IC L E seasons of freebies and casual employ­
ment, the revolution is not only going to
Scripting the Change: Selected Writings be a long haul, but will definitely require
of Anuradha Ghandy edited by Anand Teltumbde accomplishment of much harder and
and Shoma Sen, foreword by Arundhati Roy more complex tasks.
(Delhi: Daanish Books), 2011; xxiv+ 456, Rs 350.
It is a pity that a close and perceptive
review of Naxalbari finds no place in this
to yield an appropriate line for the strug­ selection. While Naxalbari certainly made
gle of the oppressed and resisting masses. a decisive break with explicit or implicit
But while I am impressed by the con­ collaboration with bourgeois parliamen­
sistency and clarity of Ghandy’ s stand tary politics, looking back one could
that at this moment all such struggles are hardly claim for it a path-breaking role
potentially part of a broad revolutionary like Lenin’ s April Theses and Mao’ s Hunan
movement to establish radical democracy Report in their respective contexts. For
in the country, I cannot believe that mili­ enlightenment I had ventured into the
tancy can or need be maintained at its hot-house-like atmosphere of the debate
peak in all the phases of the struggle. among Naxalites on Charu M ajumdar’ s
Neither can the term “ revolutionary” legacy, with claims and counter-claims
serve as a maid of all work in contexts based solely on quotations without any
that actually require more patient enquiry objective assessment of historical con­
and innovative thought. texts, and had come out exhausted but
At the peril of being dubbed a counter­ not a whit wiser.
revolutionary I also find it difficult to Neither, I regret to say, can I share the
believe that except in a very broad sense author’ s unqualified enthusiasm for the
the “ line”laid down by Mao Zedong Great Proletarian Cultural Revolution
more than 80 years ago out of his study under Mao’ s leadership. Here and there,
of Chinese (and global) political and to be sure, there had been mature appli­
social conditions can apply to present- cation of its basic ideas, releasing creative
day India where things have developed energies of the working people for pro­
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,
adjust to capitalist penetration and for­ regimented, highly emotive ritual which
mal democracy with greater ease under aroused destructive mass hysteria among
state patronage, where there could not be young people, which, in turn, provoked
any question of powerful warlords defy­ an equally massive reaction, with ulti­
ing the central government and ruling mately devastating results for the work­
over vast stretches of the country for ing masses. It is futile to insist that the
decades. The repressive machinery rep­ reaction had been the handiwork of a
resenting the interests of imperialists, mere handful of super-subtle conspirators.
comprador capitalists and feudal ele­ The parrot-like drill is highlighted by
ments having acquired wider reach and the fact that in a country of hundreds of
greater technological clout, the electronic millions, only 13 operas were allowed to
media busy corrupting the minds of the be performed as “ safe”for the people!
people with non-stop dissemination of Centuries-old feudal mental habits of
all kinds of crap and confusing them, the entire society were sought to be
most non-governmental organisations wiped out overnight by insults and injuries
standing guard over those interests, heaped on reputed elderly academics
election-time over decades turning into and writers by hordes of hysterical
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REVIEW ARTICLE
Red Guards. There was an outright
denial of the course of history and the
dialectical nature of progress, and of the
need for critical assimilation of tradition.
(Needless to add, both positive and neg­
ative lessons ought to be drawn from
this great upheaval by left historians.)
This is not to minimise the compelling
power and significance of this collection
of essays. A positive and inspiring feature
of these essays is that unlike the dry,
scholastic and jargonised prose so com­
mon in Indian leftist tracts and writings,
Anuradha Ghandy’ s Scripting the Change
is a book where for the most part sustained
rigour of logic is animated by passionate
commitment and theoretical disputes are
relieved of their sense of barrenness by a
vision of radical authentic democracy.
It is now more than evident that the
Marxism as propounded by the founders
and their eminent successors could
hardly have foreseen the specific forms
that concentration of capital and their
political regimes have assumed today,
though the general trajectory was pre­
dicted correctly. The unexpected novelties
and qualitative changes that have oc­
curred in the environment of different
countries and regions, economic, cultural
and social, under the general rubric of
imperialism, feudalism and tribalism,
require painstaking study to adapt, modi­
fy and apply familiar Marxist c o n c e p t s .
(For example the Soviet model of national
development did not succeed in Afghan­
istan despite the massive fire-power of
the Red Army though it is true certain
positive steps were taken by the govern­
ment in Kabul from above.) This is a book
where we find such a bold and energetic
initiative, rich in experience and resolute
in spirit. It bears the mark of a sincere,
and practice-oriented attention to both
the historical heritage (and burden) of
Indian society and the major bourgeois
intellectual and ideological currents that
have emerged in contemporary dis­
course about society and the state, in the
face of an acute consciousness of loom­
ing crisis in the given socio-political order.
Caste and Feudal Relations
Caste had been brushed aside by the
orthodox Indian communists (until they
were jolted into some sense by the tidal
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outbursts of dalit anger in the 1970s) as a
decadent social relic destined to fade away
with social progress. Such a view neglected
the way feudal production-relations in
the country remained enmeshed in caste,
and the dangerous and devious ways
in which it is propped up by the state,
not to speak of its subversive impact on
revolutionary activities. Even present-day
parliamentary politics is so dominated by
caste that parties that originally recog­
nised its role have struck a corrupt bar­
gain with it. The left has ignored the
task of tenaciously dealing with it and
finding appropriate solutions to the
problems it poses. This is tricky business
as it demands the recognition of its char­
acter as a long-standing historical forma­
tion amenable to change without slack­
ening efforts to fight the oppressions and
discriminations it daily imposes on the
lower castes. Caste in India is organic to
the feudal relations that imperialism has
deliberately allowed to survive and sup­
ported. A lot of academic research on
caste seems to deal with it as an ineradi­
cable given feature of Indian life.
Anuradha Ghandy’ s two essays, “ Caste
Question in India”and “ The Caste Ques­
tion Returns” , are illuminating and fairly
decisive interventions on the debate on
caste from the point of view of historical
materialism. Though she depends on
Kosambi, R S Sharma and others for
inputs, she constructs the argument
with lapidary clarity. There might be
minor quibbles on details. For example,
no one in Assam has heard of a tribe
called “Bhar”having ruled there for six
centuries! (p 24) And while it is true that
Kshatriyas in alliance with brahmin
lawgivers kept down lower castes by
force (pp 23, 29), Kosambi has warned
us not to underestimate the pernicious
opiate role of religion in this suppression.
Again, granted that the system became
rigid with the consolidation of feudalism
(in the sense appropriate for India), its
institutions and customs were not con­
jured out of thin air, but had been trans­
formations of tribal ritual. For example,
the yajna, originally a tribal ritual for com­
mon good, became a ritual for confirming
the social pre-eminence of brahmin
priests and kshatriya rulers, following
the emergence of monarchy. As more
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and more tribes were assimilated to brah-
minism (“ Sanskritised” ), ethnic rules of
endogamy and exogamy were used to
advantage by brahmin lawgivers through
smritis to raise barriers to unity among the
exploited and oppressed communities, who,
in turn, found such barriers “ natural”
.
Likewise, when cattle began to be used
for agriculture, the patriarchy already
emerging in pastoral tribes along with
private property was also taken over and
turned into a pillar of the social system.
But Anuradha Ghandy is on spot in relat­
ing caste to the rise and consolidation
of class. In addition, she follows Marxist
historians like Kosambi and Sharma in
holding that after the decline of trade
and empire (which was favourable to the
rise of heterodoxies like Buddhism and
Jainism) and the growth of relatively
self-sufficient village economy, division
of labour became rigid, hereditary and
multitudinous, sanctioned by scriptures
and ritual and occasionally enforced by
the Raj-danda. The monarchical state of
the kshatriyas expanded and proliferated
by incorporating more and more tribes
as shudras and ati-shudras, as brahmins
through land-grants of kings and nobles
introduced more advanced techniques
of agrarian production supplemented by
magic in previously backward areas.
Even foreign invaders (until the advent
of Muslims) were turned into neo-
kshatriyas through fake genealogies
and the domination of two castes was
thus sanctified at the cost of social stag­
nation. The hierarchical system became
inexorable guaranteeing social peace and
unhindered surplus extraction, steered
by the occasional use of violence by the
state. This also led to degradation of
many castes along with their professions
in social estimation, internalised by
many of such communities as destiny or
karmaphal But the general picture pre­
sented is correct and illuminating: the
explosion of violence against dalits and
adivasis since independence by higher
castes and the local administration, with
the government ignoring and under­
playing it, the corporation ruthlessly
evicting them from traditional environ­
ments where they eked out a precarious
livelihood, moneylenders and contractors
sucking their blood, and the lower courts
v o l x l v i i n o 18 B329 Economic & Political w e e k ly

and lawyers wrapping up justice into
knots, most definitely underscore the
persistence of Indian feudalism and the
“democratic”state’ s role in defending it.
Its current virulence under the influence
of upper-caste politics is demonstrated
in a report in The Hindu (6 March 2012)
that exposed s c / s t students to recurring
humiliation and discrimination at national
institutes of higher education like the All
India Institute of Medical Sciences, and
picking up at random current journals
one comes across a report about forcible
sterilisation of tribals in a Bharatiya Janata
Party (bjp) -ruled state keeping them
totally in the dark about the real nature of
this “treatment”(Outlook, 12March 2012).
The medieval Bhakti movement was a
challenge to the rigidities and indigni­
ties of caste, and it was apparently given
momentum by rapid urbanisation and
expansion of trade and commodity pro­
duction under the sultanate and early
Moghuls. But for reasons which we
cannot go into in the present review,
brahminism succeeded in defeating this
challenge. The intervention of colonial
powers at this juncture, and the total
lack of foresight and initiative of a deca­
dent feudal state and ruling classes who
often entered into alliances with them
to defend themselves against popular
regional forces prevented the dissolution
of feudalism. As Ghandy puts it, imperi­
alism found it convenient and profitable
to maintain an ailing feudalism as a jun­
ior ally, which led to f u r t h e r impoverish­
ment, degradation and wretchedness of
the lower (working) castes. (It was not
only the East India Company, but the
Privy Council on many occasions of
caste disputes that gravely deliberated
on caste status in the 20th century with
the help of learned pundits!)
Imperialism
and Caste-based Feudalism
Yet the dialectics of imperialism, which
was based on expansion and concentra­
tion of capital beyond national boundaries,
also compelled it to recruit educated
assistants for various administrative and
technical tasks from an emerging native
middle class which it sought to make
over in its own image through western
education. Ideas such as equality before
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the law, universal education, the impor­
tance of science and reason, civil rights,
percolated to the intelligentsia of this
class, though the rulers skimpily and
rather reluctantly implemented them.
The idea was to implant in the minds of
the natives an image of the rulers as a
superior race of benevolent guardians
destined to rule over them until they
acquired after centuries necessary quali­
ties for self-rule. Such ideas, though
meagre and weak, were enough to
generate some social ferment among the
middle class culminating in the birth
of movements for liberal reform and
education such as the Brahmo Samaj in
Bengal and Prarthana Sabha in Bombay
Presidency, by and large among higher
castes. On the other hand, the weak
impetus of capitalism in its imperialist
role also changed social relations to a little
extent and stirred a section of the lower
castes into an awareness of their wretch­
edness and an impulse for liberation.
But the comprador nature of native
capital and imperialist support to feu­
dalism necessarily restricted their vision,
and they (like Jotiba Phule, B R Ambedkar
in Maharashtra and Periyar in south
India) sought the support of British rulers
against the hated upper castes and reli­
gions that the latter promoted. Neither
the upper caste elites nor the pioneers of
campaign against the caste system from
the lower castes could recognise the ba­
sically feudal character of the society.
Following the transfer of power half­
hearted land reforms by the Indian rulers
only benefited certain backward castes
and offered little succour to scheduled
castes and scheduled tribes. But it is
surely significant that sincere and intel­
ligent leaders of the dalits such as
B R Ambedkar continued to pin their
hopes on the state and its power to legis­
late. Anuradha Ghandy underscores the
rise of dalit elites who poured out their
wrath against the shackles of caste in
burning poetry and prose arousing a
sense of guilt among the upper caste
elites but stopping short of a revolt
against feudalism that still persists, and
eventually getting sucked into the vortex
of bourgeois parliamentary politics.
But if we are to take the anti-caste
struggles of dalits seriously, in spite of
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REVIEW ARTICLE
their collaborationist attitude, why
should we not concede the positive if
limited role of the upper caste elite
in our social and political history? The
typical Naxalite attitude to the pioneers
of nationalist awakening among the
middle class is to express disgust and
disdain at their contributions. Anuradha
Ghandy is more restrained, but she also
blames them for not seeing feudalism as
a mortal enemy of the people. Granted
that they had the gumption to speak for
the whole nation, while exempting feudal
elements that sat on the bent backs of
the working people, they also helped
spread the ideas of equal social and
political rights. (Consider especially the
role of Congress socialists up to a point
in history.) Anuradha Ghandy rightly
points out that the anti-caste campaign
of dalits was often in content a struggle
against upper-caste moneylenders and
landlords, but fails to mention the limi­
tation that its form and ideology imposed
on it. Actually, as she says, the rise of a
dalit middle class, however small, in­
creased the stress on identity and diluted
the sense of underlying socio-economic
oppression. Subsequently, this develop­
ment encouraged discursive analysts like
Gyanendra Pandey to concentrate on sup­
pressed identity as the existential trauma
of dalits. The situation has led to splits in
the movement of depressed classes, pitting
dalits against Other Backward Classes
(obcs), and triggering raucous skirmishes
among them, and eventually placing the
various governments in power in a position
to strike deals with the fractured leader­
ship by offering the bait of reservation.
The Mandal and anti-Mandal agitations
further confused and divided large num­
bers of the educated middle classes,
blurring the sense of the large picture.
Towards Annihilation of Caste
Anuradha Ghandy’ s way out of this
labyrinth is that while revolutionaries
must put annihilation of caste on their
agenda, the oppressed castes must also
be made to realise that this is impossible
without an uncompromising fight against
the three enemies of the Indian people -
imperialism, feudalism and the compra­
dor bourgeoisie (p 62). She believes the
poorer sections of upper castes and the
37
REVIEW ARTICLE

members of the oppressed castes must masses of the doubly burdened lower
unite in an agrarian revolution that will castes. It is also difficult to accept her po­
give land to the tillers and power to sition that in the transitional period the
local people’ s committees. All caste in­ revisionists among the left are also to be
stitutions, caste ideologies and practices strictly ostracised, in view of her admis­
must be fought with a clear demand for sion that the ranks of those fighting for
radical democracy (pp 72-79). While democracy are much broader than the
correct as a whole it does not address revolutionary left. At least at the grass­
the quandary that dalit movements are roots level a certain level of tolerance and
eventually facing by putting the state mutual understanding has to be arrived
run by “ the three enemies of the Indian at with due caution. She agrees that the
people”on the seat of the arbitrator. Such Communist Party of India (Marxist)
aspirations, however deluded, cannot be [ c p i( m ) ] in theory accepts feudalism as
brushed aside so easily, and there is no an obstacle to social change (p 85), but
scope for armed struggle here. Her own condemns its mechanical approach to it
29 prescriptions for this phase of the in practice as more a question of super­
struggle include support to such demands structure than of the base, thus allow­
as right of entry to temples, real (rather ing the ruling classes to play a vicious
than formal) equality in employment, caste politics. This is not correct, for
reservation in educational institutions “ semi-feudalism”cannot be a matter of
and jobs. Of course such demands can superstructure alone. But she is right on
conceivably be realised by militant agi­ spot insofar as parliamentary tactics
tations forcing the state to concede them. prevent the c p i ( m ) from taking on the
But bourgeois parliamentary methods problem seriously.
with dilatory rules can dampen such In my opinion, for all it is worth, it
movements and also find time and scope will be better if overground fronts are
to instigate the poor of upper castes properly built up to work for the party
against lower castes in general! without blind “ revolutionary”tactics but
The quandary compels the author to with dedication, patience and discipline.
make a highly significant concession in It seems that in West Bengal the “ Police
another important essay “ The Caste Santras Birodhi Andolan Committee”was
Question Returns” : formed only after police excesses reached
It is true that the communists must be the a peak. Such front organisations, not
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
cratic revolution... but they need not be, mature workers with a truly democratic
and are not, the only fighters for democratic outlook, may serve as an ideal platform
change (p 83).
for all genuine democrats and widen the
She also warns: influence of democratic ideas and values.
Today, many of the present-day leaders of Issue-based joint action (e g, corruption,
the dalit movement go on a tirade against illegal violation of civil rights, lumpen
communists but see no harm in associating hooliganism of ruling-class agents) can
with such caste-ridden parties as the Con- rescue dalits from identity-sectarianism,
gress-I and the b j p (p 81).
inspire class solidarity and strengthen
There is therefore no way in which the party’ s links with the people. This
we can bypass the class nature of the will help keep alive something like
present dalit leadership and their con­ “ social conscience”among middle-class
sequent opportunism. Identity politics academics and artists. Of course there
fuelled by dogmatic academic research must be strict prohibition against tinker­
and celebrations of separate culture also ing with electoral politics. There will
obstruct class solidarity and strengthen be bad eggs in the basket, but it is
the influence of ruling class politics. The not unexpected.
author virtually admits as much by con­
demning the situation as a “ quagmire of The Woman Question
sectarianism”(p 91). But she does not W omen’s problems and issues are the
address the problem of uniting the ex­ next major area of the author’
s concern,
ploited poor of upper castes and the and their relevance for a struggle for
38 may 5, 2012
true democracy is more than evident.
One of the most impressive articles in the
selection is an erudite and magisterial
essay “ Philosophical Trends in the
Feminist Movement”(pp 145-209). The
author exposes the theoretical weak­
nesses and confusions in feminist move­
ments originating largely in the ad­
vanced capitalist countries and argues
convincingly that without a proper under­
standing of the role of feudalism and
capitalism in the oppression of and dis­
crimination against women these dan­
gers to true democracy cannot be over­
come. She also suggests that patriarchy
is no class-neutral institution, but had
been adapted by both feudalism and
capitalism by virtue of their basically
oppressive and exploitative character.
Failure to acknowledge it had led femi­
nists astray into all kinds of eccentric
utopianism and compromises, including
downright reactionary ideas.
There is no question of ignoring the
revolutionary and profoundly illuminat­
ing impact of feminism on the democratic
revolutionary movements. Patriarchy has
been a constituent of all kinds of class
rule, and it has deprived women of their
deserved role in leading such move­
ments, considerably weakening them
(p 147). Further, struggle against it has
promoted some progress in emancipa­
tion of women from domestic slavery
and some expansion in wom en’ s social
and political rights and role (pp i47ff).
The initial intensity (not without some
fanaticism) of this movement soon cata­
pulted it towards a leftist direction. “But
after 1975 there was a shift. Systemic
analysis (of capitalism and of the entire
social structure) was replaced or recast
as cultural fem inism ”, which was based
on the “ assumption that men and
women are basically different”(p 153).
Eventually there emerged schools of
feminist thought that centred around
biology of reproduction as the sole basis
of theory and advocated total separation
of women from men, oblivious of the
historical development of patriarchy in
class societies. Certain schools gave up
working for changes in material condi­
tions of social life and confined them­
selves to analysis of “ representations”
and “ symbols”(pp 158-172). The author
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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 / te rm s

