Land Of(Missed)Opportunity

In spite of being endowed with fertile soil and a favourable agro-climatic condition, Bihar’s agricultural sector has remained short of cutting edge in recent times. Since the benefits of Five Year Plans couldn't reach the state, the total food grain production continues to stand below the minimum requirement. In the recent years, however, Bihar’s economy has shown signs of resilience, visible through the constructive approach towards development. Nevertheless, rural Bihar is not getting its due from the opportunities generated by rapid economic growth. This is because the languishing rate of agricultural growth caused by an inadequate support mechanism, asymmetric new wage rates followed by the rise in public spending and natural imbalances (such as floods and drought).

The general perception about the agricultural scenario in Bihar is that it can be the food bastion for India but the current state of affairs is not very encouraging on that front. The agriculture linked industries are not really working out and conventional farming is not generating profitable returns, which is delinking the productive cycle from traditional set of systems.

In the initial decades after Independence, agricultural productivity in Bihar was better compared to other states, but now it is trailing below the national average. Statistically, some achievements have been established on the scale of production with the state government stepping in but the lurking dangers from 'unnaturally high farming wage rates' and the 'dwindling size of land holding' are being ignored. The most worrying reality is the average size of a farm, which is 0.37 hectare or less; one of the lowest in India (according to The Planning Commission of India’s estimation, 2009). At this rate collective farming would remain the only option if farm land-fragmentation isn’t checked using a more effective, alternate mechanism, soon.

The bifurcation of Bihar in the year 2000 has made the role of the primary sector even more critical, as Jharkhand now houses most of the industries and the mineral resources. So, Bihar’s economic prospects strongly rely on agriculture. It is the most vital component of the state's socio-economic structure, as the sector provides 90 per cent of the rural population their livelihood. It also contributes to about one-third of the gross domestic product of the state, which is a staggering figure.

Over the last few decades, Bihar has witnessed remarkable agricultural development with the adoption of scientific methods, but shockingly such growth has been inequitable and imbalanced. The basic reason is the highly problematic land ownership pattern which, with some geographic variations, still persists in most parts of the Bihar. For example, with radical movements for land reform, north Bihar has a progressive system of land ownership as compared to south and central Bihar, where feudalism has not been uprooted. In other parts of Bihar, land reforms could not take off as the situation on the ground remains at status quo.

According to the National Sample Survey Organisation (NSSO-2003), marginal and small farmers, who constituted 96.5 per cent of the total landowning community, owned 66 per cent of land. The medium and large farmers, who constituted only 3.5 per cent of the landowning community, owned 34 per cent of the land. Of the latter, the large owners (constituting only 0.1 per cent of total) owned 4.63 of total land. In absolute terms, this 0.1 per cent of large owners owned a little over eight lakh hectares or 19.76 lakh acres of land-a big size of land in a land starved state. The wrong landholding pattern hampers the healthy prospects of agricultural progress in the state and creates a skewed picture of economic growth altogether.

With a high density of population, the absolute level of poverty continues to be high in Bihar, making it one of India's poorest states. Both rural poverty at 42.1 per cent and urban poverty at 34.6 per cent were significantly higher than the national average (28.3 per cent for the rural areas and 25.7 per cent for the urban areas) during 2004-05 (Government of Bihar 2008-09). As a result, marginal land holders, individual labourers and casual non-farm labour are poor. The politics of state governance could be attributed as the force behind such pathetic arrangements, where 'non-issues' have been given prominence over basic livelihood issues: the irresponsible phase — from 1990-2004 — was the height of such follies.

Social security systems such as government educational institutions, public healthcare facilities and public distribution system have improved in recent years and when combined with the phenomenon of migration, as powerful means of social mobility, engenders mixed outcomes for rural Bihar. Migration was once a suitable option in Bihar's agrarian society, empowering the poor against exploitation as well as helping them escape the ironies of economic distress and caste exploitation in their home state. Things have changed a little in the last eight years and no longer are the temporary migrants from Bihar — who hitherto worked as farmhands for meagre wages —a cheap source of labour.

This would have counted as constructive change but greater social mobility is not enhancing entrepreneurial zeal in the state. The new agrarian atmosphere is in fact killing the conventional productive mechanism due to the unaffordable cost of services and goods, which has surfaced in recent years. Besides the effects of public spending, the state's rapidly growing housing upsurge poses a severe challenge to farming and related activities. We all know, the days of ‘kachha’ housing are over but the way unplanned construction is being given the name of 'progress' blurs the real state of affairs. The truth of matter is that the growth of other sectors comes at the cost of farming and allied occupations.