asserts forcefully that concentration on
patriarchy as a separate system could
only have a negative impact on revolu­
tionary democracy as a movement (p 190).
She also points out that eco-feminism
which idealises nature and assimilates
patriarchy to domination of nature by
man mystifies the human-nature me­
tabolism while postmodernism favours
an anarchist attitude to organisation in
the struggle of the masses against a
highly organised capitalist system and
its state (pp 180-99).
Coming to contemporary India she
reveals how different political parties
have been using the woman question in
their own ways. The participation of
large numbers of women in the demoli­
tion of the Babri Masjid and in some
anti-Muslim pogroms opened the eyes of
liberal feminists to the stark fact that
“ the sisterhood of women cannot form
the basis of wom en’ s movement for
democracy (p 202). Certain liberal leaders
of the wom en’ s movement oppose such
reactionary politics and also aim at
forming a democratic society through
mass movements. But since they oppose
the use of force under any circumstance
as a means of overthrowing class rule,
their movement is fated to reach a plateau
and slowly lose momentum. Significantly,
this isolates them from militant mass
movements in different parts of India.
Anuradha Ghandy deals in detail with
the contribution of Gail Omvedt who has
studied not only t h e woman q u e s t i o n i n
the Indian context but also the mass
movements of dalits and other op­
pressed classes in some depth (pp 203ff).
Of course it may be said in passing that if
communist orthodoxy in India is much
too influenced by the feudal ambience of
society in their neglect of such problems
(there was some attempt to rectify this
in the 1956 Congress at Palghat), Gail
Om vedt’ s American background may
also have inclined her unconsciously
towards pluralism. But radical demo­
crats owe many insights to her pioneer­
ing work. Having studied the works of
Sharad Joshi, Sharad Patil and Vandana
Shiva, she came to the conclusion that
“ traditional”communists had erred in
concentrating on economic causes like
the production of surplus and rise of
Economic & Political w e e k l y BE9 m a y 5, 2012
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 192.190.180.53 o n T u e , 06 N o v 2018 23 :58:08 U T C
private property, and in failing to see
that oppression of women had begun
long before the rise of private property,
with the rise of the first states around
3000 b c in west Asia. Patriarchy in
her opinion was a product of violence.
Apparently, Omvedt had depended on
research by Gerda Lerner in her cate­
gorical assertion.
But from my casual studies in ancient
economy I have gathered that there was
some kind of private property, including
land, there even then, and both Egyptian
records and the Babylonian Code of
Hammurabi refer to sale and purchase of
land. It had some links with the wide­
spread prevalence of slavery and slaves
were treated like private and state
property, though the capitalist idea of
property is certainly the main strand in
modern law which rejects slavery. The
evidence is somewhat ambiguous as in
ancient Egypt an upper-class woman
could sell and purchase land and own it
by herself, and women did have legal
identity as individuals, whereas in Sumer,
women had no legal identity and owned
no property of their own. The significant
fact is that in Egypt women were already
kept out of the public sphere and there­
fore had a somewhat lower social status.
While Engels’pioneering work may be
supplemented by findings of latest
research, it cannot be claimed emphati­
cally that systematic violence rather
than the rise of private property pro­
duced patriarchy, which therefore existed
in some kind of socio-economic vacuum.
Violence cannot be the basis of a system,
only its instrument. If it is to be sus­
tained it must have a socio-economic
foundation. As Anuradha Ghandy aptly
retorts: “ The fact of the matter is that
Omvedt emphasises the role of violence
in the subjugation of women, but she is
unable to answer the question that arises
from it - violence for what?”(p 207).
No wonder Omvedt has no revolution­
ary perspective but turns out to be a
reformist (p 206). The emphasis on
“ violence”in the abstract goes along
with a vision of a democratic state where
equal rights and equal opportunities
prevail, irrespective of gender and class.
Such is the idealised picture of bourgeois
democracy, epitomised by the ‘ American
v o l x l v i i n o 18
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
REVIEW ARTICLE
Dream” . No wonder in the early 1990s
Omvedt turned into a vocal and embattled
advocate of globalisation, which has since
heaped untold misery on the working
people of India, through enormous con­
centration of private property at the
expense of the immiserisation of the people
and their loss of control over the remain­
ing “
common”property gifted by nature.
Revolution
and Women’ s Liberation
Anuradha Ghandy’ s preferred alternative
is a “revolutionary”wom en’ s movement
as part of a Marxist mobilisation of the
broad masses for the overthrow of the
ruling classes (together with their state).
She calls it a “ Maoist”alternative insofar
as its strategic ideas are derived from
Mao’ s adaptation of Marxism to conditions
of semi-feudal, semi-colonial countries.
Women’ s movements are an integral part
of the revolutionary forces, but the strategy
not only makes women equal participants
with men, but insists that women share
leadership of the revolutionary forces
with men. A broad historical review shows
that in peasant movements and working-
class movements women not only took
part with equal ardour alongside men,
but showed exemplary courage, heroic
stamina, ability to face and overcome
risks in such struggles. Such evidence of
the capabilities counted for nothing and
was allowed to fade from public memory
(pp 2i4ff). It was only during the truly
revolutionary uprisings of Telangana,
Naxalbari and Srikakulam and the armed
struggle of adivasis under revolutionary
guidance that women rose to leadership
equally with men. Along with the general
aim of overthrowing the “ three enemies
of the Indian people”there must be in
the movement specific demands for
equal wages, right to take part in modem
industrial production and emancipation
from patriarchal custom for fulfilling
gender justice (pp 2i3ff).
Ghandy holds c p i ’s change from a revo­
lutionary to a parliamentary line, and
later the c p i ( m ) ’s descent into the same
morass, responsible for dilution of both
mass struggles and wom en’ s movements.
The reformist and collaborationist outlook
had led to a weakening of popular revo­
lutionary forces and in consequence to a
39
REVIEW ARTICLE
series of demoralising defeats (pp 303-06).
The conclusion to the essay “ Working
Class Women: Making the Invisible
Visible”(pp 308-10) formulates specific
demands, and does not end in empty
revolutionary rhetoric.
“Fascism, Fundamentalism and Patri­
archy” is another illuminating article
where Ghandy exposes sharply and force­
fully the links between subjugation of
women, religious fundamentalism and
fascist reaction. While in developed capi­
talism fascism need not find a prop in
religion, in countries like India where
religion still has a significant hold on the
people’ s mind, it is bound to seek a mass
base through religious symbolism. (The
decline of capitalism in its monopoly stage
usually arouses both revolutionary con­
sciousness and a throwback to religion.)
While she lays bare the reactionary ten­
dencies of both the Hindu and Christian
fundamentalists, she regrettably finds
something to praise in Islamic fundamen­
talism for its stern and stubborn opposi­
tion to imperialism. But there is little
hope for democracy in it, and Ghandy
is underestimating the weight of ideo­
logy in such forms of resistance. Actually
Islamic fundamentalists hope to restore
feudalism, and if left alone, may coexist
with imperialism. Nor must we forget
imperialism’ s role in funding and promot­
ing Islamic fundamentalism as an anti­
dote to communism. I think evidence can
be found in an unlikely source, Naipaul’ s There are also discussions on the origin
anti-Islamic reportage, notwithstanding
his defence of imperialism. He found the
most virulent spokesmen of Islamic fun­
damentalism in American campuses!
With ‘
New Democracy’
The range of Ghandy’ s passionate inter­
est is not confined to the caste and wom­
an questions but includes everything
that has got something to do with the
democratic revolution of her vision. She
realises that revolution is an all-embracing
process, though she does not mention
Gramsci, while warning us that the dif­
ferent strands may not have the same
ends in view or work at the same tempo.
On the other hand if the revolutionary
process gets going its eventual culmi­
nation in radical democracy is inevit­
able. Her fugitive essays in journalism
40
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bear witness to that. “ Cotton ...the Best
Flower!...?”is a brilliant specimen where
she combines political economy, socio­
logical understanding and history in a
typical Marxist synthesis. She deals
with issues of environment in “ Incham-
palli-Bhopalpatnam Revisited”not only
by laying bare the corporate-government
allian ce’ s brutal callousness to the lives
and livelihood of the common people,
but also cautions against the romantic
idealisation of the pre-industrial society
as a peaceful, serene conflict-free way
of life, reminding us of the hunger,
oppression and human degradation to
which it had subjected the people and
rejecting it as a viable alternative to
capitalist “ development” . rural areas has spread the politics of
Small magazines, published not by
fortune-hunters in the literary wasteland,
but by people committed to spreading
the message of social transformation,
also draw her attention in a brief but
substantial essay. Legal questions regard­
ing labour laws and assaults on the dig­
nity and status of women are also studied
with intent and concern and the inade­
quacies, deliberate ambiguities and sheer
hypocrisy of measures in the bourgeois
regime are analysed with acute common
sense in another essay. She also suggests
improvements and amendments that
are relevant, perhaps for mobilising re­
s i s t a n c e r a t h e r than h o p i n g that the
bourgeoisie will really concede them.
and fate of different movements. But I
am afraid I do not find in such chronicle
of events much more than an irritated
rejection of all attempts to evade the
revolutionary alternative.
The Indian Revolutionary Path
Finally the reviewer has to face the core
question: Is protracted armed struggle
the only and correct path of the Indian
revolution? As already suggested at the
outset, the vast majority of Chinese
peasants could not expect relief from
any quarter from the ruthless feudal
exploitation and they were no strangers
to armed revolt. On the other hand,
among the majority of Indian peasants
dribbles of state charity (however stu­
pendous the plunder by agents of the
state and traders and moneylenders) do
MAY 5, 2012
All use subject to https://about.jstor.org/terms
percolate in from time to time, the
parliamentary illusion has entrenched
itself, and the tradition of armed revolt
is strong only among certain sections.
The shudras over a vast extent of land
had been deprived of the right to bear
arms as early as the Mauryan Empire,
and the ceaseless inculcation of the doc­
trine of ahimsa for centuries by various
religious sects has resulted in a fatalist
mentality and pacifist culture. Only among
castes marginally touched by the brah-
minical doctrines the martial tradition
survives dormant. And the machinations
of upper castes and classes are constant
and insidious in the countryside. The
introduction of the panchayat system in
corruption into the very bases of Indian
society. A firm commitment to armed
struggle can be achieved only by pain­
staking, strenuous and prolonged political
and cultural work.
Such a notion finds a ready and fertile
seedbed among tribals or semi-tribal
castes. Among them there is no customary
bar against resort to arms, nor a tradition
of non-violence. But tribal traditions,
however heroic, have no perspective of
far-sighted strategies, meticulous plan­
ning, patient implementation and no
trained mentality that can bear frustra­
tion and setbacks. Further, there is greater
danger of spontaneous violent reactions
that are unlikely to be of much help in the
long run - witness the death sentences
imposed by “ people’ s courts”that raise
worries about rash adventurism.
This is where I have to pause, for
practice alone can help form firm judg­
ment here. From first-hand accounts of
Gandhians like Himanshu Kumar about
the reckless and lawless police atrocities
among helpless tribals (not to speak about
the Salwa Judum and the Special Police
Officers) that have no sanction in law or
civilised administration, in situations
where the police are aggressors, this
reviewer realises the futility of a dog­
matic adherence to non-violence, but the
doctrine of protracted war faces many
serious obstacles.
Hiren Gohain (hiren.gohain@ gmail.com) is a
distinguished Assamese literary and
social critic.
VOL x l v i i n o 18 0221 Economic & Political w e e k l y
 PERSPECTIVES

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

I
India’
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’
s
(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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 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

CALL FOR PAPERS

IBS 6th International Conference on Decision Sciences for Performance Excellence
December 27, 28 and 29th 2012
Decision Sciences Institute
IBS Business School, Hyderabad
The Indian Subcontinent Region Decision Sciences Institute (ISDSI) and IBS Hyderabad are organizing the 6th annual international
conference of ISDSI at Hyderabad, India from 27th to 29th December 2012. We invite all Academicians, Practitioners from
Business and Industry and Research scholars to this international conference to share, discuss and deliberate on a variety of
research agendas, ideas and findings in all disciplines relevant to decision making, decision processes and their impact on
performance excellence.
Best Paper Awards:
The conference topics/themes include b u t not limited to: The best paper in each category (Theoretical/Empirical, Application,
• Global Supply Chain Management student paper/Ph.D thesis) will be awarded with a cash prize of
•Operations Management and Operational strategy Rs. 10,000/-. Selected papers will be published as refereed conference
• Behavioral aspects of Operations Management proceedings.
• Risk and Disaster Management
• Innovative applications in Modeling and Decision techniques Conference Chair:
• Financial Risk Management Dr. Ravi Kumar Jain, IBS Business School, IFHE University
• Issues in global banking Prof. Jatinder (Jeet) N. D. Gupta, The University of Alabama
• Global Investment decision making and M&As Prof. D K Banwet, Dept, of Management Studies, IIT Delhi
• Capital markets, trading & portfolio management
• Performance and Revenue Management Conference Co-Chair:
• Accounting, Auditing and Compliance Prof. Bhimaraya Metri, Strathclyde SKIL Business School
• Trends and challenges in Family Business Management Prof. Ramachandran Natarajan, Tennessee Tech University
• Innovations and Entrepreneurship Dr. Sashikala, IBS Business School, IFHE University_______________
• Innovations in Information Technology applications
• Decisions Sciences in governmental and social sector organizations Conference Registration Fee
• Industry sector-specific decision making & Strategy formulation
• Strategic HRM, Culture and behavioral impact on performance Nationality Category Before 15th Oct Alter 15"'Oct
• Product, Services and Knowledge management
Foreign Academician/ Industry $300 $350
Paper Submission: Submit your papers online at the conference Delegate Research Scholar $150 $200
website (see URL below) or send your papers to igd$lQ6®lbsindla,prg
IMPORTANT DATES Industry Delegate Rs. 7500 Rs. 9000
Last date for Abstract Submission June 30, 2012 Indian
Academician Rs. 4500 Rs. 6000
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Last date for submission of full paper August 30, 2012 Research Scholar Rs. 3000 Rs 4500
Notification of acceptance September 30, 2012
FOR MORE INFORMATION VISIT CONFERENCE WEBSITE: www.lbshvderabad^org/conference/ISDSIdBS

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
poor substitute, we actually have in­
come distribution data.
What Ails the Statistical System?
The answer to this question may lead us
to the complex issues of governance and
is likely to attract controversy. Neverthe­
less, there are certain drawbacks of the
system which stand out. First, the subject
of statistics is not receiving the attention
and importance it deserves in the hands
of public administration. There are many
departments of the government which
do not appear to consider quality data as
an essential need for policy. They are
happy with half-baked statistics and
they show no awareness of the draw­
backs of this data. Even the issues of
slackness in governance seem to be get­
ting reflected in embarrassing statistical
errors of a severe nature.
Second, the root of the malaise lies in
the loss of development perspectives
after economic liberalisation began in
the 1990s. The flow of data as it existed
in the controlled regime collapsed after
liberalisation, but the reformers showed
no enthusiasm for substituting the earlier
controlled arrangement by a method
befitting the liberalised environment.
Year after year there has been only a
steady deterioration.
Third, one of the key components of
reform policy has been fiscal prudence
and consolidation, and as a consequence
the worst to be affected has been the
social infrastructure. Statistics fell in
this category and there have been steep
reductions in staff strength in the gov­
ernm ent’ s statistical establishments. In
the mean time, the complexities in m o­
bilising statistics in diverse fields have
vastly increased and the training re­
quirements have grown manifold.
Fourth, there has arisen a more fun­
damental issue of the loss of pride in
statistics as a profession, particularly in
public administration and public institu­
tions like the Reserve Bank of India ( r b i) .
It is found that the government and the
institutions find it difficult to attract suf­
ficient numbers of candidates and fill
staff positions created after the regular
attrition. Therefore, it is not a question
of want of resources alone; it is also a
Economic & Political weekly DBS9 m a y 5, 2012
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question of the statistics profession be­
ing made more attractive intellectually.
Fifth, the drawbacks in the statistical
system as well as the unattractive nature
of the profession in general, have also
arisen because there is a serious flaw in
the organisational set-up of the statistical
system. The n s c was to be a statutory
body with permanent members and
with executive and financial autonomy,
but the government chose to appoint an
n s c with part-time chairman and mem­
bers and did not make the body a statu­
tory one. As an initial effort, this was no
doubt commendable, but no effort has
since been made to place the n s c on a
statutory and permanent footing. The
purity and reliability of statistics can be
ensured only when the system is gov­
erned by an enduring institutional struc­
ture and is conferred independence and
autonomy. Due to the absence of such
autonomy, we see the sorry spectacle of
very many statistical units being treated
as appendages to the ministries and de­
partments of the Government of India.
There is a strong case for making the sta­
tistical units in different departments au­
tonomous entities that primarily report
to the n s c . Also, the n s c has a major role
of guiding, and collaborating with, the
state statistical bureaux. The absence of a
statutory commission has truly hindered
improvements of statistics in the states
based on the recommendations contained
in the Rangarajan Commission Report
(2001). In this respect, the two new
schemes, namely, the IMF-supported
India Statistical Strengthening Project
( i s s p ) and the Thirteenth Finance Com­
mission grant of Rs 1 crore per district
for strengthening the district statistical
system, should go a long way in effect­
ing an improvement, but this is also con­
ditional upon the central system being
able to provide training and other guid­
ance to the state bodies to absorb the re­
sources so provided.
Finally, India had acquired a com­
mendable reputation for its sample sur­
veys, but of late the survey units in the
system have suffered a serious blow
from a paucity of staff and the conse­
quential dependence on part-time field
personnel. With a multiplicity of field
surveys expected of the National Sample
v o l XLVII NO 18
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
PERSPECTIVES
Survey Office ( n s s o ) , the facilities for
training of staff are found to be grossly
inadequate. A recent World Bank report,
“Modernisation of India’ s Statistical Sys­
tem ”, had placed the additional staff re­
quirements for the systems at central
and state levels at about 6,000. The in­
troduction of information technology
may have reduced that requirement, but
the fact remains that the staff size, its
quality and its training requirements
have all been affected by a defective
staff policy in the government. Various
research papers have brought out how
the sample sizes have been drastically
reduced in diverse field surveys because
of the inadequacy of the organisational
strength at the n s s o or at the c s o level.
As a result, both sample and non­
samples errors are feared to be high.
Even statistical units in individual de­
partments are deprived of adequate staff
strength. Institutions like the r b i , which
were involved in such surveys in the
past, have taken a back seat and hence
the required sample sizes have dwindled
in relevant surveys.
The drawbacks of the system are at­
tributable to both the neglect by the gov­
ernment and the academic community.
There are very few studies focusing on
data adequacy and quality in India.
There is yet another flaw arising from
the neglect, essentially by the academic
community. This is an absence of social
audit of the data put out by public agencies
claiming success in public programmes.
Even various professional organisations
do not, except for some rare exceptions,
address database problems in their semi­
nar programmes. Therefore, a stage has
come for the intellectual community to
come together and form an India Data­
base Forum ( i d f ) , on the lines of the
International Data Forum.4
The data issues raised at the inter­
national level are, of course, different
from those we face in India, as enumer­
ated above. The International Data
Forum “ aims to facilitate and coordinate
international production and sharing of
data for research in the social scien ces” .
However, one of the guiding principles
set out for that forum, namely, to “ act as
a catalytic and visionary organisation to
identify gaps in research data needs and to
43
PERSPECTIVES
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 ”
(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 ­
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
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 .
What Will the IDF Do?
The tasks of the proposed i d f will be
twofold; promoting research and advo­
cacy. It must be made clear at the outset
that the intention here is not to create an
institution for producing data on any
sector of the economy. That is the exclu­
sive job of the government. Against the
backdrop of data issues posed above, con­
certed actions are called for on two fronts.
First, the i d f should promote research
on the Indian database issues. Though
these issues have gained importance in a
variety of ways, they are not being ad­
dressed by professional bodies at all, or if
they are addressed, they are done as tail-
end subjects.
Second, there is the need, and ample
scope, for advocacy work in matters
relating to database issues. The statisti­
cal system is receiving stepmotherly
treatment at the hands of the public ad­
ministration. While the statistical cadre
working in the government as well as in
the statistical system in particular have
a strong case for better attention from
the government, they themselves cannot
take up such issues. They cannot, for
instance, deal with the problem of
strengthening the statistical system, in­
cluding the conferment of statutory sta­
tus on n s c and making it an autonomous
and independent institution. Likewise,
there is a strong case for making statisti­
cal units in different departments and
units autonomous and primarily report­
ing to the n s c . India is one of the few
countries possessing no data on income
distribution. Academicians and inter­
national organisations readily accept
household consumption expenditure
distribution as a surrogate for income
distribution. Demands for undertaking
such nation-wide integrated surveys on
income, expenditure and savings have
to be done in a concerted manner, and
i d f can canvass for it in a systematic
way. Likewise, there is the need for
promoting research on green gross
domestic product and generally on
environmental issues.
44
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In the same vein, another important
flaw in all programmes intended for the
informal sectors and the poor concerns
the absence of regular social audit of the
data put out by public agencies claiming
success in public programmes. Very often
the nature and quality of data published
are also inadequate to make a critical
assessment of the social programmes in
question. Demands for such independ­
ent social audits of public programmes
and the authenticity of statistics on the
programmes can be made in research
articles or otherwise by the id f .
To correct the present malady, the i d f
should galvanise the academic com­
munity to take interest in this subject,
hold regular seminars, invite papers for
workshops and conferences and produce
a journal focusing on varied database
issues. The universities and academic
institutions should be goaded to introduce
credit courses on the Indian statistical
system and database issues at the MA/
MPhil and doctorate courses.
Thus, the five key functions envisaged
for the i d f are: (i) encouraging and pro­
moting research on the extent and qual­
ity of statistics in different areas; (ii) ac­
tivism for strengthening the statistical
system including of the n s c and can­
vassing genuine autonomy for this body;
(iii) seeking better focus on distribu­
tional issues in statistics gathering and
dissemination while making public in­
formation and data policies on inclusive
growth as well as on the scheme of
financial inclusion; (iv) Demanding reg­
ular social audit of the data put out by
public agencies, particularly in regard to
claims of success in public programmes;
and (v) encouraging universities to in­
troduce credit courses on different types
of data for their postgraduate, MPhil
and PhD programmes.
n o t e s ________________________________________
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
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
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
in In d ia ” d u r in g 1998 but, as it w a s t o o
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
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,
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 .
B e g in n in g m u c h e a r lie r in 1972, th e In d ia n
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
o n th e Data Base o f the Indian Economy d u r in g
1972 t o 1997.
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
m ay 5, 2012
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 ­
sion , in t h r e e s e r ia lis e d a r tic le s in EPW. H e
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
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
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 .
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
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 ­
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 ­
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
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
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
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
( 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
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 ­
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
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
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
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
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
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
2008; R e v is e d N o v e m b e r 2008). B a rm a n w a s
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 .
REFERENCES_______________________________
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 ­
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
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 ­
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 -
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 ­
, Journal o f Deve­
m e n t A n aly sis: A n O v e r v ie w ”
lopment Economics, E lsevier, V ol 44(1), p p 3-27,
June.
- (2003): “In d ia ’ s S ta tis tic a l S y stem : C r itiq u in g
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 ­
sion” ,E c o n o m ic & P o litica l Weekly, Vol XXXVIII,
N o 4,25 January.
V id w a n s, S M (2002a): “In d ia n S ta tistic a l S y ste m
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 ”
V ol 37, N o s 37 a n d 39,14 S ep tem b er.
- (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
S u rv ey ” , Economic & Political Weekly, V ol 37,
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
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 -
, 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 .
EPW Index
An author-title index for EPW has been
prepared for the years from 1968 to 2010.
The PDFs of the Index have been uploaded,
year-wise, on the EPW web site. Visitors can
download the Index for all the years from the
site. (The Index for a few years is yet to be
prepared and will be uploaded when ready.)
EPW would like to acknowledge the help of
the staff of the library of the Indira Gandhi
Institute for Development Research, Mumbai,
in preparing the index under a project
supported by the RD Tata Trust.
v o l x l v i i n o 18 Q323 Economic & Political w e e k ly
 SPECIAL ARTICLE
On the 'Failure of Bt Cotton'
Analysing a Decade of Experience
RONALD J HERRING, N CHANDRASEKHARA RAO
Given that the controversy over success and failure of Bt
technology still exists, this paper discusses the available
field studies that have addressed agro-economic
questions of Bt cotton cultivation in India. Since a
meta-analysis of studies can give only partial
conclusions, owing to differences across study
methodologies and coverage, this paper takes a
different strategy, i e, looking not simply at differences
between Bt farms and non-Bt farms, but at the
experience of farmers before growing Bt and after
switching to Bt. It also examines the more general
problem of comparing field studies and suggests ways
to use farmer behaviour as a proxy for settling different
interpretations of agro-economic effects of the new
technology. The study explains why there has been so
much controversy given virtually universal adoption of
Bt technology in cotton and concludes that in the battle
of numbers around Bt cotton, those of the farmers have
been curiously missing.
Ronald J Herring (ronherring@ cornell.edu ) teaches at Cornell University,
Ithaca, New York. N Chandrasekhara Rao (raonch@gmail.com) is at the
Centre for Economic and Social Studies, Hyderabad.
Economic & Political weekly DDQ may 5, 2012 v o l x l v ii n o 18
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1 The Puzzle
I
ntense controversy surrounds transgenic crops in much of
the world. Results from India's first genetically engineered
crop - Bt cotton - have figured prominently in global de­
bates about agricultural biotechnology. Disputes about the ef­
fects of Bt cotton on production figured into controversy sur­
rounding India's second transgenic crop: Bt brinjal (Solanum
melongena aubergine, eggplant}. Politics and policy towards
agricultural biotechnology in India for the future will be con­
ditioned by the success or failure of Bt cotton. One prominent
claim is that Bt cotton has caused “ crop failures and mass
su icides”.1At the end of a decade of cultivation of this crop in
India, an assessment of this claim seems timely.
Much of the controversy around biotechnology addresses
ethical arguments, or concerns for multinational control, human
health, or environmental effects.2Many of these questions resist
empirical testing; some are matters of individual preferences.
In all technological change, uncertainty is inevitable and dif­
ferent individuals will have different tolerance for uncertainty.
Nevertheless, the claim that Bt cotton has caused crop failures
and mass suicides belongs to a different category; it is an
empirical claim about the actual state of affairs on the ground.
In assessing the empirics of Bt cotton, there are two nested
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
(Herring 2006; Shiva 2006). Proponents of transgenic cotton
argue that evidence from the field shows the same success in In­
dia that is apparent in China and other countries (James 2002).
45
SPECIAL ARTICLE
This question is consequential. If critics are right, the large
sums invested in biotechnology as a project of the develop­
mental state promise only further misery for India’ s farmers. If
proponents are right, technological change offers one of the
few viable paths out of the classic poverty trap in agriculture -
low yields, low income, low investment, resulting in low yields
and on to another cycle. On sustainability grounds, Bt technol­
ogy also claims to offer some relief from unsustainable pres­
sures on rural ecosystems caused by the pesticide treadmill.
How does one settle this dispute?
After this brief introduction, this paper discusses in Section 2
existing field studies addressing agro-economic questions of
Bt cotton cultivation in India. Because a meta-analysis of
studies can give only partial conclusions, owing to differences
across study methodologies and coverage, we discuss in
Section 3 data derived from a different strategy: looking not
simply at differences between Bt farms and non-Bt farms, but
at the experience of farmers before growing Bt and after
switching to Bt. Section 4 examines the more general problem
of comparing field studies and suggests ways to use farmer be­
haviour as a proxy for settling different interpretations of
agro-economic effects of the new technology. In Section 5 we
return to consider possible mechanisms for the origins of dis­
crepancies in field reports of success and failure at the level of
the farm. Section 6 looks at the aggregate picture: what can
we say about Bt cotton in India’ s agricultural performance? In
Section 7, the article returns to explain why there has been so
much controversy given virtually universal adoption of Bt
technology in cotton for reasons explored in previous sections.
We conclude that in the battle of numbers around Bt cotton,
those of farmers have been curiously missing.
2 Field Studies
Normal science takes a hypothesis, collects appropriate data
and tests the proposition. Measuring inputs and yields in agri­
culture is not rocket science; the hypothesis of Bt cotton failure
should be easy to test. But that has not proved to be the case.
Field studies are the starting point, but suffer from lack of
comparability: what village, what farmers, what cultivars,
what controls, what season? There is no space here to discuss
all studies of Bt cotton, but some generalisations can be noted.
Formal-sector studies (industry, government) were in the
beginning most likely to find strongly positive agro-economic
effects. These studies were reported in Parliament from
officially sanctioned field trials of Bt cotton and offered confir­
mation of the standard narrative of Bt cotton advocates: har­
vested yields increased because of superior bollworm control;
costs of bollworm control went down; therefore, net incomes
went up. These results led to an official approval of Bt cotton
for commercial release in March 2002. Academic studies were
more nuanced but largely confirmed this story; in general, for­
mal-institutional analyses reinforced the position of the
Department of Biotechnology.2 3The studies conducted by n g o s
(Gene Campaign, Deccan Development Society) contradicted
these conclusions and supported the Bt failure narrative: lower
yields, higher debt and sometimes serious externalities.4
46
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These studies have become increasingly isolated over time,
though they persist in the media and in global advocacy
networks. Recent studies have converged around rejection of
the failure narrative and affirmation of the success story. We
do not know of any peer-reviewed study that confirms failure
of the Bt technology in cotton, but doubts remain prominent in
civil society.
The standard practice in the face of conflicting results is to
conduct a meta-analysis of all studies. Not all studies are com­
parable as some measure only a subset of the variables that
others measure. Nevertheless, one meta-analysis of studies
relevant to the reported connection between farmer suicides
and Bt cotton did attempt a systematic comparison (Gruere
et al 2008). Sponsored by International Food Policy Research
Institute, this analysis covered both peer-reviewed and non­
peer-reviewed published field studies. It found that across 22
field studies available for comparison, covering 12,931 farming
plots, net returns from Bt cotton farming increased by 53.5%
as a weighted average in comparison with non-Bt fields. The
reasons for this increase in income were as predicted: a
weighted average of 34.4% decrease in pesticide use (on 11,136
plots), leading to a 45.8% decrease in pesticide cost and a
39.1% increase in yields. As critics argued, total costs of culti­
vation in the studies increased - by an average 15.0% - but in­
creased costs were more than compensated by better yields,
resulting in higher net incomes for farmers.5
A meta-analysis is decisive only if there is broad agreement
on the components of the field of studies being surveyed. Some
studies by local groups are not generally available, nor are
sampling techniques always specified, nor yield measurement.
Studies finding crop failure were criticised in the scientific
community for lacking rigour and transparency. Opponents of
Bt cotton rejected studies reporting positive agronomic effects
as biased by corporate or state sponsorship. Peer review itself
as a standard for establishing integrity of findings was rejected
by some opponents of Bt cotton. There were regional differ­
ences as well. Reports of failure, including the most detailed
(Qayum and Sakkhari 2005), often came from Andhra
Pradesh. No studies known to us reported failure in Gujarat,
where the making of transgenic cotton hybrids became a rural
cottage industry - albeit an illegal one (Gupta and Chandak
2005; Herring 2007b).
Problems of comparability across studies led us to employ
two alternative methods. First, to answer critiques that cross-
sectional studies fail to control for critical variables - soil
quality, farmer skill, education and connections, class, irriga­
tion, etc, - we present data from a before-and-after field study
in areas where reports of failure have been prominent: Andhra
Pradesh. The before-and-after study follows the same farmers
in the same fields; the only change in cotton farming is the
adoption of Bt hybrids by those farmers. These findings con­
firm that the cross-sectional studies in the same areas - Bt vs
non-Bt farms - are not biased by hard-to-measure effects of farm
management, farmer characteristics or agronomic potential of
particular farms. Second, in Section 4, we look to Andhra
Pradesh as a potential regional outlier given the prominence of
m ay 5, 2012 v o l x l v i i n o 18 DDES Economic & Political w e e k ly
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
Change
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
Fertilisers
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:
4
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
Manure
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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SPECIAL ARTICLE
irrigation or lack of it and agro-climatic zones did not matter
in getting superior results from the technology (Figures 1to 3,
p 47). Figure 1 demonstrates that across social categories and
farm size, Bt adoption resulted in increases in physical yield
and net income. The social categories are scheduled caste/
scheduled tribe ( s c / s t ) , backward caste (bc), and other caste
(oc). Farmers are divided into categories of small, medium
and large, as is conventional, based on the size of landholding.
Figure 2 shows the effects of irrigation: farmers from both
irrigated and unirrigated cropping conditions gained by the
same criteria. Results shown in Figure 3 bear on the question
of environmental effects and sustainability as well: farmers of
all size and social categories reduced plant protection expend­
iture (on pesticides) and produced each quintal of cotton at
a lower cost.
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
Studies are limited by time and space and are often not com­
parable. What gets studied depends on the priorities of fund­
ing and interests of researchers. Moreover, data in field studies
are social products, dependent on the relations of production
between data producers and subjects in an artificial setting.
An alternative way to measure the effect of any technology is
to analyse the trajectory of large numbers of individuals using
it. Consider the mobile telephone: it may well be a health risk
or offensive in some social settings, but it is hard to dispute the
utility of the technology to users. Can we look into farmer
behaviour, a proxy for variables contested in field studies?
The virtually universal adoption of transgenic cotton in India
alone would lead one to question the representativeness of
studies reporting failure. Bt cotton technology has been avail­
able legally since 2002, and illegally since 1999; if it is failing,
would we not see massive dis-adoption - not of specific cultivars,
but of Bt technology? One study did document dis-adoption
after crop failure and loss of income; it came from Warangal
district in Andhra Pradesh (Qayum and Sakkhari 2005). This
outcome is especially puzzling because the all-India data
showed adoption rates to have been higher in Andhra Pradesh
than in other states in the same period (Herring 2008b).
Warangal figured prominently in early concern with farmer
suicides and in the book Seeds of Suicide (Shiva et al 2000).
One entry into the puzzle could be to look at the district most
often mentioned in failure reports to see whether conditions
were different from the rest of India: could there be a district
effect? Specifically, are there mechanisms in Warangal that
might explain divergent interpretations of the national trend?
One local refutation of the notion that farmers adopt Bt
technology because of higher incomes with less pesticide con­
tamination is that there is no choice. By 2010, virtually every­
one agreed that non-Bt cotton seeds were disappearing from
the market. The question is why. Devinder Sharma, a promi­
nent commentator on Bt cotton, said at a public forum at the
India International Centre in New Delhi on 4 December 2009,
that there were no non-Bt cotton seeds available because the
government prevented their sale through the Essential Com­
modities Act (personal communication). International narratives
48
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about India have stressed the power of Monsanto in preventing
the production of non-Bt cotton seeds. Could these claims ex­
plain rapid adoption even in areas of widely reported distress,
including suicides?
In Andhra Pradesh, it is clear that the dynamic worked in
the opposite direction: the demand for conventional seeds be­
gan to decline as Bt hybrids became more available. As early as
2004-05, there were instances of police protection for sales of
Bt seeds in the state. Interviews with local representatives of
seed companies in Andhra Pradesh in 2006 revealed that the
growth in demand for Bt cotton seeds had been exceptional
and unanticipated.7Nuziveedhu Seeds had in 2006 put out its
first transgenic cotton, on licence from Mahyco-Monsanto
Biotech (mmb) and found demand far exceeding supply. They
produced 10,000 seed packets; demand proved to be around
40,000. Representatives from seed firms reported large stock­
piles of unsold non-Bt seeds, for which there was no demand.
Farmers throughout the state were switching to Bt hybrids; the
local seed industry had to gear up quickly to expand Bt hybrids.
The then director of the Andhra Pradesh Seed Certification
Agency in Hyderabad estimated in 2006 that Bt hybrids consti­
tuted 85-90% of the cotton area in the state. Yet it remained
possible that industry and government estimates of a statewide
phenomenon concealed variance at the district level. Scien­
tists at the agricultural research station of Acharya N G Ranga
Agricultural University ( a n g r a u ) in Warangal district, the
most senior of whom was cited as an authority by Shiva et al in
Seeds of Suicide (2000), estimated that 80-90% of the cotton in
the district was Bt cotton in 2006. Officers in the Department
of Agriculture in Warangal town estimated that 95% of the
cotton area in the district was transgenic. Local seed mer­
chants on Station Road estimated a somewhat higher figure -
98%. Some had ceased to stock non-Bt cotton hybrids because
there was no demand for them; their perception of the local
market matched that of state-level seed companies. These
numbers are consonant with the conclusion of anthropologist
Glenn Stone's (2007) detailed empirical work in Warangal dis­
trict: farmers were adopting Bt cotton with such alacrity that it
was “ more than innovation adoption, more than a tipping
point: it was a craze” .8 The gap between supply and demand
allowed some hucksters to market counterfeit Bt seeds
(Herring and Kandlikar 2009).
Unstructured interviews with farmers in Warangal district
confirmed of the dominant finding of formal field studies in
the rest of India: farmers grow Bt cotton for higher incomes
through better pest management at lower cost. The extent of
benefit varies with the level of pest infestation; in heavy pest
years, Bt technology saves cotton crops; in years of moderate
or low infestations, the enhanced cost of the Bt seed is subjec­
tively discounted as insurance. This insurance cost is more ex­
pensive in officially approved Bt hybrids than in the cheaper Bt
stealth seeds, assuming they contain the Bt transgene. The
highest yield encountered in unsystematic sampling in
Warangal district in 2006 was of an unlabelled “ Gujarat Bt” ,
though there were illicit Bt seeds from Kurnool district within
the district as well.
may 5, 2012 v o l x l v ii n o 18 DDE3 Economic & Political weekly