Today, the ground realities of rural Bihar are hardly being noticed by institutions or experts working on policy matters: their placid demeanour is largely shaped through the 'bandwagon' of applause for changing Bihar, even where it is changing in an unhealthy manner. It is true that now manual labourers from Bihar can negotiate better for their services but it is disappointing that 'money from outside' at cost of local productive engagements is being preferred. This damages the natural/social fabric, and distances the state from the control of economic policies. It further attracts the wrath of cynical regional biases towards these 'unsolicited migrants' from Assam to Maharashtra.

Worse than the national average, Bihar has received attention from self proclaimed 'policy think tanks' and genuine research organisations, supported by the government. In the absence of proper statistical data and insights, the local government officials have less to say 'on record' in response of any queries made about the pathetic agricultural conditions in state. Bihar government's initiatives look progressive, but there is a huge discrepancy between what was promised and what has been delivered. So far, against the claims of near about 200MOUs related to industrial set-ups in Bihar (including agro-processed industries), few are actually working.

Bihar could have retrieved in well shape, a losing co-operative system through channelizing investments in the cash generating agri-businesses like, fisheries, sugar production, fruits farming, dairy etc, alas, the tall claims were mostly forgotten and north Bihar remained without major industries.. The two prominent and erstwhile industrialised districts, Darbhanga and Madhubani have more than a dozen dysfunctional industrial infrastructures, where once paper, spinning products and sugar were produced on a large scale. These industries were based on local agricultural inputs and hence were supported local farming and enterprise. At that time farmers were not in a wretched condition although their reliance on external money was negligible.

Despite these impediments, rural Bihar is likely to be less gloomy than other distressed terrains of the country, as the people of the state are witnessing change in a positive direction. In absolute terms, Bihar has a long road to walk to generate balanced growth and attain its lost edge in agriculture, besides acquiring a continuing flow of public spending and attracting private investments.

The National Council of Applied Economic Research’s agricultural outlook and analysis report states: "The global scenario for the food commodities has also been affected by the adverse weather conditions. The estimates by FAO, USDA and other international agencies indicate decline in the world production of grains in 2012-13 as compared to the previous year." So, time is ripe now for Nitish Kumar’s government to focus on core areas to save the state’s agriculture from a vicious tailspin.

Atul Kumar Thakur
(The author works on policy issues. He can be reached at atul_mdb@rediffmail.com
The views expressed here are personal)
(Published in Businessworld,19December2012)

The visionary’s World

Book Review: Non-fiction/cinema-Deep Focus: Reflections on Cinema by Satyajit Ray (edited by Sandeep Ray), Harper Collins, 171 pp; Rs550 (Hardback)
There is unanimity among different sections of polemists who regard Satyajit Ray as the man who heralded realism in Indian cinema and whose contribution is strongly felt in India and the world; not only in the cinematic arena but on the overall movement of realistic art. Ray was a thinker, writer and gifted speaker, which made him distinctively creative and appealing to different class of observers. The first writing proposal Ray received was from P.C. Mahalnobish, renowned economic planner of free India, who at that time was heading the Indian Statistical Institute (ISI) in Calcutta. Impressed by the young economics student, Mahalanobish offered Ray a regular column in ISI’s journal. This marked the beginning of the latter’s tryst with writing.

At a different point in time, Rabindranath Tagore had induced Ray’s mother to send him to receive art education at Shantiniketan, which Ray happily joined to live under the shadow of Tagore rather than earning a formal recognition in art. After Tagore’s death, he felt living in the campus was purposeless and thus left his art training in the final year in favour of travelling across India with meagre resources but the rich company of a few likeminded friends. Free humane spirits always drove him more than anything else; Ray, like Tagore, remained attached to the beautiful attributes of life and works. As a filmmaker, he met the acclaim he deserved though his contributions as a writer remained subdued under the deep canopy of the former.

It was in 1976, when Ray published his first collection of articles, Our Films, Their Films that critics started to take notice of his sublime, creative side. Our Films, Their Films is one of the most memorable collections of Satyajit Ray's writings, besides My Life, My Work, a five-part lecture delivered by him in Calcutta in English in 1982, and Under Western Eyes, an essay about distorted European and American perceptions of Indian culture as well as Indian cinema, which appeared in Sight and Sound in 1982 and can be called Ray’s finest ever piece in depth and vision.

Deep Focus ,which comes after an abnormal hiatus, is a rich anthology of Satyajit Ray's writings, which includes, Under Western Eyes and twenty one other previously published pieces, compiled under the editorship of his son Sandip Ray. The range of pieces is diverse in length and arc from the subtle to the substantial. They focus on a spectrum of subjects: from the craft of filmmaking and cinema as an art to Ray's childhood memory of an accidental family visit to a “soft porn” Bengali silent film as well as the unusual experience of sitting on a Soviet film festival jury. The book also includes personal responses from Ray’s fellow directors such as Charlie Chaplin, Jean Godard, Ingmar Bergman, Akira Kurosowa and others.