Agro-chemical dealers in their shops, along with farmers
coming and going, confirmed these results. Their livelihood
depends on monitoring farmer behaviour; they cannot contin­
ually deceive farmers with exaggerated or false claims. Some
have been physically punished for trying. Local insecticide
sales were estimated to be down by 60%. Some dealers had
lost half their cotton pesticide business; a few reportedly
closed shop. Spraying for sucking insects in cotton, and some­
times overly-cautious excessive spraying for bollworms, con­
tinued, but the reduction of pesticide use was substantial -
around half in the estimates of local farmers and agro-chemi­
cal dealers. To people who sell and grow Bt cotton, the notion
that “ Bt cotton has failed”was incomprehensible.
Why then are there reports of failure in Warangal? History
and policy provide some help in explanation. Adulterated
cotton seeds from the firm Excel had failed farmers in 2000,
before Bt cotton was on the market; the firm was forced to pay
compensation. When some farmers in the district demanded
compensation in 2004 for Bt cotton failure, they were relying
on a proven model of gaining resources. The administration in
this district was especially sensitive to rural protest because of
a history of Maoist agrarian insurrectionist activity. Mahyco-
Monsanto agreed to pay Rs 3.27 crore compensation to farmers
despite denying culpability; their calculation was that it was
an acceptable price to pay for staying in the cotton market
in Andhra Pradesh, where they had Rs 15 crore of business
(Herring 2008b). Politics and policy in the state in the form of
ex gratia payments for farmer suicides produced perverse in­
centives, as parodied in the popular film Peepli Live and recog­
nised by the state government as early as 1998. Despite incen­
tives to claim failure of Bt seeds, behaviour in the fields produced
evidence of general satisfaction with the technology. When
three cultivars of Bt cotton produced by Mahyco-Monsanto
were banned in Andhra Pradesh on grounds of agronomic fail­
ure, at least one of these hybrids - m e c h 12 - was sufficiently
popular with farmers that some travelled across state lines to
procure it, from Nanded and other locations in Maharashtra.
The all-India story of adoption of Bt technology parallels the
Warangal story. Despite court stays and state government
bans, Bt cotton hybrids are now essentially universal. In his
announcement of the moratorium on Bt brinjal in 2010, the
then minister of environment Jairam Ramesh stated that more
than 90% of cotton farmers in India grow Bt cotton. Without
adopting the most demeaning cultural urban bias, it is difficult
to think that farmers would adopt and spread a technology
that is literally killing them.
5 W h y D o S t u d i e s F in d F a ilu r e ?
Discussions of field studies have often conflated performance
of specific cultivars with performance of Bt technology. India
has heterogeneous agro-climatic and socio-economic condi­
tions. As a consequence, different cultivars are used in differ­
ent areas in different years; farmers frequently switch hybrids.
Because of agronomic differences, cultivars that work well in
one region, district, farm, or even field, may fare less well in
the next. Each hybrid of cotton contains somewhat different
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germ plasm. Bt technology only confers one trait; some hybrids
with this trait do better than others. The only thing that Bt
hybrids have in common is this one trait: insect resistance con­
ferred by a transgene. There are over 800 legal hybrids with
this specific trait, generated by Bt gene insertion. Not even the
mechanism for obtaining the trait is exactly the same in all
cultivars: Nath Seeds, for example, used a Bt construct from
the Chinese public sector in its hybrids; J K Agri of Hyderabad
used an indigenously developed Bt gene construct; some m m b
hybrids (bgi) use the conventional cryiAc gene (now present
in brinjal varieties and hybrids under consideration for de­
regulation), whereas others use a stacked-gene technology
(bgii). The new public sector Bt cotton is not a hybrid, but an
open-pollinated variety, designed to facilitate seed-saving for
farmers who prefer to do so.9 There are still many illegal Bt
cotton hybrids as well - deshi Bt. One would expect variance
in performance of Bt cottons ex ante.
For precise measurement of the independent contribution
of Bt technology - the additional trait - to yields, we would
ideally compare isogenic cultivars, one with and one without
the transgene, to isolate the effect of the technology. None of
the claims of Bt failure compared two isogenic cultivars, one
with and one without the Bt gene, to assure control of varietal
characteristics.10An analysis by Naik et al (2005) found that
cultivar differences were a major source of variation in results
in yield comparisons. By analogy, we would not ask the ques­
tion: “ has word-processing software failed?”Instead, we would
ask what software on what machine doing what tasks? And we
would compare the genre of technology to alternatives, like
paper and pencil or typewriters, before declaring failure of
word-processing technology.
Some reports of failure attributed all problems in cotton cul­
tivation to Bt. Characteristics of specific hybrids such as staple
length, boll size, seed density and sensitivity to drought or wilt
have been used to demonstrate failure. However, the cry genes
inserted to produce the Bt insecticidal protein have no bio­
logical connection to these phenotypic variations.11 These
differences across cultivars are reflections of the different
germ plasm in different hybrids. If cotton hybrids did not
differ, there would not be hundreds of them grown in India.
Unless researchers control for cultivars, variation between the
Bt crop and the “ check”crop may simply reflect phenotypic
differences resulting from different germ plasm in the plants.
The illegal Navbharat 151 contained superior germ plasm,
explaining its persistence as a base for deshi, though illegal, Bt
variants. Farmers experiment widely with different cultivars;
even in the same area, some cottons work better in some fields,
for some farmers, than others (Roy 2006). There are many un­
measured variables in producing yield results, often in com­
plex interactions, including soil ecology, microclimate, water
timing, soil chemistry, pest incidence and availability of nutri­
ents. One of the most criticised of the early official Bt hybrids,
m m b m e c h 184, wilts when subjected to early moisture stress.
This hybrid is probably the source of n g o reports that Bt causes
leaf wilt. Yet some farmers with good water control have found
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
ent problem that is harder to correct: fraudulent practice in an
unregulated seed market. Even with proper controls for germ-
plasm, field studies may err because some seed packets
labelled “ Bt”do not contain Bt cottonseeds. “ Duplicates”are
frauds on farmers; missing the transgene, they do not produce
the cry protein[s] that provides insect protection. There have
been cloth-bag, farmer-generated and F2 Bt seeds that do
produce the cry insecticidal protein but at uncertain levels;
their germ plasm may be very good or not so good. Without a
seed certification process that works, the farmer does not know.
The analogy would be downloading software of unknown
provenance from the web to save money: it may or may not be
what it represents itself to be. Shortages of Bt seeds in the early
period because of regulatory restrictions and expanding
demand led to shortages. As a result, seed stock of ambiguous
heritage entered the villages and was sold as Bt; there was
widespread fraud. In Warangal, one duplicate was labelled
Mahaco to trick farmers into thinking it was Mahyco (Herring
2008b). Failure to control bollworms on those plants is not a
failure of Bt technology, but a failure of information in an un­
regulated seed market. The extent of counterfeit and spurious
seed distribution is not known, but has been significant,
including in troubled cotton areas such as Vidarbha.12 Like
Warangal earlier, Vidarbha has become a site of media reports
of failures of Bt cotton. Some farmers who honestly believe
that they have planted Bt cotton seeds have in fact been vic­
timised by fraudulent labelling of a popular technology.
Finally, cotton fails when water is inadequate. Government
agencies in India strongly advise against cotton cultivation in
drought-prone marginal areas without irrigation, whether the
cultivar is Bt or non-Bt. In thin red soils without irrigation, the
risks of planting any cotton are high. Farmers know this, but
alternatives are often less desirable. There is no evidence that
addition of the Bt transgene affects drought tolerance one way
or the other. Drought tolerance is a trait that would be among
the very first priorities of Indian cotton farmers if biotech­
nology could produce it, but to date there are only distal prom­
ises, no products.
commercial firms’ offerings. India ranked fourth in the world
in area under transgenic crops in 2010, following the us,
Brazil and Argentina, and ahead of Canada and China
(Herring 2011). Aggregate global data have understated Indian
acreage, especially in the early years, as unknown quantities
of stealth Bt seeds have been in circulation. Official reduction
in the trait value of Bt cotton seeds by state governments in
2006 reduced prices of government-approved hybrids by
40-60%, and thus, reduced incentives for gray-market under­
ground breeders.
Early hybrids contained a single transgene; beginning in
2006, a “ stacked gene”technology produced hybrids with two
transgenes (cryiAc and cry2Ab) to expand insect control. By
2009 more hybrids incorporated the stacked gene technology
than the first generation single gene technology. By 2010,
Bt cotton hybrids accounted for about 94 lakh hectares (lh) of
the approximately 110 lh planted to cotton in India. Within the
Bt acreage, stacked gene technology covered about 66 lh.
These Bollgard 11 seeds are somewhat more expensive than
the original single gene Bt hybrids, but farmers are evidently
finding the increased cost justified by returns in the field.
Production and productivity at the national level reinforce
the micro-level story of increased production and productivity.
Table 3 and Figure 4 (p 51) indicate significant increases in
harvested yield of cotton at the national level, even at a time
when farmers of many other crops were experiencing in­
creased difficulties in India. The jump in yields has been rela­
tively recent. It took 36 years to double the lint production per
hectare in India from 100 kg in 1950-51 to 200 kg/ha in 1986-87
(Figure 4). It took only five years for lint production per hec­
tare to double again, after the introduction of Bt technology in
cotton in 2002-03. The average yield for five-year period, pre­
ceding introduction of Bt cotton, was 203 kg/ha. The most re­
cent estimate for 2010-11 is 518 kg/ha. Total production has
increased by more than 150% over the average for the five-year
period preceding introduction of Bt cotton. Though weather is
always a critical factor, it seems certain that the new cotton is
largely responsible for increased productivity, along with
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)
600------------------------- :---------
0 rTTTTrTTTTTTT*rHTTTTT"rnTTTT1
1950-51 1956-57 1962-63 1968-69 1974-75 )-81 1986-87 1992-93 1998-99 2004-05 2010-11
Figure 5: Area under Cotton and Percent Irrigated Area since 1950
40 -
1950-51 1958-59 1966-67 1974-75 1982-83 1990-91 1998-99 2006- 2010-
07 11
Source: Directorate of Economics and Statistics, Ministry of Agriculture.
argument is not persuasive. The area under hybrids has
been increasing in cotton for the last two decades and the
process accelerated after introduction of Bt technology;
the big jump in productivity happened only after Bt. The
area under irrigation did not change sufficiently to explain
so marked an increase in yields and production. Indeed,
continuous increases in irrigated area in cotton did not corre­
spond to a decisive improvement in yields until after intro­
duction of Bt technology. After a continuous increase in the
percentage of cotton area irrigated from 1951 up till the
1990s, the percentage of cotton area irrigated stabilised and
has been relatively constant in the Bt period, except for a
drop in 2003-04 (Figure 5). Neither area under hybrids nor
cotton area irrigated can explain the dramatic increases in
yields and production.
Farm-level yields and aggregate national production have
understandably dominated concerns in the Bt cotton discus­
sion, but are only part of the story. Crop success or failure
has local spread effects. Bt cotton seems to have positive
effects in this sense. In studies conducted by Subramanian
and Qaim (2010), Bt cotton adoption increases aggregate
household incomes, including those of poor and vulnerable
farmers; the net effect is increasing returns to labour, espe­
cially for hired female workers.14 Panel studies in Andhra
Pradesh indicate significantly higher percentage increases in
labour employment and share of wages in total costs of pro­
duction, resulting from higher labour productivity.15Higher
production means more demand for labour, since harvesting
is done manually in India, unlike the situation in some other
countries. More cotton production also means more economic
activity in villages; crop failures, on the other hand, depress
village economies whether one is a farmer or not. Landless
labourers in particular are vulnerable to crop failures - they
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lose remunerative harvest work - but have no voice in crop
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
about rural India emerging from India and subsequently dif­
fusing through global networks and media (Herring 2009).
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
longitudinal studies. The reason is that seed technology is
scale-neutral, offering similar benefits to both small and large
farmers. As importantly, because the technology is all con­
tained in the seed, Bt cotton allowed “ trialability”
: the possi­
bility of trying out small amounts of seed at low cost and ex­
panding planting after assessing performance (Roy 2006).
Farmer behaviour is then perhaps the most telling refutation
of the failure narrative: Bt cotton has spread almost univer­
sally among farmers of all size classes.
Studies may disagree, but do have a centre of gravity, a
central tendency. That centre of gravity is a clear refutation of
the “ failure of Bt cotton”narrative. But as important as formal
studies is this grounded empirics of farmers trying out new
ways to cope with a periodically devastating problem. Farmer
adoption and diffusion ratify most convincingly the techno­
logy behind Bt cotton. Bt genes confer no miracles, but do offer
a trait that helps significantly in mitigating the effects of a
major enemy of cotton - the bollworm - and the accompanying
hazards of pesticide dependency: indebtedness and poisoning.
These robust results - conclusions of farmer and studies
alike - have been rejected in much of the media and in some
social organisations. There are two kinds of explanations: one
is based on interests, the other is based on the inherent diffi­
culty of assessing outcomes in so varied an agro-ecology as In­
dia’s cotton zones. The Bt failure literature requires some ex­
planation not only for its prominence, but also because it
clashes so egregiously with farmer behaviour.
The global rifts on agricultural biotechnology have created
rival networks with opposed interests (Heins 2005; Herring
2008a). Corporate interests in biotechnology promise miracle
seeds; opponents have interests in demonstrating technology
failure. There are markets for both narratives and interests
in their production. For some n g o s , failure means affirmation
of their campaigns for alternatives: organic farming and
“GMO-free zones” , both popular in Europe and in international
advocacy networks. These n g o s can be funded to solve
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problems only if there are problems, or to mediate the contro­
versy only if controversy can be sustained. Some claims of
firms and organisations should then be considered strategic or
instrumental in an ongoing political conflict over sustainable
futures. Mass publics face daunting information costs in
assessing these rival claims; distance from agriculture in
middle-class populations makes assessment doubly difficult.
Molecular biology is cognitively daunting. Few urban citizens
know how traits are introduced into crops, or the complex
determinants of yields in fields. Media reports of extreme
events leave urban constituencies with considerable anxiety. A
nuanced report on variable results across different Bt hybrids
under different agronomic conditions will not be recognised in
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
is smoke, there is fire” . Competition thus selects for extreme
claims that facilitate being heard in the global cacophony.
Aside from the question of interests, field reports of failure
have alternative explanations. First, confusion of traits with
technology with cultivars results in a cognitive lumping con­
trary to agricultural practice; hundreds of distinct Bt cultivars
become “g m o s ”(genetically modified organism). Field studies
have often failed to make the appropriate distinctions, result­
ing in considerable confusion (Naik et al 2005). Second, the
very popularity of Bt cotton opened the door to spurious seeds:
demand exceeded supply. “ Genetic anarchy”of unregulated
and illegal Bt hybrids muddied the waters. Many reports of Bt
failure in specific fields or specific seasons must be coming
from farmers who think their cotton has the cry Bt transgene
protection when it does not. No studies that we know of test
for spurious seeds.
More fundamentally, despite the lack of evidence, the fail­
ure narrative resonates with the penumbra of anxiety that
hangs over the g m o . Reports of India’ s Bt failure resonate
internationally because of global unease with official science
bent by corporate interests and influence. In discussions of
agricultural biotechnology anywhere in the world, someone
invariably raises the issue of the farmer suicides in India,
driven by “ terminator technology”in Bt cotton. Evidence to
ing of F2 seeds, high rates of adoption - face a steep cognitive
obstacle given information co&s and the dominant scepticism
about g m o s. Competing claims of suicide seeds and silver
bullets, make evaluation of outcomes especially difficult.
Ironically, a collective cultural urban bias seems to diminish the
power of the numbers of those who take them most seriously:
the farmers. There is curiously little attention given to the
skill, experience and agency of farmers in assessing the new
technology. In this case, their numbers - on yields, pesticide
costs and income - accord with the central findings of the bulk
of empirical work on Bt cotton. As farmers of necessity must
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

1 A r e p o r t p u b lis h e d in Science in Society , L o 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
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
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
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-
m aculture.0rg.au/2010/01/26/farm er-sui-
cid es-an d -bt-cotto n - n igh tm are- u n fold in g- in -
in d ia / . S im ila r c la im s w e r e m a d e in a n A m e r i­
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
S c h o o l: Every Thirty Minutes: Farmer Suicides,
Human Rights, and the Agrarian Crisis in India,
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
(N ew York: NYU S c h o o l o f Law, 2011).
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
r e d iff B u s in e s s a re d iff.co m , “In d ia sa y s n o to
Bt b rin jal, fo r n o w ” , 9 F e b ru a ry 2010: “Bt c o t ­
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
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 ”.
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
as a n in d ica tio n o f th e d iffu s io n o f th e narrative.
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
a re o v e r d e t e r m in e d a n d d iffic u lt to assess,
e s p e c ia lly in th e s h o r t term . F o r an o v e - v ie w o f
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
r in g (2007a, 2007c); R e v ie w o f A g ra ria n S t u d ­
ie s (2011). On e t h ic s s p ecifica lly , see
N u ffie ld C o u n c il (2004).
3 E x a m p le s o f s tu d ie s fin d in g s u p p o r t fo r th e
s u c c e s s s to r y in c lu d e N aik (2001); Q a im a n d
Z ilb e r m a n (2003); N e ils e n (2004); B a m b a w a le
e t al (2004); B e n n e tt e t al (2004); N a ik et al
(2005) ; G u p ta a n d C h a n d a k (2005); Patil,
B asav araj a n d H a n c h im a l (2007); D e v a n d R a o
(2006) ; G a n d h i a n d N a m b o o d ir i, (2006);
B e n n e tt e t al (2006); N a r a y a n a m o o r t h y a n d
K a la m k a r (2006); Roy, H e r r in g a n d G e is le r
(2007) ; S a d a s h iv a p p a a n d Q a im (2009); Sub-
r a m a n ia n a n d Q a im (2009,2010); R a o a n d D e v
(2009; 2010).
S a h a i a n d R a h m a n (2003); S h iv a a n d Ja fri
(2004) a n d Q a y u m a n d S a k k h a ri (2005)
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
studies, se e APCoAB (2006); G ru ere e t al (2008);
G r u e re (2011); H e r r in g (2008b).
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
s tu d ie s re s u lt e d in th e s a m e p a tte rn a n d v e r y
sim ilar arithm etic averages o n the m a jor variables
o f a g r o - e c o n o m ic interest. S e e a ls o G ru ere 2011.
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
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
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
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
( H errin g 2008b).
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
2008b. In t e rv ie w s w ith D r R a n g a R ao, o f
P rabh at S eed s, D r Satyn arayan a o f N u ziv eed h u
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
b io tech , H yd eraba d , 13 D e c e m b e r 2006.
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 ­
l ie f th a t a d o p t io n o f Bt c o t t o n w a s n o t e n tir e ly
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
w o r k in th e d is t r ic t (Ston e 2010) c o n fir m e d
h ig h e r y ie ld s, r e d u c e d p e s t ic id e u s e b u t r e ­
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
n e w t e ch n o lo g y .
9 T h o u g h h y b rid s e e d s a re n o t sa v e d in gen era l,
s o m e fa rm ers in Gujarat sa v e d F2 Bt h ybrid s e e d s
in th e e a r ly y e a rs w h e n N avb h a ra t 151 w a s
q u a sh e d b y th e GEAC an d b e c a m e u n av aila ble in
Gujarat. F2 se e d s w e re in these ca ses u sed straight
fr o m th e g in as “lo o s e s e e d s ”(R oy e t al 2007).
10 T h e o n ly stu d y w e k n o w is B am b a w a le et al
2004; B o llg a r d MECH-162 w a s c o m p a r e d to th e
is o g e n ic non-B t M E C H 162 a n d a co n v e n tio n a l
h ybrid. T h e ir s tu d y u s e d a p a r tic ip a t o r y field
tria l t o te s t m e a n in g fu lly p a ir e d h y b rid s w ith
an d w ith o u t in tegra ted p e s t m a n a g e m e n t (IPM).
11 H o w th e in s e r t e d g e n e a ffe c t s th e g e n o m e is
th e s u b je c t o f m u c h resea rch . D e s p ite th e
130 rese a rch p ro je c ts fu n d e d b y th e EU fo u n d
that th ere is n o scien tific e v id e n ce that tra n sg e n ­
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
m aterial is m o r e risky than “co n v e n tio n a l p la n t
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
D irectorate-G en eral fo r R esearch 2010).
12 A fie ld k it d e v e lo p e d b y th e C e n tra l In stitu te
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
w h e th e r o r n o t th e p la n t s ’t is s u e a c t u a lly c o n ­
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 ­
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,
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
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
a n d K a n d lik a r 2009.
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
p r o d u c t io n a n d p r o d u c tiv it y t o th e in tr o d u c ­
t io n o f Bt c o t t o n (G ol 2008)
14 S e e S u b r a m a n ia n a n d Q a im (2009, 2010).
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
f o r d eta ils.
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July 30,2011
Urban Concerns: An Introduction
Bypassing the Squalor: New Towns, Immaterial
Labour and Exclusion in Post-colonial Urbanisation - Rajesh Bhattacharya, Kalyan Sanyal
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SPECIAL ARTICLE
Revolutionary Movements in a Post-Marxian Era
SUMANTA BANERJEE
The key to revolutionary change in today's world lies
beyond the traditional Marxist conceptual framework or
the leadership of Marxist political parties. In India, four
broad areas of protests constitute the major
components of a new revolutionary strategy in the
post-Marxian era - (i) movements by forest dwellers
against both the state machinery and predatory
commercial forces; (ii) protests by villagers against the
establishment of industrial estates, big dams and nuclear
plants that threaten to oust them from their lands and
homes, and endanger the environment; (iii) civil society
campaigns against corruption and crime; and
(iv) secessionist struggles on the issue of
self-determination in the north-east and Kashmir. How
will a new generation of post-Marxian revolutionary
theoreticians and practitioners invigorate these
movements with a progressive ideological
core and a comprehensive coordinated programme
of socialist change?
This paper was presented - in an abridged version - at the international
conference on “Marxism: Marx and Beyond” , held in Kolkata during
22-24 March 2012, under the joint auspices of the Institute of
Development Studies Kolkata, and the Centre for Marxian Studies,
Jadavpur University, and sponsored by the Indian Council of
Philosophical Research, New Delhi.
Sumanta Banerjee (.suman5ban@yahoo.com) is best known for his book
In the Wake ofNaxalbari: A History of the Naxalite Movement in India.
Economic & Political weekly 13353 m ay 5, 2012 v o l x l v ii n o
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o start in a lighter vein, let me recall this joke about a
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.
He replies: “ Over there” , pointing out into the darkness. The
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
drunken answers: “ Because the light is so much better here
under the lamp post” .
Sometimes I wonder whether we are behaving like the
drunk in trying to find the key for the revolutionary transfor­
mation of our society under one single political lamp post -
while the key may lie elsewhere beyond the circle of light
shed by that lamp post. We perhaps believe that what is
sought can be found only under the old lamp post of the tradi­
tional Marxist classics. That lamp post does indeed continue
to shed light on a lot of hidden corners of the capitalist mode
of production and its present nefarious form of neo-liberal
globalisation. Marx was prescient in his acute analysis of the
basic laws of global capitalist development, and therefore he
remains relevant for those fighting to change that inequitable
global order. His tools of analysis have been refined or modi­
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,
there are a lot of new theoretical challenges and innovative
forms of protest that are breaking out, and which need to be
faced by Marxist ideologues and practitioners. Hitherto
ignored social and political grievances of underprivileged
and invisible sections of society (like demands of aboriginal
people, ethnic and linguistic minorities, gender rights of
women) are bursting out in sparks of resistance and lighting
up the obscure corners of the vast darkness that lie outside
18 55
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the Marxist lamplight. I will come to specific instances in
India in a while.
Opposed to this there has developed a parallel stream of for­
tune hunters among the upper and middle classes - who act as *
a buffer zone between the state and its business tycoon allies
and multinational industrial patrons on the one hand, and the
disgruntled masses on the other. This is the new generation of
executives in multinational corporations, employees in the
information technology sector, and a host of middlemen like
contractors in the booming construction business, as well as
professionals like academics, medical practitioners and others
in the tertiary sector who have gained from the privatisation of
their occupations in the neo-liberal era of globalisation. This
new generation of middle classes are ensconced under a cur­
tain - which can be described as the “ brass curtain”. Like the
“iron curtain”that was stitched by the us cold war tailors
around the Soviet Union, China, Cuba and other socialist
states in the 20th century, to insulate their socialist experi­
ments from the rest of the world by military intervention and
trade embargoes, today again the same us-led corporatocracy is
embroidering a new curtain - the garish, glitzy “brass curtain”
of crass privatisation and brash consumerism to protect its
employees within a cocoon.
M i d d l e C la s s a s t h e V a n g u a r d ' ?
The corruption of these newly educated sections of the middle
classes brings me to another problem being faced today by
Marxist practitioners - the ability or the desirability of the
present middle class intellectuals to act as the “ vanguard”(in
the Leninist sense) in the struggle for socialist transformation.
The power of the capitalist global order to seduce these influ­
ential members of the professional classes to its fold has
robbed the Marxist movement of an enlightened intelligentsia
from these classes which in the past had always invigorated it
with fresh theoretical insights. The communist movement
today, whether in India or abroad, lacks leaders possessing the
intellectual calibre and practical experience of those of the
past who could reconstruct their theoretical understanding of
Marxism in accordance with their national needs in changing
circumstances - whether Togliatti in Italy, Maurice Thorez in
France, Mao in China, Ho Chi Minh in Vietnam, or P C Joshi in
India, who could animate a small communist party in the
1940s with a wide scale programme of leading peasants’ move­
ments and working class strikes, organisation of relief for the
victims of the 1943 Bengal famine and 1946 communal riots,
and building up of a rich cultural venue (in the shape of the
Indian People’ s Theatre Association and the Progressive Writ­
ers’ Association) that brought together some of the best talents
from the contemporary Indian scene of arts, music, theatre
and literature.
In parenthesis, let me in this connection touch upon briefly
the problematic of the “ vanguardist”role of the party - in the
paradigm of revolutionary strategy. In Russia in the past, the
urban educated middle class intelligentsia formed the leader­
ship of the Bolshevik Revolution. In China, the Maoist concept
of leadership was based on rural-based communist organic
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intellectuals mainly from the peasantry. But both these forms
of party hegemony, in the Soviet Union first and China later,
led to the bureaucratisation of the communist movement
(which provoked Mao to launch the Cultural Revolution to
“ bombard”the party headquarters in China, but which sadly
enough ended up in violent chaos and factional fights within
the Chinese Communist Party).
Against this backdrop of the tragic historical experience of
a single party hegemony in the socialist movement and post­
revolutionary societies in the 20th century, participants in the
present movements and agitations for socialist change in the
21st century often propose another alternative that suggests
the doing away of the party altogether - harking back to the
anarchist vision of a socialist movement based on (pure)
spontaneous popular protests rejecting control by any politi­
cal party or centre. The World Social Forum through its vari­
ous congregations (including one in Hyderabad in 2003) has
brought together these various voices of protest in a pluralis­
tic ambience. These voices await synchronisation and grada­
tion from “ bilambit”to “ drut”in the “ raga”of Indian revolu­
tionary transformation. This needs a new generation of crea­
tive and innovative artistes - both ideologues and practition­
ers - who can both bring about the revolution and create the
post-revolutionary society.
There are tensions between these non-party movements
and the political parties which want to intervene. A typical ex­
ample is the adivasi peasants’ uprising against police atrocities
in Lalgarh in West Bengal sometime ago, that was hijacked by
the Communist Party of India (Maoist) (cpi(Maoist)) in its
attempt to orient the uprising towards the tactics of guerrilla
warfare as a part of its strategy of agrarian revolution to cap­
ture state power. The Maoists there (led by Koteshwar Rao,
known as Kishenji, an ideologue and tactician from Andhra
Pradesh), in their amoral opportunist device, backed Mamata
Banerjee’ s Trinamool Congress, deployed their armed squads
in her favour to eliminate their rivals in the ruling cpi(Marxist),
campaigned for her in the elections, and paved the way for her
coming to power. Once she won the elections with their help,
Mamata got rid of her Maoist comprador, by allowing the secu­
rity forces to kill Kishenji (who was the most vociferous cham­
pion of Mamata Banerjee in his t v interviews on the eve of the
elections). The Maoist party’ s “vanguardist”role in Lalgarh
thus proved to be a total disaster, and also exposed the naive
political judgment of the Maoist leadership.
In contrast with these ideologically committed, well-meaning
but politically confused, and militarily ill-equipped middle
class leaders of the Maoist movement, who face death in false
encounters in the jungles of Chhattisgarh or Jharkhand, a new
generation of middle class professionals is emerging in the
India’ s tertiary sector. Employed in Indian and multinational
corporate houses and the i t sector, they are protected by the
flashy “ brass curtain”of the neo-liberal global order. But like
the “ iron curtain”of the past, this curtain is also vulnerable to
fissures, as evident from the huge wave of protests that began
over the past year, from among this section of the salaried
petty bourgeoisie in Greece in western Europe and Egypt
MAY 5, 2012 VOL XLVII NO 18 B SB Economic & Political weekly

in west Asia - and can soon reach the shores of the Indian
middle class.
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
When we take into account these changing contours of anti-
state protest - both among the wider masses and the privi­
leged classes - we feel the need to enlarge the circle of the
light from the Marxist lamp post to cover these various seg­
ments in the hitherto neglected vast space of complex class re­
lationships, and the complicated forms of manifestation that
they are assuming. But before taking up the specific cases of
anti-state movements in India that need to be incorporated in
a Marxist programme of socialist transition, let me briefly
dwell upon the historical context of the political position from
which Marxists are grappling with this challenge today:
To put it in a broader perspective, the protests - whether the
social movements, peasants’uprisings and working class
strikes in India, or the Occupy Wall Street agitations in the us
and Europe, or the Arab Spring in west Asia - are taking place
in a post-Marxian political scene. This is not to suggest that
there is a fragmentation of the ideological core of socialism
that has sustained Marxian and post-Marxian politics. I am
trying to highlight two factors that are changing the terrain of
the struggle: (i) the changes in the economy brought about by
a new technology ushered in by the neo-liberal global order
that has changed the composition of both the industrial work­
ing class and the professional middle classes, on the one hand;
and (ii) the growing self-assertion by hitherto ignored op­
pressed communities and sections of the population, which
are being marginalised by the impact of this neo-liberal eco­
nomic order, on the other. These complex developments need
to be factored in by Marxist ideologues and practitioners who
are involved in bringing about a socialist transformation.
It is these changes that call for post-Marxian strategy of
revolutionary transformation. By using the term post-Marxian,
I mean a period characterised by several important traits that
signify both continuation as well as departure from the o rig i­
nal programme and prognosis made by Karl Marx in the 19th
century. It also implies the end of one phase of Marxist experi­
mentation with revolutions and socialist reconstruction in
Russia and China.
Marx’ s paradigm of revolution was marked by certain
important preconditions - one, the movement was required
to be led by the industrial proletariat of the contemporary ad­
vanced capitalist states of the west; two, in order to carry out
the strategy of overthrowing the capitalist state and capturing
power, the tactics that were to be adopted were primarily city-
based insurrections (the model available to and appreciated by
Marx, being the Paris Commune that took place during his
lifetime); three, the post-revolutionary state that was to be
installed was designated as a form of “ dictatorship of the pro­
letariat” , as a transitional phase towards the development of a
communist society; four, once the proletariat captured power
in Europe, it would lead to the emancipation of the people of
the colonies in Asia, Africa and America (cf Engels to Kautsky,
12 September 1882: “ ...the countries inhabited by a native
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population which are simply subjugated, India, Algiers, the
Dutch, Portuguese and Spanish possessions, must be taken
over for the time being by the (European) proletariat and led
as rapidly as possible towards independence” ).
All these preconditions of the traditional Marxist paradigm
had faced challenges in the course of the revolutionary move­
ments and post-revolutionary construction of socialist states
in both Europe and elsewhere during the last 100 years or
more. The outbreak of the 1917 Bolshevik Revolution in a back­
ward capitalist state, followed by seven decades of experi­
ments in socialist reconstruction there, and the communist
revolution and post-revolutionary turmoil (e g, Cultural Revo­
lution in China), defied the trajectory of change that was
designed by Marx. They gave rise to new problems that had
escaped the attention of Marx and Engels - like issues of
human rights, demands of nationalities, ethnic identity, envi­
ronmental concerns and feminist self-assertion. To give one
instance - the post-Marxian ideologues and practitioners are
today facing a new challenge in the Arab world. Various layers
of complex socio-economic and religious interrelationships are
propelling different types of agitations there - ranging from
acts of terrorism by the conservative religious Taliban and
A1 Qaida outfits in Afghanistan, Pakistan, and countries in
west Asia and Africa on the one hand, to movements by secu­
lar groups in Tunisia, Egypt, Turkey and other parts of the
Arab world on the other.
There is a need for an extremely nuanced Marxist approach
to these various types of popular upsurges. Marxists also need
to acknowledge that the pro-Left secular regimes (cf Baathist)
in countries like Iraq under Sadaam Hussain, Libya under
Gaddafi, Syria under Assad, had failed their people during the
last decades. Like their socialist counterparts in the Soviet
Union and east Europe, they had also notched up atrocious
records of corruption and repression of democratic opposition
- which aroused mass discontent. Although secular and pro­
poor in some of their reforms, they carried on the feudal leg­
acy of dynastic succession of the Arab sheikhs, by promoting
their sons or nephews (cf the progeny of Sadaam and Gaddafi).
This is not peculiar to the Arab world. Even the communist
ruling party in North Korea has not been able to rid itself of
this feudal habit of dynastic succession. In the Arab world, in
the absence of an alternative left leadership to oppose the cor­
rupt and repressive ruling Baathist and other secular regimes,
the people flocked to the Islamist fundamentalist eagles which
swooped down to occupy the vacuum of political opposition.
A post-Marxian strategy of revolutionary transformation
therefore should also take into account these failures of past
socialist regimes, the roots of corruption and state terror that
led to their fall. Yet, there is a continuity which flows from the
Marxist analysis of capitalist development. We are rediscover­
ing Marx’ s relevance today when, under the neo-liberal order
of globalisation, a reorganisation of the international division
of labour is taking place which, as Marx pointed out in Capital,
Vol I, is “
suited to the requirements of the chief centres of mod­
em industry”(which are in this case the us-dominated western
economic powers, that are setting up special economic zones,
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call centres, etc, in India and other countries which form the
peripheries to the “ chief centres”).
Further, our present-day critique of the global environmen­
tal threat again harks back to Marx’ s warning that such an eco­
logical crisis was bound to happen because of the capitalist
economic system. At the end of Chapter xv of Capital,
“Machinery and Modern Industry” , Marx wrote: “ ...all progress
in capitalistic agriculture is a progress in the art, not only of
robbing the labourer, but of robbing the soil; all progress in
increasing the fertility of the soil for a given time, is a progress
towards ruining the lasting sources of that fertility”Are we
not observing today the saturation of the fertility of the soil in
Punjab, Haryana and other areas due to the excessive and
indiscriminate use of chemical fertilisers and pesticides in the
race for progress in growth? Marx ended the chapter with the
following words: “ Capitalist production, therefore, develops
technology, and the combining together of various processes
into a social whole, only by sapping the original sources of all
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
the skin of the capitalist mode of production, and predict its
future course - which capitalism as an economic system has
generally followed. But his critique was limited by the condi­
tions of the historical period in which he was writing - a period
when capitalism in Europe was taking on a ruthlessly aggres­
sive posture, concentrating on primitive accumulation of capi­
tal, exploitation of resources from its colonies, and pauper­
isation of its own industrial proletariat.
The tactics that Marx and Engels suggested for overthrow­
ing this inequitable and oppressive capitalist structure was a
revolutionary insurrection by the urban industrial proletariat
of Europe. The immediate model was the Paris Commune.
Both of them dismissed the possibilities of national minorities
or the rural poor in the colonies as becoming decisive forces in
the revolutionary transformation.
In fact, in 1848, Engels defended the French campaign
against Bedouins in Algeria in the following words: “ The strug­
gle of the Bedouins was a hopeless one...And if we may regret
that the liberty of the Bedouins of the desert has been destroyed,
we must not forget that these same Bedouins were a nation of
robbers....”CNorthern Star, 22 January 1848).
But towards the end of their revolutionary careers, Marx
and Engels possibly toyed with the idea of giving the benefit of
doubt to the parliamentary politics of the bourgeois system to
bring about the radical change that they had envisaged. Engels
writing in March 1895 in his Introduction to his friend’ s classic
work - The Class Struggles in France - analysed the changes
since the 1848-50 period in these words:
With ...successful utilisation of universal suffrage... an entirely new
method of proletarian struggle came into operation, and this method
quickly developed further...the conditions of the struggle had essen­
tially changed. Rebellion in the old style, street fighting with barri­
cades, which decided the issue everywhere up to 1848, was to a con­
siderable extent obsolete....the conditions since 1848 have become far
more unfavourable for civilian fighters and far more favourable for the
military. In future, street fighting can therefore be victorious only if
this disadvantageous situation is compensated by other factors.
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Engels then claimed with confidence: “ We, the ‘revolution­
ists’
, the ‘overthrowers’- we are thriving far better on legal
methods than on illegal methods and overthrow ” . This was
refuted by history, as is well known by future developments in
Europe. The capitalist rulers could hijack the democratic right
of universal suffrage to their advantage by buying off a section
of the working class - who became the “ labour aristocracy”as
described by latter-day Marxists. The capitalist system could
also incorporate into the vast tertiary sector of its economy
large sections of the middle classes. Engels had placed hope in
these sections when he wrote in his 1895 article: “.. .by the end
of the century we shall conquer the greater part of the middle
strata of society, petty bourgeois, and ....grow into decisive
power...”His dream was soon to be shattered.
Thus, while the Marxian critique of capitalism in its basic
analysis still, remains relevant, the Marxian programme of
socialist transformation - either through armed insurrections
or through universal franchise - has suffered vicissitudes.
tactics of armed revolution succeeded in the capturing of
power by the communists - but with mixed outcome as far as
the goal of socialist transformation is concerned. The parallel
alternative of attempting the transformation through universal
franchise has also been tried out by Marxist political parties in
Europe (at one time conceptualised as euro-communism -
which failed to take off).
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
In the present phase of capitalism, where the system has been
able to consolidate its monopoly over the global economy (with
the collapse of the alternative socialist system in the Soviet Union,
and the incorporation of the so-called communist state of China
into that economy), Marxian ideologues and practitioners have
to fashion a new set of strategy and tactics on an international
scale to challenge that global monopoly. It cannot and should
not be a replication of attempts to consolidate revolutionary
forces that we witnessed in the 1930s under the hegemony of a
single communist party (that was based in the Soviet Union)
in the name of the Comintern or the Cominform in the 1940s.
There cannot be a repetition of a similar hegemony that was
attempted by the Chinese Communist Party in the 1960-70
period when its theoretician Lin Piao sought to impose on
communist fighters in Third World countries, the tactics of
encirclement of cities by villages - tactics that proved a disaster.
The alternative global Marxist strategy therefore has to be more
nuanced to be sensitive to the various types of popular protests
and rebellions in different parts of the world and select, incor­
porate or reject them according to its ideological principles.
Surely the Marxists cannot support the orthodox religious and
terrorist A1 Qaida - just because it is killing us soldiers!
There is a need to refashion the Tricontinental strategy that
was envisaged by Che Guevara in the 1960s. Che dreamed of
more and more Vietnams to defeat us imperialism. That is not
possible today. But his basic concept of creating and expanding
more and more centres of movements against us expansion­
ism still remains valid. Such movements are taking place
MAY 5, 2012 VOL x l v i i n o 18 E33Q Economic & Political w e e k ly

in different parts of the world - in different forms, whether
armed or non-violent, whether the Zapatista insurrection
in Mexico or the parliamentary experiments in Venezuela
and Bolivia.
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
But it is in India, more importantly, where the two alternatives
within the Marxian framework of change have coexisted with
various degrees of success and failure for several decades.
Here for the first time, communists could get elected to a state
legislature (in Kerala in 1957) to be able to form a government
- but to be dismissed as soon as they introduced land reforms
and changes in the educational sector that threatened vested
interests. Since then, it had been a long struggle for parliamen­
tary communists to inch their way to form governments in
states and operate within the limited constraints of a centrally
ruled structure, but make use of the constitutional powers to
bring about certain socio-economic reforms within that struc­
ture. We have to acknowledge that the Indian Constitution,
notwithstanding the mendacity of the Indian state, still offers
opportunities to communists to implement these reforms. For
more than three decades, from 1977 to 2011, the communists
ruled at a stretch in West Bengal, enjoying enough rights to
bring about institutional changes to meet the basic needs of
the people like healthcare, housing, education, and to intro­
duce a governance free from corruption and criminality. But,
sad to say, the communists in power in West Bengal, after the
initial period of limited land reforms and efforts to involve
people in decision-making at the grass-roots level (through the
panchayati system and similar popular mechanisms), failed to
solve these basic requirements of the citizens in their quotid­
ian existence. They soon sank into the slimy mire of corruption
and crime in the area of daily governance, and degenerated
into agents of the neo-liberal global order in the area of eco­
nomic reforms (cf Singur, Nandigram, Lalgarh).
Similar to the pattern followed by the communist rulers in
the Soviet Union and east European countries in the period
preceding their downfall, and in China today, in West Bengal
also a bureaucratic hierarchy developed in the c p i( m ) ’s organi­
sation, where power and privilege from the top echelons of the
party flowed to the apparatchiks at the bottom, who main­
tained the party’ s control and influence over the people
through a judicious mixture of distribution of largesse and ter­
ror. The terror tactics which was predominantly resorted to by
the cp i( m ) during the latter days of the Left Front rule in West
Bengal (in Singur, Nandigram) spelt the rout of the cp i(m ) in
the 2011 elections. Like the Soviet and east European party
bureaucrats and party-patronised privileged elite, who had to
pay the price for their terrorisation, corruption and arrogance,
and lost power at the end of the 1980s, the West Bengal cpi(m )
leaders and their prot£g£es are now biting the dust.
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
moral degeneration of communists in power in general. Critics
from the Maoist camp of the alternative strategy of armed
struggle, in a simplistic manner, attribute this degradation to
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SPECIAL ARTICLE
the bourgeois parliamentary system, which they feel, is bound
to corrupt communists whenever they join it. But how can the
Maoists gloss over the corruption of the communist rulers who
came to power through armed struggles and were given a
chance to build an egalitarian society under a communist rev­
olutionary system? Whether in Stalin’ s Russia or Mao’s China,
they acquired notoriety for amassing wealth and terrorising
their own people. There seems to be a continuity in the institu­
tionalisation of coercion and terror in governance by commu­
nist rulers from the Soviet Union in the 1930s to Kampuchea
under Pol Pot in the 1970s. On a mini-scale, we discover the
same symptoms in the policies and practices of the Left Front
government in West Bengal during the final decades of its
regime - in a violent manner it tried to suppress popular
protests in Singur, Nandigram and Lalgarh against its indus­
trial projects that threatened the livelihood and homes of the
local villagers.
The basic questions that I am raising are - what social or
political enzyme in our past programme of building socialism
could have distorted an idealist revolutionary Stalin into a
cynical brute, or brought about the mutation of a young sensi­
tive Marxist like Pol Pot into a ruthless reprobate? How could
communists make such a violent departure from the funda­
mental Marxist humanitarian premise of respecting the rights
of individuals and enhancing their capacity to develop as per­
fect human beings? The roots of Marxism are embedded in the
basic proposition that Karl Marx made in his Economic and
Philosophic Manuscripts of 1844: “ ...the complete return of
man to himself as a social (i e, human) being - a return accom­
plished consciously and embracing the entire wealth of previ­
ous developm ent” .
In the post-Marxian strategy of revolution, there is an urgent
need to restore this Marxian premise of respecting and
encouraging the right of the individual to full development of
his/her creative capacities. The communist-led governments
in the past provided the basic material amenities to their peo­
ple, and educated and trained them to the level from where
they could serve the economic and political interests of the
state. But beyond that level, they forbade them to think, or to
question the state’ s policies. Questioning the status quo, which
is the basis of human progress, was suppressed in socialist
states. Yet, Marx in his theoretical pursuits and political praxis
followed the famous dictum - lDe omnibus dubitandum’ (doubt
everything). The post-Marxian revolutionaries, both in the
course of their ongoing struggles and in the territories where
they have come to power, have to respect and restore the demo­
cratic rights of both the participants in their struggles, and
the citizens who live in these territories. To hark back to Che
Guevara’ s dream, communists in power, while bringing in an
equitable socio-economic order, should also shape new human
beings who are capable of developing their individuality.
T h e P r e s e n t S i t u a t i o n In I n d ia
In the light of the above mentioned historical experiences of
the communist movement in the past and the changes that
are taking place in the post-Marxian era, let me come to the
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possibilities of revolutionary transformation of the current
popular movements in India. I identify four broad areas of
such protests in the present Indian context - (i) movements by
forest dwellers and tribal people mainly in the hill areas
against both the state machinery of oppressive functionaries
(like forest guards), and predatory commercial forces that
threaten their livelihoods (ranging from the peaceful Chipko
movement opposing destruction of forests in the western
Himalayas to the violent Maoist-led resistance in the forests of
Chhattisgarh, Jharkhand and neighbouring areas against the
encroachment by corporate houses to displace them from
their homelands to make way for industrial development);
(ii) protests by villagers in the plains against the establishment
of industrial estates, installation of big dams and nuclear
plants among others that threaten to oust them from their
lands and homes, and endanger the environment; (iii) civil so­
ciety campaigns by people like Anna Hazare, and citizens’
groups like “ Wada Na Todo” , or those monitoring elections,
which voice the grievances of common citizens against wide­
spread corruption and crime in the political system and soci­
ety in general; lastly, (iv) the most controversial area that
challenges Marxist ideologues and practitioners in India - the
secessionist struggles on the issue of self-determination by
various dissatisfied ethnic and regional communities in the
north-eastern states of Nagaland, Manipur, Assam, and in the
north-western state of Kashmir. They range from armed insur­
rections to peaceful mass demonstrations in the streets, which
reflect the popular feeling that they have had a raw deal by
remaining within the Indian Union.
It is these different explosions of protest breaking out in
various corners of India that constitute major components of
a new revolutionary strategy in the post-Marxian era. They
need to be dovetailed with the traditional Marxist proposition
of a worker-peasant alliance as the main propelling force for a
revolutionary change. Such a proposition implies that a joint
struggle by the industrial working class and the rural peas­
antry alone can be decisive in bringing about the change. But
in a country like India, with diverse sociocultural commu­
nities, uneven levels of economic development and political
consciousness, and fragmentations within the working and
peasant classes, Marxist practitioners have to both honestly
comprehend this reality and be patient enough to sensitise
these various sections of a vast disgruntled population to
the political ideology of socialism, and convince them to
participate in a multi-level revolutionary endeavour with flex­
ible tactics to move towards a socialist transformation of
Indian society.
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
Yet, each of the movements mentioned above has its own com­
plexities with which Marxist ideologues and political parties
often feel ill at ease. For instance, as for the first category - the
struggles of forest dwellers and tribal population - should
Marxists regard them as pre-capitalist forms of protest against
the introduction of technology, like the Luddite rebellion in
the early days of industrialisation, primitive forms of protest,
60
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which following past historical pattern, are likely to disappear
against the inevitable progress of industrialisation? Or, should
they be recognised in the third world context, as assertions of
a strong traditional sense of sociocultural identity reinforced
by protests against the modern industrial corporatocracy’ s
encroachment on their territory? How can Marxists synchro­
nise their voices with those of the industrial working class?
Besides, different groups in these movements have different
approaches to social change. Some, like non-governmental
organisations, want to strengthen the role of local forest
dwellers and tribal people in decision-making within the
present structure, and make the prevailing capitalist system
more humane. Some like the Maoists want to destroy the
structure and strengthen the antagonistic movement against
capitalism by leading these tribal populations in an armed
struggle in confrontation with the state.
The Maoists in their areas of control in Chhattisgarh,
Jharkhand, Malkangiri and other pockets of resistance, have
often succeeded in carrying out land reforms, and meeting the
basic needs of the local villagers. But the encirclement of their
pockets by the state’ s security forces has led to the elimination
of most of their top leadership (Azad, Kishenji and others,
killed in false encounters), large-scale arrests of members of
their central committee, and increasing surrender of their
cadres. In the absence of any effective political guidance from
the central leadership, most of the Maoist guerrilla squads are
fast turning into roaming gangs of extortionists and criminals
in areas like Jharkhand. This again suggests the failure of the
leadership in educating the Maoist ranks in the basic ideology
of Marxian socialism and humanism. Like their parliamentary
counterpart - the c p i ( m ) - the Maoists are also facing a politi­
cal crisis and a challenge to their moral credibility. In the light
of their experiences of armed struggle during the last three
decades or so, the Maoist leaders have to be self-critical, ask
themselves whether the tactics of a protracted armed struggle
(that was viable in China from the 1920s till the 1940s) can be
replicated in 21st century India, and reformulate their pro­
gramme for a radical change.
Let us take the second type of movements - those against
big dams and industrial projects, prompted by concerns of
local villagers about threats to their livelihood and environ­
ment (cf the Narmada Bachao Andolan). Do the Marxist par­
ties have a plan to incorporate their demands in their overall
strategy of a socialist transformation in India? To come to the
third category of protests, how should Marxists relate to the
Anna Hazare type campaigns which take up burning social
issues, but stop only at demanding the reforming of the present
structure of governance without challenging the basic capital­
ist system that gives birth to corruption and crime? How can
Marxist parties take up these quotidian problems of the citi­
zens, try to help them in overcoming the myriad problems that
they face - and in the course, politicise them to make them
aware of the need for breaking down the present political
structure to replace it with a socialist system? To recall Marx
again - “ The communists fight for the attainment of the im­
mediate aims, for the momentary interests of the working
MAY 5, 2012 VOL XLVII NO 18 OBB Economic & Political weekly

class; but in the movement of the present, they also represent
and take care of the future of the movement”(Communist
Manifesto, 1848). In other words, the present revolutionary
strategy has to be linked to the future post-revolutionary stage
of reconstruction.
But more challenging for Marxists is the fourth area of pro­
tests - the secessionist movements. Most of the centres of
these secessionist struggles happen to be situated in territo­
ries which border countries with which India is in a rather
hostile relationship - China in the north-east, and Pakistan in
the north-west. As a result, a perpetually paranoid Indian
state administration had always responded to demands for
autonomy by these ethnic and regional communities by deni­
grating them as foreign-inspired and suppressing them by
military means. Indian Marxist parties - whether the parlia­
mentary communists or the armed cpi(Maoist) - have always
betrayed an ambiguous attitude towards these movements in
their theorisation about nationalities. In their tactics, they
have often betrayed a certain expediency - sometimes dis­
missing the secessionist movements from the statist point of
view of protecting the Indian nation’ s territorial integrity (e g,
by the parliamentary communist parties), sometimes by bat­
ting for them to fight the Indian state (e g, the Indian Maoists’
support to the United Liberation Front of Asom ( u l f a ) and
Islamist terrorist groups, their logic being “ my enem y’
enemy is my friend” . So, any stick is good enough to beat the
Indian state!).
The ambiguity and expediency in the policies of the
Indian Marxists towards the nationalities can be traced
back to the conflict among Marxist ideologues on the question
of the right of self-determination of nationalities right
from the days of the first socialist state in the Soviet Union.
As early as 1917, Rosa Luxemburg questioned the wisdom of
the new Soviet state’ s grant of that right to every nationality
(within the erstwhile Tsarist-ruled territory of the Russian
empire) without taking into account the feudal and fascist
character of the leaders of these local nationalities who
could come to power by taking advantage of the right of
self-determination (cf The Russian Revolution, 1917-18). On
the issue of self-determination of nationalities, today also
the Marxists face a dilemma. While agreeing on the principle
of the right of self-determination, should they allow it to be
usurped by chauvinist ethno-nationalist groups like the
Liberation Tigers of Tamil Eelam in Sri Lanka, u l f a in Assam,
or religious fanatic terrorist organisations like the Hizbul in
Kashmir? Drifting with the current of self-determination,
should the Marxists (particularly the Maoists) be passive
witnesses to the future occupation of Kashmir by a Taliban-
type mullacracy imposing coercive shariat laws on women
among others?
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
It would be both naive and dangerous for Marxists to celebrate
all forms of resistance, just because they are anti-us. Washing­
ton’ s neo-imperialist adventures in Afghanistan and west Asia
have provoked popular anger, opening up space for many
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SPECIAL ARTICLE
different forms of resistance. In the absence of any secular and
democratic leadership, this space is being dominated by
fanatic religious militant groups like the A1 Qaida, and an
equally dogmatic religious regime like Iran.
But to come back to the various types of anti-state move­
ments in India - both violent and non-violent, secular and
religious - the majority of their participants remain dis­
persed, each group tightly ensconced within the shell of their
respective concerns. They need to coalesce into a single move­
ment. And it is here where a new generation of post-Marxian
revolutionary theoreticians and practitioners can invigorate
them with a progressive ideological core and a comprehen­
sive coordinated programme of socialist change. There can
be debates over the methods of bringing about that change -
whether through parliamentary reforms or armed struggle,
or a combination of both (as experimented with in Nepal
and some countries in south America). As in the past, when
Indian Marxist parties drew inspiration from the Soviet
Union and China as models of socialist states, at present,
among Marxist circles in India (like the c p i ( m ) in particular),
there is a lot of curiosity and expectations about the socialist
experiments being carried out in Latin America. Cuba, par­
ticularly, during the last several decades, has braved us sanc­
tions and has succeeded in bringing about basic socio­
s economic reforms that have improved the health and educa­
tional standards of its people. Venezuela under Chavez has
shown impressive social gains for its people, and has even in­
spired the concept of a Bolivarian Alternative for the Americas
( a l b a ) as a pivotal force to bring about a radical change in
Latin America.
But, while raising my fist in a red salute to these experi­
ments in socialism, I also want to keep my fingers crossed. Let
us not be carried away by the immediate socio-economic suc­
cesses of these regimes. There are problems like allegations
about the suppression of dissident intellectuals in Cuba. In
Venezuela, there are complaints about a coterie growing
around Chavez (known as Chavismo) who are reaping profits
and enjoying privileges. Is there going to be a repetition of the
same pattern of bureaucratisation and corruption of the
political system as happened in the Soviet Union and China
in the past?
Basically, it boils down to the problem of humanising the
strategy and tactics of revolutionary change, and democrat­
ising the post-revolutionary reconstruction of society. Let us
not reduce the problem to a simplistic debate over parliamen­
tary or non-parliamentary methods, or tactics of violence or
non-violence - an either/or approach towards the transforma­
tion of our society in a socialist direction. On this particular
debate, let me end by quoting Rosa Luxemburg:
Legislative reform and revolution are not different methods of
historic development that can be picked out at pleasure from the
counter of history, just as one chooses hot or cold sausages. Legisla­
tive reform and revolution are different factors in the development
of class society. They condition and complement each other, and
are at the same time reciprocally exclusive, as are the north and
south poles, the bourgeoisie and the proletariat (Social Reform or
Revolution, 1900).
61
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 SPECIAL ARTICLE
Policy Reforms in the Indian Pharmaceutical
Sector since 1994
Impact on Exports and Imports
REJI K JOSEPH
Liberalisation measures in the pharmaceutical sector
have brought about major changes in the industrial
licensing policy, import restrictions, foreign direct
investment and production controls. It was feared that
firms would shift from indigenous production to
imports, especially of bulk drugs, and this concern was
aggravated with the change in the patent law. This
paper finds that these apprehensions have only partly
come true. Exports of formulations have grown faster
while their imports have not registered any jump,
keeping the balance of trade positive. But there has been
a decline in domestic production of bulk drugs and a
growth in imports because the industry is moving away
from intermediates and is focusing on bulk drugs at the
high end of the value chain.
This article is based on my PhD thesis and I gratefully acknowledge
the direction provided by Jayati Ghosh and Biswajit Dhar in doing this
study. I also thank the anonymous reviewer who provided me with very
detailed and productive comments.
Reji K Joseph (rejikjoseph@ ris.org.in ) is at the Research and Information
System for Developing Countries, New Delhi.
62
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1 In tr o d u c tio n
he debate on the implications of liberalising import
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
lations that insisted on local production, placing pharmaceu­
ticals in the open general licence ( o g l ) category and the abo­
lition of restrictions on foreign firms were all expected to
encourage imports of pharmaceutical products into India.
With the new patent regime, it was apprehended that growth
in exports would be limited due to restrictions on the scope
of operations of generic producers, particularly their ability
to export to preferred destinations, while imports would get
a boost because of the constraints on domestic producers
of patented medicines, thus causing the balance of trade to
deteriorate. This paper provides an analysis of the trends and
patterns in pharmaceutical exports and imports in the new
policy era.
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
regime - came about as an outcome of India’ s obligations under
the Trade-Related Aspects of Intellectual Property Rights
( t r i p s ) Agreement. The concern that liberalisation would
result in an increased dependence on imports was aggravated
by the decision to implement product patent rights in the
pharmaceutical sector. Studies have established a positive
may 5, 2012 vol xlvii no 18 BBB3 Economic & Political weekly

correlation between the strengthening of patent rights in
developing countries and increased exports to these countries
by companies based in developed countries. It was feared that
the Indian pharmaceutical industry would no longer be able
to export generics of on-patent drugs, which had been a thriv­
ing business in the past.
Maskus and Penubarti (1995) and Smith (1999) found a
strong positive correlation between exports and the level of
intellectual property protection in importing countries. Smith
(1999) observed that strengthening patent rights in countries
that pose a strong threat of imitation would expand exports,
whereas strong patent rights in countries where the threat of
imitation is weak would enhance market power. India was
classified as a country with weak patent rights and strong
imitative abilities where a strengthening of patent rights
would bring about market expansion. Following this reason­
ing, it was expected that imports to India would expand with
the implementation of product patent rights and this would
adversely affect the balance of trade. The other view, how­
ever, was that the rise in imports of formulations would be
offset by the growth in exports of bulk drugs (Lanjouw 1999).
Further, the expiry of blockbuster patents was expected
to provide Indian firms with new opportunities for exports.
It was also expected that the cost advantages of production
in India, compliance with good manufacturing practices
and the expertise in reverse engineering would make Indian
firms explore new opportunities in low-volume, high-price
regulated markets while retaining their traditional low-price,
high-volume markets in Asia, Africa and Latin America
(Grace 2004).
Chaudhuri (2005) showed that there has been a remarkable
growth in Indian pharmaceutical exports, particularly after
2000. The growth in exports to regulated markets, especially
the us, has been the major reason for the spurt. Exports to
regulated markets accounted for 39% of the exports in 2001-02.
Dhar and Gopakumar (2008) arrived at a similar conclusion.
Chaudhuri also pointed out that in 2001-02, formulations
constituted 52% of the exports with the remaining being bulk
drugs.1However, there are no major studies providing detailed
analyses of imports of pharmaceuticals to India. This study
attempts to fill the gap and also endeavours to capture the
more recent trends in exports.
3 M e th o d o lo g y
The analysis is based on data accessed from c o m t r a d e . 2 The
advantage of this data is that it enables cross-country compari­
sons as it is based on an international classification, the Standard
International Trade Classification ( s i t c ) . Major international
statistical publications, including the annual International
Trade Statistics brought out by the World Trade Organisation
( w t o ) , follow the s i t c and use c o m t r a d e data to identify
major exporters and importers. As countries need not strictly
follow the s i t c for domestic purposes, there may be differ­
ences in the figures reported by c o m t r a d e and government
sources. For example, while c o m t r a d e and International
Trade Statistics report that India’ s exports in pharmaceuticals
Economic & Political weekly QQ 53 may 5, 2012 vol xlvii no 18
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SPECIAL ARTICLE
in 2008 was $5.9 billion, the annual report of the union govern­
m ent’ s department of pharmaceuticals reports a figure of $8.4
billion for 2008-09.3
Pharmaceutical products are classified into formulations
(dosage forms) and bulk drugs (active pharmaceutical ingredi­
ents, or a p i s ) . The European Medicines Agency ( e m a ) defines a
formulation as “ the physical manifestation that contains the
active and/or inactive ingredients that deliver a dose of the
medicinal product. The key defining characteristics of the
dose form can be the state of matter, delivery method, release
characteristics and the administration site or route for which
the product is formulated. A pharmaceutical dose form is the
form in which a pharmaceutical product is presented in the
medicinal product package as supplied by the marketing
authorisation holder/manufacturer/distributor” .4The us Food
and Drug Administration ( f d a ) defines a bulk drug as “ any
substance or mixture of substances intended to be used in the
manufacture of a drug (medicinal) and that when used in its
production becomes an active ingredient of the drug product.
Such substances are intended to furnish pharmacological ac­
tivity or other direct effect in the diagnosis, cure, mitigation,
treatment, or prevention of disease or to affect the structure
and function of the body.” 5In India, these terms are defined in
the Drugs Price Control Order ( d p c o ) . The d p c o defines a for­
mulation as “ a medicine processed out of, or containing the
use of any one or more bulk drug or drugs with or without
pharmaceutical aids, for internal or external use for or in the
diagnosis, treatment, mitigation or prevention of disease” 6
and a bulk drug as “ any pharmaceutical, chemical, biological
or plant product including its salts, esters, stereo-isomers and
derivatives, conforming to pharmacopoeial or other standards
specified in the Second Schedule to the Drugs and Cosmetics
Act, 1940 (23 o f 1940), and which is used as such or as an
ingredient in any formulation.”
The s i t c does not explicitly use these terms (formulation
and bulk drug), but classifies pharmaceutical products into
two groups - code 541 “ medicinal and pharmaceutical prod­
ucts, other than medicaments of group 542”representing
bulk drugs and code 542 “ medicaments (including veteri­
nary medicaments)”representing formulations. Code 541
consists of selected products from harmonised system ( h s )
chapters 26, 29 and 30. Code 542 consists of selected prod­
ucts from h s chapter 30 (3003 and 3004). h s chapter 30,
which is on pharmaceutical products, has six sub-chapters
(at four digits) and the term “ ‘medicaments”apply only to
sub-chapters 30037 and 3004,8 indicating these two are
distinct from the other four sub-chapters. For this study,
products coming under s i t c code 541 (which in the h s clas­
sification are select products from chapters 26, 29 and the
products under chapters 3001, 3002, 3005 and 3006) are
considered bulk drugs and products coming under s i t c code
542 (which in the h s classification are products under chap­
ters 3003 and 3004) are considered formulations. My inter­
action with officials of the Bulk Drug Manufacturers’Asso­
ciation (India), Hyderabad confirmed that h s 3003 and 3004
are considered as formulations by the pharmaceutical
63
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 ­
pany in diversification over the last few years, b o o stin g non-
patented d ru g sales from 5% to 12% b e tw ee n 2004 and 2009.
In im ports o f pharm aceutical g o o d s (excluding raw m ateri­
als), the lead in g players are foreign firm s (Table 3). W hen
firm s in the P row ess database are c a tegorised on the basis o f
their ow nership, it is fou n d that foreign firm s have an imports-
sales ratio o f 40% w h ereas the ratio for d om estic firm s is on ly
5% (in 2009). The taken-over firm s d o n ot have any im ports.
There w as a ju m p in the im ports-sales ratio o f m
(from 13% in 1994-95 to 24% in the next year) after the restric­
tions on im p orts w ere elim inated. In 1994, the M odification to
the D rug P olicy 1986 rem oved all the restrictions on the use o f
im p orted bu lk drugs. O ver the years, the im p ort duty also
Tw o m ajor ch an ges in trends are seen in Figure 2. One, the
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
form ulation s durin g the 1990s, but the o p p o site is true in the
current decade. Two, bulk drugs w hich sh ow ed a steady decline
in the gro w th o f exp orts b etw een 2001 and 2005, reversed the
trend in the post-2005 period. Formulations, on the other
hand, exh ibited a steady g row th in exp orts throughout. On the
w hole, it m ay b e con clu d ed that exp orts o f bu lk dru gs and
form ulation s have b e e n g ro w in g at higher rates in the post-
n c s in 1995-96 2005 p e rio d than in the 10 years o f the post-1994 period.
An im portan t factor con tributin g to the g row th in exp orts o f
bulk dru gs in the last few years has b e e n the ou tsou rcin g o f
a p i p rodu ction by m n c s . Table 5 (p 66) sh ow s selected cases o f
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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SPECIAL ARTICLE

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
Cycloserine
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 192.190.180.53 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’
s
(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
India.23
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
generics (for w hich no patent exists in the ex p ortin g country
or im p ortin g country) have b een targeted under the counter­
feit label. Such initiatives, su p p orted by ph arm aceutical lo b ­
bies and the eu , have fou n d takers in d e v e lop in g countries,
esp e cia lly in east Africa. The east A frican region has recen tly
seen a few p olicie s and legisla tion s co m in g up to address the
coun terfeit d ru g problem . Kenya ad o p ted the Kenya Anti-
C ounterfeit Act in 200827 and T anzania and U ganda p ro p o se
to en act sim ilar laws. The cu lm in ation o f all th ese initiatives
has b een a region a l anti-counterfeit p o licy and law - the East
A frican C om m u n ity P olicy on Anti-Counterfeiting, Anti-
P iracy and Other Intellectual P roperty Rights V iolations28
and the East A frican C om m un ity Anti-Counterfeit Bill, 2010
(M usungu 2010).
The Kenyan law raised con siderable public debate on h ow
such law s m igh t affect access to gen eric drugs. It states that
co p ies or gen eric versions o f all produ cts having patent p ro tec­
tion in Kenya or elsew h ere can b e con sid ered “
coun terfeit”in
case o f an intellectual p roperty dispute w ith the patent holder.
This m ay classify a genu in e d ru g ex p orted from India to Kenya
as a counterfeit dru g if a com pan y that d o e s not hold a patent
for that particular d ru g either in India or Kenya but in som e
third coun try raises a dispute over it. The Kenyan law, h ow ­
ever, w as ch allen ged in the cou n try’
s high cou rt29 by three
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
adversely affect their access to affordable g en eric
The p etition ers h eld that the Act co n fu se d q uality and in tel­
lectual p roperty rights issues, thereby defin in g legitim ate
g en eric d ru gs as counterfeits. Satisfied w ith the petition,
Justice M w en doh issu ed in terlocutory orders on 23 April 2010
su spen d in g the p ow ers o f the anti-counterfeit a gen cy to inter­
fere w ith the im port and distribution o f gen eric m ed icin es in
Kenya.30 Indian pharm aceutical exp orters have ex p ressed
con cern that legislation s like that o f Kenya cou ld seriously
affect the cou n try’
s exports.31
6 Im p o rts o f Bulk D ru gs a n d F orm u la tion s
The in creasin g dep en d en ce on im ports o f bulk drugs, w hich
prim a facie seem s to be undesirable, n eeds to be seen in the
con text o f the ch an gin g dyn am ics o f the industry. Im port
dep en d en ce o f the pharm aceutical industry five d ecades ago
w as beca u se o f the lack o f m an ufactu rin g capabilities. The sit­
uation has ch an ged and the in creasin g d epen d en ce o f the
presen t tim e is not due to lack o f capabilities, but due to the
availability o f ch eaper interm ediates and bulk drugs in foreign
countries. The in creasin g export-orientation o f the industry
has forced firms to look for ch eaper inputs to m aintain their
com petitive advantage in the international market. The in ­
creasin g dep en d en ce on bulk drugs, interm ediates and other
raw m aterials is an ou tcom e o f the shift in the orientation o f
the exp ort com p osition o f the industry - it is b e co m in g m ore
and m ore form ulations-oriented, and that to o w ith the brand
India im a ge (good quality at a low price).33
W hen firms are orien ted tow ards the d om estic market,
there are few incentives to reduce the cost o f p rodu ction b e ­
cause about 50% o f the dru gs in the retail market in India are
un der a cost-based price con trol system (100% o f the dru gs
w ere un der price con trol in 1970, w hich cam e d ow n to 90% in
1979, 70% in 1987 and 50% in 1995) that assures com pa n ies a
p redefin ed rate o f return. The incentives g o to p rom otin g
produ cts rather than in n ovatin g to reduce cost, w hich explain s
w hy high am ounts are spent on advertising and m arketing in­
stead o f research and develop m en t (r & d ) by both m n c s and
h iv drugs. Indian firms. T he Indian pharm aceutical industry spent 4.8%
o f its sales turnover on r & d in 2008-09 w hereas its spen d in g
on advertisem ents and m arketing w as 6%.34 As firms in creas­
ingly enter foreign markets, co st b e co m e s a critical factor and
they im p ort ch eaper raw m aterials to curtail the co st o f p r o ­
duction. As the industry gradually sheds its focu s on bulk
dru gs in its external orientation, there is little to gain from the
brand India im a ge in the case o f form ulations and therefore no
com pu lsion s for p rodu ction w ithin India.
Figure 5: Ratio of Exports to Imports of Raw Materials
500-------------------------------------------
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
Switzerland
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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 SPECIAL ARTICLE
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
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
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
(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
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
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
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 s e d t o c la s s ify b u lk d ru gs.
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
U n ite d N a tio n s S ta tis tic s D iv is io n (SIDC). A ll
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
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 ­
a rd In te rn a tio n a l T ra d e C la s s ific a t io n (SITC).
In India, th e D G C I& S is th e n o d a l a g e n c y
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.
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
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
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 /
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 ­
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
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 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,
3 0 , 35, 38,56 a n d 96.
4 E u ro p ea n M e d icin e s A g e n c y (2005), “
N ote fo r
G u id a n ce o n D ata E lem en ts a n d S tan d ards fo r
D ru g D iction a ries”, (EM EA/CHM yiCH/168535/
2005).
5 U SFD A (2001), “G u id a n c e fo r In d u stry : Q7A
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
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
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
B io lo g ie s E v a lu a tio n a n d R esea rch .
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
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
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
e x c lu d e d f r o m its p u rv iew .
7 “M ed icam en ts (excluding g o o d s o f h ea d in g 3002,
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 ­
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 ­
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 ­
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.”
8 “M ed icam en ts (excluding g o o d s o f h ea d in g 3002,
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
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,
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
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)
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.”
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
H S 2002.
10 B a s e d o n C O M T R A D E data.
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
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)
in J u ly 2008.
12 D a b u r w a s tak en over by F re s e n iu s K abi
(S in ga p ore) in A p ril 2008 a n d S h a n ta B io te ch
b y S a n o fi A v en tis (France) in J u ly 2008.
13 L eadin g g lo b a l ph arm aceu tical firm s are e x p ecte d
t o su ffer substantial e ro sio n in their sales fro m the
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 ­
du cers. In d u stry e stim a tes in d ica te that in 2010,
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
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
th r e e years. F or E li Lilly, t h e risk f r o m g e n e r ic
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
h ig h a s 6 6 % o f to t a l s a le s in 2010 (D h ar 2011).
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
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 .
2010.
,
Financial Times, 21 O c t o b e r 2010.
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
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
t o 7.5% in 2007-08 (Jha 2007).
17 B a s e d o n P r o w e s s data.
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
p a te n t o n C e ft in (antibiotic). G SK file d a su it in
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
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 ­
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
in g its g e n e r ic v ersio n . H o w ev er, in 2001, R a n ­
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
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 ­
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
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
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
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 .
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
, Mint, 9 S e p t e m b e r 2010.
B ig P h a rm a ”
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
, Economic Times, 22 S e p t e m b e r 2010.
U S”
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
, Business Standard,
O p e n fo r In d ia n P h a rm a C o s ”
6 M a r ch 2009.
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 -
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
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/
A N D A G en ericD ru gA pprovals/u cm 0 5 0 5 2 7 .h tm ;
d ata fo r ANDA a p p r o v e s (not first-time generics)
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-
cessd ata.fd a.gov / scrip ts/ cd er/ d ru gsa tfd a/in d ex .
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
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 /

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SPECIAL ARTICLE
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
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1,735 D M F filin g s as o f 2008. T h e t o p 10 In d ia n Jo seph , R eji K (2008): “T h e R a n b a x y M o d e l a n d
37 “S ick B u lk D r u g C o s M ay G e t L ife S u p p o r t ”
,
fir m s h a d 831 DM F f ilin g s a s o f M a r ch 2009. C o n s o lid a t io n , Economic
in P h a rm a S e c t o r ”
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
38 T h e s e p o in t s c a m e o u t d u r in g a n in te r a c tio n
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w a s a n e x c e p tio n a l year. K PM G (2006): The Indian Pharmaceuticals Indus­
w ith th e IDM A, N e w D elh i.
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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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h o w th e in d u s tr y is m o v in g . Prospects in India and China, D FID H e a lth S y s ­ P r ic e w a t e r h o u s e C o o p e r s (2005): “In d ia : P r e s c r ip ­
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
d e n c e in th e w a k e o f M N C in itia tiv es to e q u a te D r u g s a n d P h a rm a c e u tic a l In d u s t r y ”
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B arrier t o U S E x p o rts? ”
I n d ia n g e n e r ic s w ith co u n te rfe its. o f P e tr o le u m a n d C h e m ic a ls, N e w D elh i. Economics, 48, p p 151-77-

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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 / te rm s
 NOTES
Assessing the Role of
Government-led Microcredit
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 __________________________________
Using survey data collected in 2007
from three districts in Andhra
Pradesh, this article assesses the
performance of 72 primary
agricultural credit cooperatives. It
finds that these credit cooperatives
tend to be used as political
instruments and, as a result,
borrowers prioritise all debt
obligations to microfinance
institutions, informal moneylenders
and others, before primary
agricultural credit cooperatives.
The authors suggest that if the
performance of these credit
cooperatives does not improve, a
larger government role in the supply
of credit may undermine the culture
of repayment.
We would like to thank Giovanna Pernushi
and Niraj Verma for valuable comments. The
views expressed are those of the authors and
should not be attributed to the World Bank, its
executive directors, or the countries
they represent.
Jordi de la Torre (j.delatorreanglada@gmail.
com ) is with Georgetown Law. Xavier Gine
(xgine@worldbank.org ) is with the World
Bank and Bureau for Research and Economic
Analysis of Development. Tara Vishwanath
Qyishwanath@worldbank.org) is with the
World Bank.
Economic & Political w e e k ly 13259 m ay 5, 2012
This content downloaded from 192.190.180.53 on Tue, 06 Nov 2018 23:58:16 UTC
T
he microfinance revolution that
started 30 years ago has resulted,
as of last count, in more than
3,500 microfinance institutions ( m f i s )
that collectively serve almost 150 million
clients worldwide (Daley-Harris 2009).
Proponents of microfinance claim that
by using innovative contract features,
such as joint liability, frequent repay­
ments and escalating loan sizes, m f i s
have managed to achieve high repay­
ment rates while serving a fraction of
the w orld’ s poor. Without proper access
to financial services, the poor have to
rely on their own scarce resources and
uncertain incomes to invest in education,
start new businesses or enhance the
productivity of the land they cultivate.
Underinvestment in these crucial assets
tends to keep their overall productivity
low, making it very hard for them to
escape the vicious cycle of poverty.
The recent crisis in Andhra Pradesh
( a p ) , however, has called into question
the role that m f i s play in providing ac­
cess to financial services to the poor. The
crisis was triggered by an ordinance
promulgated by the Government of a p , 1
in response to allegations of over-indebt­
edness of clients due to careless lending
practices and rumours of debt-related
suicides among m f i borrowers.
While there may be some truth to these
allegations, partly a result of the rapid
growth that m f i s have experienced in re­
cent years, especially in a p , m f i s do serve
an important segment of society, particu­
larly those who lack assets that can be
used as collateral. Repayment rates remain
low today, and if proper measures are not
successfully implemented, the micro­
finance sector may wither or disappear
altogether. If this were to happen, what
then are the feasible credit alternatives?
And will they contribute to the efficiency
of credit markets for the poor?
v o l x l v i i n o 18
All use subject to https://about.jstor.org/terms
Perhaps one consequence of a dimin­
ished role for m f i s as credit providers for
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
involvement in providing access to credit
for the poor is clearly warranted.
In this article we report findings from
a survey conducted in three districts in
a p in 2007 designed to assess the per­
formance of rural credit cooperatives
and in particular the primary agricul­
tural credit societies ( p a c s ) . p a c s are the
lowest tier of the rural cooperative
banking system. They focus primarily on
providing short-term (seasonal) credit for
agricultural purposes and are regulated
by the National Bank for Agriculture and
Rural Development ( n a b a r d ) . Accord­
ing to the Reserve Bank of India ( r b i ) ,
there were 94,942 p a c s in 2008, each
one serving seven villages on average,
with a total membership of 131 million
individuals, 79 million of which were
borrowers (Johnson and Meka 2010).
The experience of p a c s may prove
useful in shedding light on the debate
surrounding the role of government in­
tervention in access to credit for the
poor, especially in rural areas.
We find evidence that p a c s were
used as political instruments. Borrow­
ers responded by prioritising all debt
obligations ( m f i s , informal lenders, etc)
ahead of repayment of p a c s loans. This
indicates that there is a weak culture
around repaying institutions with sig­
nificant government involvement. A
private sector solution that is shielded
from government interference may be
desirable to that extent.
The article proceeds as follows. We
first describe the data and the sources of
credit used by the sample of households
interviewed. We then discuss p a c s man­
agement practices and the impact of
politics on the culture of repayment.
Data
Our data includes 72 p a c s from the
districts of Anantapur, Mahabubnagar
and Vizianagaram in a p with audited
recovery rates as of June 2004 between
73
Figure 1: Households' Preferred Sources of Credit (in %) Figure 2: Percentage of HH That Have At Least One Loan with...(in %)
80
Informal
70

60

Formal 50
institutions
40

30

SHG 20
10

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
article are part o f the b a selin e co lle cte d
for the assessm en t o f a G overn m en t o f
India reform p ro gra m m e that fo llo w e d
the re com m en d a tion s o f a Task Force
led by A V aidyanathan w h ich su bm itted
its report on revival o f rural cooperative
credit institutions in February 2005. The
p rogram m e sought to transfer funds to
qu a lify in g p a c s so that accum ulated
losses w ou ld be w ip ed out, thereby m eet­
ing a m in im um capital to risk w eigh ted
assets ratio (c r a r ) o f 7%.
W e ch ose a sam ple o f p a c s
the three districts w ith repaym ent rates
in 2004 ju st above and b e lo w the thresh­
olds o f 30% and 50%.2 The sam plin g
strategy oversam pled p a c s
triggers, resulting in a un iform distribu­
tion o f p a c s w ith repaym ent rates b e ­
tw een 20% and 60% that is very sim ilar
to the distribution usin g all p a c s
range. The study, however, did n ot in­
clude any p a c s w ith repaym ent rates b e ­
A bout 6% o f h ouseh olds o w n ed less actual ch oice.4 The data sh ow that only
than one acre, 40.2% had lan dholdin gs 6% o f h ouseh olds had a loan w ith an
o f less than five acres and the rem ainin g s h g , and perhaps as a consequence, they
54.3% o f h ouseh olds o w n ed m ore than w ere a lm ost never the preferred source
five acres o f land. A m ong households with for credit (less than 2% o f h ouseh olds
a p a c s borrower, alm ost 42% ow n ed m ore rank s h g s above other sources). This is
than five acres. T hese h ou seh olds w ou ld n ot too surprising, as s h g s target the
be classified as large farmers, p rovidin g p oo re st h ouseholds in the community.
little eviden ce that p a c s p rioritised M arginal farm ers exhibited a slightly
marginal and small farmers. This lack o f higher preference for s h g loan s than
targeting w ould be consistent w ith cro ss­ sm all and large farmers, but they en ded
coun try eviden ce by Beck, Dem irguc- up b o rro w in g the least from this source
Kunt and Martinez-Peria (2008), w h o (less than 10% o f households).
in each o f foun d no significant association betw een Inform al loans, quite surprisingly,
greater government ow nership o f banks w ere the preferred and m ost used
and financial access across countries. source, by a large m argin a m on g all
However, p a c s adm inistrative data grou p s o f farmers. This is probably due
around the indicate that on ly 12% o f m em bers are to the higher flexibility they offer. Loans
large farmers. So w hat explains this d is­ from p a c s w ere the preferred sou rce for
crep an cy in the data? As it turns out, m argin al farmers, and in deed the d o m i­
p a c s adm inistrative data are based on nant source o f credit for m arginal and
in that lan dh oldin gs recorded in the m em b ers’ the secon d source for sm all farmers, b e ­
passbooks, an official docu m en t that low inform al credit. In sum, the larger
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
above 60% (18.7% o f all p a c s ).
W e then ch o se a represen tative sa m ­
ple o f b o rro w in g h ou seh o ld s and an ­
oth er sam p le o f n on -borrow ers from
the v illa g es w h ere the p a c s
Sin ce w e had the p ro p o rtio n o f
m em b ers in each village, w e cou ld
w eig h t re sp o n ses from the m em b ers
and n on -m em bers and rep ort su m m ary
statistics that w ere represen tative o f
the v illa g es w h ere p a c s operated.
In 2007, w e in terview ed 1,060 farm ­
ers from 106 differen t villages, o f w hich
847 w ere p a c s m em bers and 213 w ere
non-m em bers.3 The p opu lation in these
villages w as m ostly en ga ge d in a gricu l­
ture (82.6%) and on ly about h alf o f
h ou seh old h eads w ere literate.
o f the h ou seh old s sam pled had total
lan dh oldin gs b e lo w 5.5 acres o f land.
p a c s ), or istered in the nam e o f the member. But a
h ou seh old m ay have m ore than one
passbook. A ccordin g to survey data,
h ouseh olds o w n 1.74 p assb ook s on aver­
age. This su ggests that about two-thirds
operated. o f the m em bers classified as sm all and
p a c s m arginal farm ers a ccordin g to their land
p assb ook s live in h ouseh olds w ith total
lan dholdin gs o f m ore than five acres.
Henceforth, w e classify respon dents into
marginal, small and large farmers accord­
ing to household landholdings rather than
individual passbooks.
Sources of Credit
Figures 1 and 2 report the preferred
sou rce o f credit and actual use by sou rce
at the tim e o f the survey in 2007. It
H alf is n otew orth y to observe the relatively
lim ited role o f self-help grou p s
both as the preferred as w ell as the
did not translate into greater access rela­
tive to sm all and large farmers, w h o also
b orrow ed m ore heavily from form al and
inform al sources.
T hese d ifferen ces in len din g m e th o d o ­
lo g y are e ch o e d in Table 1 (p 75), w hich
reports the characteristics o f loan s for
the sam ple by credit source. The m ain
differen ces lie in collateral requirem ents,
interest rate, m aturity and average loan
size. Both p a c s and form al sou rces o f
credit require collateral. In term s o f
ch an ges in the interest rate, in form al
loan s ch arge nearly tw ice as m uch as
loan s from p a c s and also have a shorter
maturity. The problem w ith p a c s , h ow ­
ever, is that the average loan size w as
sm aller (a m edian o f Rs 10,000 versus
Rs 20,000 for in form al sources), and
(s h g s ), collateral is required. Indeed, h alf o f 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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 NOTES

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 192.190.180.53 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
NOTES
loan as a bribe, m f i loans, on the con­ provided by existing research is only
trary, were perceived as 18 percentage partial and incomplete.
points less likely to suffer this problem. We have, however, some good indica­
Besides, loans from p a c s were perceived tions of where the right path might lie.
as less likely to be repaid even if a good Providing good institutions, such as
Table 2: Perceptions on Credit and Repayment
PACS Comm. Bank MFI PACS-Comm.Bank
Perceived p ro b a b ility of...(1 to 10)
Repayment rescheduled if d ro u g h t 6.986 5.552 2.425 1.434***
Repayment forgiven if d ro u g h t 6.532 4.696 2.079 1.836***
Loan am ou n t low er than requested 6.358 4.996 3.446 1 .3 6 2***
New loan after fu ll repaym ent 4.756 6.263 6.772 -1 .5 0 6***
Share deducted fro m loan as bribe 4.722 2.889 2.862 1 .833***
Share capital/savings misused and lost 4.677 2.423 3.539 2 .2 5 5 ***
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 ***
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 ***
An asterisk (*) indicates that the sample is restricted to those with more than one source of credit.
Source: Household survey conducted in three districts in AP, India in 2007.
harvest followed a drought than were efficient, speedy and fair courts is an
either loans from commercials banks area where only the government can
or M F IS. play an active role. Also, governments
Finally, respondents were asked to can provide much needed registries of
provide a ranking of lenders they would credit information, liens and property
pay first if they had an outstanding loan ownership, and make sure the legislation
from different lenders but did not have is reliable and that property rights and
enough money to meet all repayment responsibilities of companies and finan­
obligations. As it turns out, p a c s loans cial institutions are properly defined. Re­
always appeared last in the repayment forms in these areas may be difficult to
priority list, behind all other loan types. accomplish in the short term. But there are
The first in the list was always a loan many other dimensions where progress
from an m f i . Thus, the frequent an­ comes at lower costs. Djankov, McLiesh
nouncement of relief measures appears and Shleifer (2007) use a panel of aggre­
to undermine the culture of repayment. gate data for 129 countries over 25 years
to confirm that creditor rights and the
Conclusions existence of (public or private) credit
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
Economic&PoliticalwEEKLY
quences. There is strong evidence point­ INDIA AND THE ILO
ing to the crucial importance of govern­
ment institutions for the functioning of
the financial sector in general and access
India and the ILO in Historical Perspective
to credit in particular. However, instead
of replacing private agents in the market, India, the ILO and the Quest for Social Justice since 1919
governments can make a more valuable Indian Officials in the ILO, 1919-c 1947
contribution by securing an adequate Employment in Development: Connection
environment for private credit institu­ between Indian Strategy and ILO Policy Agenda
tions to flourish and by improving insti­ Fundamental Principles and Rights at Work: India and the ILO
tutional mechanisms in ways that fur­
ther the availability of credit to poor
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
institutions involves decision-making with
long-time horizons, and the guidance
76
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registries exhibit a strong correlation with
higher ratios of private credit to g d p .
Interestingly, information infrastructure,
such as credit registries, matter more com­
pared to creditor rights in poorer coun­
tries than in rich countries.
PACS-MFI Comm.Bank-MFI The experience of India
in the 1990s also gives in­
4 .5 6 1*** 3.127*** sights into ways the govern­
4 .4 5 3 *** 2.6 1 7*** ment can work to ensure
2.9 1 2*** 1 .5 5 0*** that access to credit is avail­
-2 .0 1 5*** -0 .5 0 9 **
able to those who need it the
1 .8 6 0 *** 0.027
most. Visaria (2009) shows
1.139*** -1.116***
that the new expedited
-1 .8 0 6 *** -0.407*
mechanism introduced for
0 .9 0 4 *** 0 .2 6 6 *** loan contract enforcement
resulted in sizeable increases
in loan recoveries, as market
participants were able to bypass the in­
efficient court procedures then in place.
Also, consistent with the evidence we
presented in this paper, Caprio and
Honohan (2004) advocate the impor­
tance of ensuring the independence of
bank supervisors from the political
sphere, and of the supervised entities
themselves, in order for banks to pro­
mote social welfare and not their own
or that of their officials.
In sum, in this paper, we have pro­
vided some evidence showing that gov­
ernment-controlled p a c s may suffer
from weak governance and poor man­
agement practices and may be prone to
capture by politicians. This is consistent
March 5,2011
- Sabyasachi Bhattacharya,
J Krishnamurty, Gerry Rodgers
- Gerry Rodgers
- J Krishnamurty
- 7 5 Papola
- Kamala Sankaran
For copies w rite to:
Circulation Manager,
Mumbai 400 013.
email: drculation@ epw.in
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
 NOTES

with cross-country evidence that em­
phasises governance and institutional
issues as critical in explaining differ­
ences in the performance of public
sector interventions.
n o t e 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 ­
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 ­
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
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
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,
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 f AP 2010).
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
q u a lify fo r fu n d in g , PACS w ith r e p a y m e n t
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
o n e -th ird o f t h e fu n d s in itia lly a n d on e -th ird
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%
w o u ld r e c e iv e a ll th e fu n d s im m ed ia tely .
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.
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
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)
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
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
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
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 ­
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
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
S tu a rt R u th e r fo rd in h is 2000 b o o k , The Poor
and Their Money, S H G s are an e x a m p le o f a
“p r o m o t e r ”a p p ro a ch .
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
p a ttern s. D in ? (2005), f o r e x a m p le , d e m o n ­
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 ­
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
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
(2005) a ls o fin d th a t in P ak ista n , p o lit ic a lly
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 ^
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
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
n o n - c o n n e c t e d firm s.
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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:
M ic r o c r e d it S u m m it C am paign ).
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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
E m e r g in g C o u n t r ie s ” , Journal of Financial
Economics, 77 (2): 453-79.
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
S h le ife r (2007): “P rivate C r e d it in 129 C o u n ­
, Journal of Financial Economics, 84(2):
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299-329.
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
M icr o fin a n ce In stitu tio n s ( R e g u la tio n of
M o n e y le n d in g ) R u le s 2010” , G overn m en t ord er
M S N o 356, Andhra Pradesh Gazette, e x tra
o r d in a r y issu e, 19 O cto b er, P a n ch a y a t R aj
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,
H y d eraba d .
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
t o F in a n ce in A n d h ra P ra d e sh ” , In stitu te fo r
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
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con ten t/u p loa ds/attach m en ts/ csy / 695/CMF_
access_t0_Finance_in_A ndhra_Pradesh_2010.pdf
K hw aja, A s im Ija z a n d A t if M ia n (2005): “D o
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?
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M a r k e t” Quarterly Journal of Economics,
R u th erfo rd , S tu a rt (2000): The Poor and Their
Money (R u gby: P ra c tic a l A c tio n P u b lish in g).
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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
R e c o v e r y T rib u n a ls in , American
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Economic Journal: Applied Economics, 1(3): 59-81.

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 DIS CU S S IO N
On Publicly-Financed Health
Insurance Schemes
Is the Analysis Premature?
T R D IL IP
It is a methodological flaw to
conclude from data which
shows a rise in the incidence of
out-of-pocket medical expenses
that the Rashtriya Swasthya
Bima Yojana is ineffective. A
response to Sakthivel Selvaraj,
Anup K Karan, “
Why Publicly-
Financed Health Insurance
Schemes Are Ineffective in
Providing Financial Risk
Protection”(e p w , 17 March 2012).
diliptr@hotmail.com ) w a s p a r t o f
T R D i l ip (1
t h e t e a m t h a t d e v e l o p e d t h e N a t io n a l H e a l t h
A c c o u n t s a t t h e M i n is t r y o f H e a l t h a n d F a m ily
W e lfa r e , N e w D e lh i.
Economic & Political w e e k ly
T
he Rashtriya Swasthya Bima
Yojana ( r s b y ) as on March 2012
covers 28 million households in
India, which constitutes approximately
11% of the total number of households in
the country. The scheme is expected to
ultimately provide health insurance pro­
tection against hospitalisation to about
130 million people in the country. There
is a need to re-examine the manner in
which a national scheme of this magni­
tude has been evaluated by Selvaraj and
Karan ( e p w , 17 March 2012) and was
certified as a failure in terms of provid­
ing financial risk protection against
catastrophic healthcare expenditure by
households in India. The reported analy­
sis which does not go beyond very basic
descriptive statistics at the highly aggre­
gated national level, is regrettably
replete with methodological flaws.
T he authors have co m p a re d the
N ational Sam ple Survey O ffice ’
s (n sso)
co n su m er exp en ditu re survey data for
2004-05 (pre-RSBY period) and 2009-10
(post-RSBY period) and fou n d an in­
crease in m ean p er capita h ou seh old out-
of-pocket (oop) h ospitalisation e x p en d i­
ture and in the prevalen ce o f catastroph ­
ic health exp en ditu re due to hospitalisa­
tion. T he in crease in these indicators b e ­
tw een th ese tw o-tim e poin ts w as direct­
ly attributed to the lack o f effectiv en ess
o f the rsb y in p rov idin g financial risk
p rotection to the households. Such cru de
and un-standardised com p a rison s are
p erm issib le o n ly if the authors can en ­
sure that: (1) a substantial p ro p o rtio n o f
the h ou seh olds w as cov ered b y the rsb y
du rin g this inter-survey period, so that
the n sso con su m er expen ditu re survey
w o u ld have b e e n able to capture the
differen tials in v estiga ted in the paper,
an d (2) the p rop ortion o f h ou seh olds
ES3Q m ay 5, 2012 v o l x l v i i n o 18
This content downloaded from 192.190.180.53 on Tue, 06 Nov 2018 23:58:17 UTC
All use subject to https://about.jstor.org/terms
consuming/seeking inpatient care re­
mains unchanged at the time of these
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
expenditure estimates).
Now let us examine what proportion
of households in India was covered by
the r s b y in 2009-10. There are two data
sources available in the public domain
which provide data on the coverage by
r s b y for the latter period in which this
evaluation was performed. Jain (2011)
reports that 22.5 million households had
enrolled for r s b y by the end of Decem­
ber 2010, which constitute 9% of house­
holds in India. The p h f i (2011) study re­
ports that 80 million beneficiaries were
covered under the r s b y , which trans­
lates to around 7% of the country’ s pop­
ulation. So will this r s b y coverage of
7-9% be enough for the n s s o consumer
expenditure survey to capture the r s b y ’s
impact on o o p expenditure on hospita­
lisation in Indian households? The an­
nual hospitalisation rate in India is 25
per 1,000 population ( n s s o 2006). Due
to this sample size constraint, the authors
are in no position to attribute the in­
crease in o o p expenses (Table 2 of their
article) and that in the proportion of
households facing catastrophic expenses
(Table 4 of their article) to the inability
of the r s b y to provide financial protec­
tion against risk of hospitalisation.
Inpatient care is consumed by a small pro­
portion of households in a year and hence
the authors will have to wait for the cov­
erage of r s b y to reach at least 30% in
order to apply such methodologies. Such
high coverage levels are needed for com­
parison, as programme statistics indi­
cate that one out of eight households
among r s b y beneficiaries are reporting
hospitalisations during a one-year refer­
ence period. Further Dror and Vellakkal
(2012) have shown that the coverage of
r s b y within the b p l households had
touched 28% as on 31 March 2011. The
midpoint which the 2009-10 n s s o data
refer to is 1 January 2010 and r s b y
coverage level here among b p l house­
holds is expected to be much less than
the 28% estimated as of March 2011.
79
DISCUSSION
The second and more serious issue
while comparing household-level o o p
expenses on hospitalisation between
two surveys is the nature of variation in
the proportion of households incurring
these expenses between the two survey
points. Table 1shows that the proportion
of households reporting o o p hospitalisa­
tion expenses has increased from 9% in
Table 1: Percentage of Households Reporting Out-of-•Pocket Hospitalisation Expenses by Monthly
Per Capita Consumer Expenditure (MPCE)Quintiles
MPCEQuintile
Rural
Poorest 3.6
Second poorest 5.2
Middle 7.4
Second richest 10.7
Richest 17.8
All 9.0
Richest/poorest ratio 4.9
Sample households (N) 79,298
Source: Unit records of the NSSOConsumer Expenditure Surveys in 2004-05 and 2009-10.
2004-05 to 13% in 2009-10. Such an
increase also limits the crude comparison
of o o p expenses and catastrophic spend­
ing on hospitalisation reported by the
authors. This sharp increase is noted to
be very high in the poorest quintile and
lowest in the richest quintile. The rich-
poor gap in the proportion of households
incurring o o p expenses narrowed down
during the five-year period. An increase
in the proportion of households report­
ing o o p expenses is more pronounced in
the rural than urban areas of the coun­
try. This increase in this proportion noted
here could be largely due to two reasons:
(1) a larger share of households/persons
sought medical care in 2009-10 than in
2004-05, due to improvements in access
to healthcare and/or (2) a rise in the share
of hospitalisation care providers where
o o p expenses are unavoidable, due to
marginalisation of public hospitals,
growth of the private healthcare sector
and promotion of public-private partner­
ships. This issue cannot be settled due to
the absence of information on r s b y par­
ticipation, the household/individual lev­
el risk of hospitalisation and the source
of healthcare provider in the n s s o sur­
vey that has been analysed. However the
authors seem to be in a hurry to attribute
every increase in burden of hospitalisa­
tion expenses to r s b y inefficiency.
As is known, the healthcare sector is
one of the rapidly growing sectors in
80
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 192.190.180.53 o n T u e , 06 N o v 2018 23 :58:17 U T C
India. Apart from medical inflation restricted to that part of the analysis in
which is a global phenomenon, the in­ the paper o o p expenses on hospitalisa­
crease in o o p expenses on hospita­ tion. The manner in which a flagship
lisation is mainly triggered by the ever programme of the government like r s b y
increasing demand for modern medical has been evaluated by the authors was
care which was once physically and unfair not only to r s b y but also to the
financially inaccessible to a vast majority rich national-level data sets. The authors
of the population in the country. In the should have tested the significance as
present health system setting, the well as confidence interval of differen­
tials observed and should have attempt­
ed standardised comparisons before
2004-05 2009-10
arriving at such strong conclusions. Other­
Urban Total Rural Urban Total
wise the paper will send wrong sig­
6.4 4.4 8.6 9.8 8.9
nals to public health planners (Planning
10.5 6.7 9.1 12.8 10.2
9.8 8.1 11.2 15.7 12.6 Commission 2012) who are still search­
10.0 10.5 15.4 16.3 15.6 ing for strategies and models for provid­
12.2 16.3 19.9 15.3 18.5 ing universal access to essential health­
9.8 9.2 12.8 14.0 13.2 care and medicines in the country.
1.9 3.7 2.3 1.6 2.1
45,346 1,24,644 59,097 41,697 1,00,855 R E F E R E N C E S ________________________________________
Dror, D M a n d S V ella k k a l (2012): “Is R SB Y Plat­
fo r m to I m p le m e n t in g U n iv e rsa l H o s p ita l
demand for healthcare will increase in
, Indian Journal of Medical Research,
In s u r a n c e ”
the coming years with an increase in ex­ 135:56-63.
posure to modern medical care. As a re­ Jain, N (2011): “
A D e s c r ip tiv e A n a ly sis o f th e R SB Y
D a ta fo r th e F irst P h a se ”in P a la c io s e t a l (ed.),
sult, the health conditions which were India's Health Insurance Scheme for the Poor:
probably undetected in the earlier years Evidence from Early Experience of RSBY (N ew
D elh i: C e n tre fo r P o lic y R esearch ), p p 38-64.
due to a lack of access to medical facili­
N a tio n a l S a m p le S u rv e y O ffic e (2006): “M o rb id ity
ties and which the public considers seri­ H e a lth C a r e a n d C o n d it io n o f A g e d ”
, R eport
ous and seek medical attention have in­ No 507 (60/25/0/1) ( N ew D e lh i: N a tio n a l
S a m p le S u r v e y O ffice), M in is t r y o f S ta tis tic s
creased mainly due to expansion of a n d P r o g r a m m e Im p le m e n ta tio n , G o v e r n m e n t
healthcare markets. The authors have o f India.
P la n n in g C o m m is s io n (2012): “R e p o r t o f th e S te e r­
adopted a narrow view of attributing
in g C o m m it t e e o n H e a lth fo r T w e lfth Five-Year
every change in o o p expenses on hospi­ P lan ”, H e a lth D iv isio n , P la n n in g C o m m is s io n
talisation to r s b y ineffectiveness. The o f India, N e w D elh i.
P u b lic H e a lth F o u n d a t io n o f In d ia (2011): “
A C r iti­
changes noted in o o p expenses should c a l A s s e s s m e n t o f E x is t in g H e a lth In s u ra n c e
be analysed with respect to the broader M o d e ls in In d ia ”
, a r e p o r t su b m itt e d t o th e
P la n n in g C o m m is s io n , G o v e r n m e n t o f India,
contextual changes in the health system
N e w D elh i.
including the r s b y . S elvaraj, S a n d A K K aran (2012): “W h y P u blicly-
The r s b y covers hospitalisation ex­ F in a n ce d H e a lth In s u r a n c e S c h e m e s A re
In e ffe c tiv e in P r o v id in g F in a n cia l R isk P r o te c ­
penses of households and that was the , Economic
t io n ” & Political Weekly, V ol XLVII
reason why this rejoinder has been (11): 61-68.
REVIEW OF RURAL AFFAIRS
January 28,2012
Agrarian Transition and Emerging Challenges - P K Viswanathan, Gopal B Thapa,
in Asian Agriculture: A Critical Assessment Jayant K Routray, Mokbuf M Ahmad
Institutional and Policy Aspects of Punjab Agriculture: A Smallholder Perspective - Sukhpal Singh
Khap Panchayats: A Socio-Historical Overview - Ajay Kumar
Rural Water Access: Governance and Contestation
in a Semi-Arid Watershed in Udaipur, Rajasthan - N C Narayanan, LalithaKamath
Panchayat Finances and the Need for Devolutions from the State Government - Anand Sahasranaman
Temporary and Seasonal Migration:
Regional Pattern, Characteristics and Associated Factors - Kunal Keshri, R B Bhagat
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
may 5, 2012 v o l x l v ii n o 18 IM S Economic & Political weekly
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
 CURRENT STATISTICS EPW Research Foundation
The share ofthe public debt of the government of India inthe formof internal and external loans intotal liabilities decreased from 74.4%in2000-01 to64.9% in2006-07, but consistently increased thereafter
to a budgeted 78.0% in 2012-13. During the same period, the share of contractual savings such as provident funds and small savings, after increasing from 25.6% to 35.1%, declined to touch a low of 22.0%.
Public debt asa share of gross domestic product at market prices went upfrom 36.8% in 2010-11 to a budgeted 38.6% in 2012-13.
Macroeconomic Indicators
Variation (%): Point-to-Point
Index Numbers of Wholesale Prices*
(BaseYear:2004-05 = 100)A Weights March Over Full Financial Year
2012 Month 2011-12 2010-11 2009-10 2008-09 2007-08
2006-07 2005-06 2004-05® 2003-04@
All Commodities 100.0 159.8 0.9 6.9 9.7 10.4 1.6 7.7 6.7 5.7 5.4 5.4
PrimaryArticles 20.1 206.3 2.4 9.6 13.4 22.2 5.4 9.6 12.8 4.3 1.7 1.7
FoodArticles 14.3 196.8 2.3 9.9 9.4 20.6 8.0 5.6 13.2 5.0 3.8 3.8
Non-FoodArticles 4.3 189.1 1.3 -1.2 27.3 20.4 0.6 16.3 10.6 -3.5 -7.0 -7.0
Minerals 1.5 343.0 4.1 28.6 15.2 37.9 -2.8 28.2 13.8 18.5 - -
Fuel &Power 14.9 174.0 0.5 10.4 12.5 13.8 -3.4 7.4 1.1 17.3 10.4 10.4
Manufactured Products 65.0 142.2 0.4 4.9 7.4 5.3 1.7 7.1 6.3 3.5 5.0 5.0
FoodProducts 10.0 153.7 0.2 5.9 2.4 15.1 6.3 8.4 4.3 2.4 1.9 1.9
Food Index(computed) 24.3 179.1 1.6 8.5 6.8 18.5 7.3 6.7 9.6 3.9 3.0 3.0
All Commodities(Monthlyaveragebasis) 100.0 155.9 - 8.8 9.6 3.8 8.1 4.7 6.6 4.5 3.7 3.7
AThedateoffirst releaseofdata basedon2004-05 serieswef 14September 2010.@Full fiscal year variationisbasedon 1993-94.
* Consequent uponthe decisionofthe Cabinet CommitteeonEconomicAffairs(CCEA) heldon24January2012, weeklyreleaseofWholesalePriceIndex(WPI) forthe commodities/itemsundertheGroups"PrimaryArticles"and
"Fuel andPower”isdiscontinuedwith immediateeffect. WPI shall, henceforth, bereleasedonamonthlybasisonly. The lastWeeklyWPI fortheweekending 14January2012._______________________________
_____________________________________________________________________________________ Variation (%): Point-to-Point________________________________
Cost of Living Indices Latest Over Over 12Months Fiscal Year SoFar Full Fiscal Year
Month 2012 Month 2011 2010 2011-12 2010-11 2010-11 2009-10 2008-09 2007-08 2006-07 2005-06
IndustrialWorkers(IW) (2001=100) 1992 0.5 7.6 8.8 7.6 8.8 8.8 ' 14.9 8.0 7.9 6.7 5.3
Agricultural Labourers(AL) (1986-87=100) 6253 0.6 6.8 9.1 6.8 9.1 9.1 15.8 9.5 7.9 9.5 5.3
Note:Superscript numeral denotes month towhichfigure relates,eg, superscript 2standsfor Februaryand 3standsfor March.
Variation
Monty and Banking (Rscrore) 6 April Over Month Year-on-Year Fiscal Year SoFar Full Fiscal Year
2012 2012-13 2011-12 2011-12 2010-11 2009-10
MoneySupply(M3) 7547820 264780(3.6) 908230(13.7) 203750(2.8) 135470(2.1) 839950(12.9) 901410(16.1) 807898(16.8)
Currencywith Public 1037790 5880(0.6) 105940(11.4) 11200(1.1) 20020(2.2) 114760(12.6) 144340(18.8) 102040(15.3)
DepositsMoneywith Banks 6507140 258040(4.1) 801180(14.0) 192730(3.1) 117340(2.1) 725790(13.0) 757220(15.7) 707607(17.2)
ofwhich: Demand Deposits 731670 61510(9.2) 70180(10.6) 31460(4.5) -61360(-8.5) -22640(-3.1) 4880(0.7) 129282(22.0)
Time Deposits 5775470 196530(3.5) 731000(14.5) 161270(2.9) 178700(3.7) 748430(15.4) 752340(18.3) 578325(16.4)
Net BankCredit toGovernment 2391510 27500(1.2) 455400(23.5) 30730(1.3) -47780(-2.4) 376890(19.0) 314700(18.9) 391857(30.7)
BankCredit toCommercial Sector 5033840 226250(4.7) 786710(18.5) 83560(1.7) 10450(0.2) 713600(16.8) 745280(21.3) 476507(15.8)
Net ForeignExchangeAssets 1513560 33660(2.3) 122210(8 .8) -10110(-0.7) -1990(-0.1) 130330(9.4) 111880(8.7) -70724(-5.2)
BankingSector'sNet Non-Monetary Liabilities 1405200 23020(1.7) 457470(48.3) -99560(-6.6) -174800(-15.6) 382230(34.1) 271890(32.0) -9012(-1.0)
of which:RBI 582200 24630(4.4) 225580(63.3) -15330(-2.6) -11730(-3.2) 229180(62.2) 66710(22.1) -86290(-22.2)
ReserveMoney(13 April 2012) 1417570 26410(1.9) 59410(4.4) -9670(-0.7) -18660H.4) 50420(3.7) 220240(19.0) 168582(17.1)
Net RBI Credit to Centre 516920 24680(-) 143680(-) -11760(-) , -20790(-) 134650 180680 151589
ScheduledCommercial Banks(6 April 2012)
Aggregate Deposits 6095040 241670(4.1) 762800(14.3) 191380(3.2) 124260(2.4) 695680(13.4) 715150(15.9) 658720(17.2)
Demand 654200 55220(9.2) 68930(11.8) 31400(5.0) -56430(-8.8) -18900(-2.9) -3900(-0.6) 122515(23.4)
Time 5440840 186450(3.5) 693870(14.6) 159980(3.0) 180700(4.0) 714590(15.6) 719050(18.7) 536195(16.2)
Investments (for SLRpurposes) 1811890 46760(2.6) 240090(15.3) 75250(4.3) 70180(4.7) 235020(15.7) 116870(8.4) 218340(18.7)
BankCredit 4693570 206890(4.6) 740270(18.7) 81940(1.8) 11210(0.3) 669540(17.0) 697300(21.5) 469241(16.9)
Non-FoodCredit 4614110 211270(4.8) 710740(18.2) 83780(1.8) 25560(0.7) 652520(16.8) 681510(21.3) 466961(17.1)
Commercial Investments 168810 -2840(-1.7) 29220(20.9) -2710(-1.6) -8010(-5.4) 23920(16.2) 29529(25.0) 11654(11.0)
Total BankAssistancetoComml Sector 4782920 208430(4.6) 739960(18.3) 81070(1.7) 17550(0.4) 676440(16.8) 711039(21.5) 478615(16.9)
Note: Government Balancesason31 March2012arebeforeclosureofaccounts.
Index Numbers of Industrial Production February* Fiscal Year SoFar Full Fiscal Year Averages
(Base2004-05=100) Weights 2012 2011-12 2010-11 2010-11 2009-10 2008-09 2007-08 2006-07
General Index 100.00 174.9(4.1) 168.7(3.5) 163.0(8.1) 165.4(8.2) 152.9(5.3) 145.2(2.5) 141.7(15.5) 122.6(12.9)
Mining 14.157 134.8(2.1) 126.5-(2.1) 129.2(5.8) 131.0(5.2) 124.5(7.9) 115.4(2.6) 112.5(4.6) 107.6(5.2)
Manufacturing 75.527 186.5(4.0) 179.3(3.7) 172.9(8.7) 175.6(8.9) 161.3(4.8) 153.8(2.5) 150.1(18.4) 126.8(15.0)
Electricity 10.316 145.1(8.0) 148.4(8.7) 136.5(5.4) 138.0(5.6) 130.8(6.1) 123.3(2.8) 120.0(6.4) 112.8(7.3)
* Indicesforthe month areQuickEstimates.
Fiscal Year So Far 2011-12 End of Fiscal Year
Capital Market 2009-10
20 April 2012 Month Ago Year Ago Trough Peak Trough Peak 2011-12 2010-11
BSESensitive Index (1978-79=100) 17374(-10.8) 17316 19471(11.5) 17095 17597 15175 19702 17404(-9.8) 19445(10.9) 17528(80.5)
BSE-100 (1983-84=100) 9176(-9.8) 9121 10170(9.5) 9050 9296 7805 10262 9164(-8.6) 10096(8.6) 9300(88.2)
BSE-200 (1989-90=100) 2160(-10.2) 2147 2407(9.1) 2132 2190 1824 2427 2158(-8.8) 2379(8.1) 2200(92.9)
S&P CNX Nifty (3 Nov 1995=1000) 5291(-9.6) 5275 5852(11.9) 5207 5359 4544 5912 5296(-8.5) 5834(11.1) 5249(73.8)
Skindia GDRIndex(2 Jan1995=1000) 2257(-26.7) 2440 3080(9.7) 2239 2405 1875 3441 2316(-26.5) 3151(9.3) 2883(134.2)
Net Fll Investment in (US$ Mn Equities) - period end 110574(7.0) 110441 103313(32.0) - - - 110465(9.1") 101454(31.5) 77159(43.1)
February* Fiscal Year SoFar Full FiscalYear
Foreign Trade 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05
2012 2011-12 2010-11 2010-11
Exports: Rscrore 121040 1274840(27.0) 1003785(33.2) 1118823(32.3) 845534(0.6) 840754(28.2) 655863(14.7) 571779(25.3) 456418(21.6) 375340(27.9)
US$mn 24618 267410(21.4) 220241(39.0) 245868(37.5) 178751(-3.5) 185295(13.6) 163132(29.0) 126361(22.6) 103091(23.4) 83536(30.8)
Imports: Rscrore 195595 2069643(35.3) 1529295(24.4) 1596869(17.1) 1363736(-0.8) 1374434(35.8) 1012312(20.4) 840506(27.3) 660409(31.8) 501065(39.5)
US$mn 39782 434160(29.4) 335502(29.7) 350695(21.6) 288373(-5.0) 303696(20.7) 251654(35.5) 185749(24.5) 149166(33.8) 111517(42.7)
Non-POL USSmn 27122 301599(24.9) 241491(33.9) 249006(23.7) 201237H2) 210029(22.2) 171940(33.5) 128790(22.4) 105233(37.1) 76772(33.2)
BalanceofTrade: Rscrore -74555 -794803 525510 -478047 -518202 -533680 -356449 -268727 -203991 -125725
USSmn -15164 -166750 -115261 -104827 -109621 -118401 -88522 -59388 -46075 -27981
* Provisional figures.
Foreign Exchange Reserves (excluding VariationOver
13 April 15April 31 Mar FiscalYear SoFar Full Fiscal Year
gold but including revaluationeffects)
2012 2011 2012 Month Ago Year Ago 2012-13 2011-12 2011-12 2010-11 2009-10 2008-09 2007-08
Rscrore 1353460 1255352 1353370 25730 98110 90 10068 108086 73038 -57826i 33975 359500
USSmn 263217 281975 264538 -692 -18758 -1321 3076 -14361 19208 182641 -57821 107324
Figures in brackets are percentage variations over the specified or over the comparable period of the previous year. (-) not relevant.
[Comprehensive current economic statistics with regular weekly updates, as also the thematic notes and Special Statistics series, are available on our website: http://www.epwrf.in].

Economic & Political weekly 13323 may 5, 2012 v o l x l v ii n o 18 8l

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 192.190.180.53 o n T u e , 06 N o v 2018 23 :58:18 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
S T A T IS T IC S :— ~ -. ■
■ -

A ssets a n d L iabilities o f G ov ern m en t o f India (Rscrore)

A t t h e En d of:

1 9 5 0 -5 1 1 9 9 0 -9 1 2 0 0 0 -0 1 2 0 0 5 -0 6 2 0 0 6 -0 7 2 0 0 7 -0 8 2 0 0 8 -0 9 2 0 0 9 -1 0 2 0 1 0 -1 1 2 0 1 1 -1 2 2 0 1 2 -1 3

A c c o u n ts A c c o u n ts A c c o u n ts A c c o u n ts A c c o u n ts A c c o u n ts A c c o u n ts A c tu a ls A c tu a ls R ev ise d Budget

Liabilities
A Public Debt 2054 185529 869643 1484001 1647691 1911682 2142887 2462422 2824754 3370361 3921756
(71.7) (59.0) (74.4) (65.7) (64.9) (67.4) (67.8) (69.8) (71.7) (75.4) (78.0)
A.1 Internal Debt 2022 154004 803698 1389758 1544975 1799651 2019841 2328339 2667115 3202411 3743658
(70.6) (49.0) (68.8) (61.5) (60.9) (63.4) (63.9) (66.0) (67.7) (71.7) (74.5)
1.1 Market Stabilisation Scheme 0 0 0 29062 62974 170554 88773 2737 20000
0.3) (2.5) (6.0) (2.8) (0.1) (0.4)
1.2 Market Loans 1445 70566 428793 862370 972801 1104564 1338194 1746619 2072033 2508447 2987447
(50.4) (22.4) (36.7) (38.2) (38.3) (38.9) (42.4) (49.5) (52.6) (56.1) (59.4)
1.3 Special Securities includingthose 358 67101 123898 105307 101807 92807 88307 78307 78307 78307 78307
converted into marketable securities (12.5) (21.3) (10.6) (4.7) (4.0) (3.3) (2.8) (2.2) (2.0) (1.8) (1.6)
1.4 Total Treasury Bills 0 8031 27615 91489 112901 140382 239979 230210 237969 354053 363053
find: 14,91,182 and 364 days) (0.0) (2.6) (2.4) (4.0) (4.4) (4.9) (7.6) (6.5) (6.0) (7.9) (7.2)
1.5 Compensation and other bonds 7 1739 7278 72760 62092 71325 47506 38732 31005 25151 15138
(0.2) (0.6) (0.6) (3.2) (2.4) (2.5) (1.5) (1.1) (0.8) (0.6) (0.3)
1.6 Securities issuedto IFIs 213 6566 22598 25152 25798 24719 23085 24483 29315 28271 70333
(7.4) (2.1) (1.9) (1.1) (1.0) (0.9) (0.7) (0.7) (0.7) (0.6) (1.4)
1.7 Securities against Small Savings 0 0 193516 203618 206602 195299 193997 207252 218485 208183 209380
(0.0) (0.0) (16.6) (9.0) (8.1) (6.9) (6.1) (5.9) (5.5) (4.7) (4.2)
A.2 External Debt (balance asper bookvalue) 32 31525 65945 94243 102716 112031 123046 134083 157639 167950 178098
(1.1) (10.0) (5.6) (4.2) (4.0) (3.9) (3.9) (3.8) (4.0) (3.8) (3.5) .
B Other Liabilities 811 129029 298898 776144 890905 925743 1016291 1067538 1114020 1098353 1103616
(28.3) (41.0) (25.6) (34.3) (35.1) (32.6) (32.2) (30.2) (28.3) (24.6) (22.0)
B.1 National Small Savings Fund 337 50100 54620 413499 468010 478290 470141 521194 568614 562614 562614
(11.8) (15.9) (4.7) (18.3) (18.4) (16.9) (14.9) (14.8) (14.4) (12.6) (11.2)
B.2 State Provident Funds 95 11670 41724 66262 71440 75330 83377 99433 111947 121947 133947
(3.3) (3.7) (3.6) (2.9) (2.8) (2.7) (2.6) (2.8) (2.8) (2.7) (2.7)
B.3 Other Accounts 16 45336 144020 186921 220160 245081 334091 327457 304697 286164 271971
(0.6) (14.4) (12.3) (8.3) (8.7) (8.6) (10.6) (9.3) (7.7) (6.4) (5.4)
B.4 Reserve Fundsand Deposits 363 21922 58535 109462 131295 127043 128682 119453 128762 127628 135084
(12.7) (7.0) (5.0) (4.8) (5.2) (4.5) (4.1) (3.4) (3.3) (2.9) (2.7)
Total Liabilities 2865 314558 1168541 2260145 2538596 2837425 3159178 3529960 3938774 4468715 5025372
Assets (Capital Investment and Loans)
A Capital Outlay 1488 122016 337930 543047 603282 722740 800235 900878 1038285 1165625 1362485
(51.9) (38.8) (28.9) (24.0) (23.8) (25.5) (25.3) (25.5) (26.4) (26.1) (27.1)
A.1 General Services 497 31023 117811 239862 276278 317830 363583 421899 492832 567672 659632
(17.3) (9.9) (10.1) (10.6) (10.9) (11.2) (11.5) (12.0) (12.5) (12.7) (13.1)
of which: Defence Services 261 24027 107994 220348 254177 291638 332557 383669 445725 511869 591448
(9.1) (7.6) (9.2) (9.7) (10.0) (10.3) (10.5) (10.9) (11.3) (11.5) (11.8)
A.2 Social Services 26 3749 10211 10559 11709 13474 16867 20437 24533 28937 35923
(0.9) (1.2) (0.9) (0.5) (0.5) (0.5) (0.5) (0.6) (0.6) (0.6) (0.7)
A.3 Economic Services 965 87244 209908 292626 315295 391437 419785 458543 520920 567617 663766
(33.7) (27.7) (18.0) (12.9) (12.4) (13.8) (13.3) (13.0) (13.2) (12.7) (1 3 .2 )

ofwhich: Agriculture 8 4443 7508 7852 7945 8347 9166 9352 9676 10928 11689
(0.3) (1.4) (0.6) (0.3) (0.3) (0.3) (0.3) (0.3) (0.2) (0.2) (0.2)
Energy 0 21207 42589 55621 57299 57875 59065 61287 59437 62043 63000
(0.0) (6.7) (3.6) (2.5) (2.3) (2.0) (1.9) (1.7) (1.5) (1.4) (1.3)
Industry and Minerals 34 23715 34338 39854 42878 47872 50483 53012 54252 56971 60051
(1.2) (7.5) (2.9) (1.8) (1.7) (1.7) (1.6) (1.5) (1.4) (1.3) (1.2)
Railways 818 17119 35661 69846 77400 85535 95080 67420 130376 153376 177376
(28.5) (54) (3.1) (3.1) (3.0) (3.0) (3.0) (1.9) (3.3) (3.4) (3.5)
B LoansAdvanced bythe Central Government 221 114725 338651 622337 672862 676252 680035 703928 756219 741911 736521
net of Loan Recovery (7.7) (36.5) (29.0) (27.5) (26.5) (23.8) (21.5) (19.9) (19.2) (16.6) (14.7)
B.1 State Governments and UTs 196 74111 223390 158024 147656 146071 144805 144047 145019 146755 149311
(6.8) (23.6) (19.1) (7.0) (5.8) (5.1) (4.6) (4.1) (3.7) (3.3) (3.0)
B.2 Investment in Special State securities under Small Savings 0 0 60202 391302 452064 458892 460056 484262 527563 519430 506110
(0.0) (0.0) (5.2) (17.3) (17.8) (16.2) (14.6) (13.7) (13.4) (11.6) (10.1)
B.3 Public Sector Enterprises, etc 25 37877 51716 67459 67769 66272 69720 70304 78325 69887 74078
(0.9) (12.0) (4.4) (3.0) (2.7) (2.3) (2.2) (2.0) (2.0) (1.6) (1.5)
B.4 Others 1 2736 3344 5552 5373 5016 5454 5315 5313 5838 7021
(0.0) (0.9) (0.3) (0.2) (0.2) (0.2) (0.2) (0.2) (0.1) (0.1) (0.1)
Total Capital Outlay and Loans Advanced 1709 236740 676581 1165384 1276145 1398992 1480270 1604807 1794504 1907536 2099006
(59.6) (75.3) (57.9) (51.6) (50.3) (49.3) (46.9) (45.5) (45.6) (42.7) (41.8)
C Cash balances under MSS, 0 0 0 29062 62974 170554 88773 2737 0 0 20000
Total Capital Outlay and LoansAdvanced 1709 236740 676581 1194446 1339119 1569546 1569043 1607544 1794504 1907536 2119006
ind cash balance under MSS (59.6) (75.3) (57.9) (52.8) (52.8) (55.3) (49.7) (45.5) (45.6) (42.7) (42.2)
Excessof Liabilities over Capital Outlay and 857 77518 491660 1065399 1199177 1267580 1589835 1922116 2143970 2560878 2906066
Loansadvanced ind Cash balances under MSS (29.9) (24.6) (42.1) (47.1) (47.2) (44.7) (50.3) (54.5) (54.4) (57.3) (57.8)
Total (incl: amount duefrom Pakistanof Rs300 cr) 2865 314558 1168541 2260145 2538596 2837125 3158878 3529660 3938474 4468415 5025072
memo items:
Percentage of public debt to GDPat market prices (19.75) (31.65) (40.10) (40.18) (38.37) (38.33) (38.06) (38.13) (36.81) (37.82) (38.60)
Percentage growth in public debt (11.03) (16.02) (12.09) (14.91) (14.71) (19.32) (16.36)
Percentage growth inother liabilities (14.79) (3.91) (9.78) (5.04) (4.35) -(1.41) (0.48)
Percentage ofother liabilitiesto GDPat market prices (7.80) (22.01) (13.78) (21.01) (20.74) (18.56) (18.05) (16.53) (14.52) (12.32) (10.86)
Figures in brackets are percentages to total.
Source: G0l(2012), Receipt Budget, Ministry of Finance, 16 March.

82 may 5, 2012 v o l x l v ii n o 18 B 3Q Economic & Political weekly

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 BOOKS ON SOCIAL SCIENCE
Religion and Conflict in Modern South Asia
William G ould
This is one o f the first single author
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around the theme o f religious conflict. Based
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Shia Women: Muslim Faith and Practice
Diane D'Souza
This book sets out to examine the gendered
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David Lewis
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The International Ambitions of Mao and Nehru: National
Efficacy Beliefs and the Making of Foreign Policy
A n drew Bingham Kennedy
Why do leaders sometimes challenge, rather
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Ambitions o f M ao and Nehru , Andrew
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Community and Consensus in Islam: Muslim Representation in
Colonial India, 1860-1947
Farzana Shaikh
Community and Consensus in Islam , first
Community and
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. in Islam
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Chandra Mallampalli
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