This compendium of Ray’s (literary) work is an impressive feat despite the glaring omission of some of his finest write-ups: Speaking of Films, Ordeals of the Alien, Why do I make films?, and his memorable tribute to Rabindranath Tagore, written in 1991 for the Guardian, which was incidentally, the last article written by Ray in English. However, this book genuinely maintains ----as is the tradition with other earlier Ray centric works—the intricate details of Ray’s cinema through pictorial representation and by recalling the behind the scene catalysts such as Banshi Chandragupta, art director, Subrata Mitra, cameraman and others who assisted Ray very firmly. Under his restless natural urge to depict scene and sensibility, Ray’s star casts were naturally fit to act according to his creative imagination; whether or not the same actors would have well with other directors is a discussion that falls within the realm of conjecture .

Undoubtedly, Ray’s influence in Bengal stands next only to Tagore. This marks the continuance of the Bengali middle class’ articulate fascination with culture and literature very actively; even the long static rule of Left front hardly derailed them from the special works of Bengali cinema, literature and art. On one level, it is satisfying, if not gratifying, to have the legend’s influence so closely down even to the bottom social level but it simultaneously also affirms the blockade of path breaking productions in literature, art or cinema from Bengal. That’s something that cannot be sidelined as a momentary affliction that will soon wither away.

Ray was against any such conformism that prevented looking at retrospective works in new light, new approaches; his writings in this book or his vision across his works exemplify this. He transcended from economics to arts as an academic learner and shifted from his professional overtures with the then leading advertising agency, D.J.Keymer (Now, Oglivy &Mather) towards making realistic Bengali cinema which reveals his dynamism and self discipline. The essays in the present volume highlight, what was not ideal with cinema, society or with the overall systemic structure during the lifetime of Ray while his work continues to be open to varied inferences by critics and intellectuals.

Deep Focus would prove to be a prominent source of reference for all those who love cinema and wish to acquaint themselves with Ray’s vision on different themes, in a different timeframe. If the respective countries (France,Japan and Italy) could be proud on Jean Renior, Akira Kurosowa and Vittorio De Sica, India too could nominate some of the most epoch making cinema makers from her land. But in any case, Ray would be the ranked first and his works would serve to know about India in making and complete totality. Ray mortally departed at dawn of economic liberalisation in India. Twenty years down the lane, all spheres are in laissez faire mode, whereas Satyajit Ray’s idealism or shrewdness faces the risk of oblivion, alas.
Atul Kumar Thakur
June 16, 2012, Saturday, 2012, New Delhi
Email: summertickets@gmail.com
(Published in Businessworld,June5,2012/ http://www.businessworld.in/businessworld/businessworld/content/Visionary%E2%80%99s-Worldview.html )

In Times of Change

The recovery from the chronic global slowdown is only partially complete in both developed and developing countries. However, developing economies are better off depending on local conditions and medium-term productivity growth rather than the large, globally integrated, influential forces that dominated economic activity before the financial crisis, and still play an important role in moulding global regulatory policies. The robust growth registered in emerging economies in the last decade has thwarted suspicions regarding these blocks. Yet, several tensions and external events have the potential to disrupt the process of development.

Output is expected to come in stronger than anticipated in performing economies. The other case could be that very strong speculative capital flows that characterised the third quarter of 2010 may return. Either scenario could potentially accentuate inflationary pressures in the global economy: both those emanating from commodity markets and those coming from increasingly binding capacity constraints in a number of emerging markets. In such a scenario, which pre-supposes that policy tightening efforts underway are not sufficient to rein in demand, authorities would be obliged to tighten more aggressively in 2012, thus leading to a more pronounced slowdown in 2013.

The big dilemma confronting democratic governments is the choice between bailouts and debt waive off. Undoubtedly, capitalist prudence orders for the former. Often bailouts occur more frequently than mass waivers of debt, albeit India presents little difference with its distinct polity and populist commitments. Indeed, complete financial recovery could be a desired endgame, though conquering it would be a pipedream under the present circumstances in which regulators, governments and financial institutions are functioning across powerful economies.

Moreover, high fiscal deficits and rising sovereign debt pose medium-term challenges to a wide-range of OECD countries. So is it time for top rank global policy makers to acknowledge this epoch making economic shift in favour of emerging economies and start sending telepathic connections across the world?

Consumption Conundrum
The global economy has grown over the decades by relying heavily on American consumption and policy dominance (good or bad). This intensified with the disintegration of the USSR in 1991 as it resulted in the demise of an alternative ideological block. The structural force behind large US consumption has been a significant middle class. The middle class is an ambiguous social classification, broadly reflecting the ability to lead a comfortable life. But the current downturn has brought this process to a halt. US households are saving again in an effort to rebuild lost wealth. The consensus forecast is that this will be a lasting effect of the global financial crisis.

How can the world economy fill this void in global demand brought on by the retrenchment of the American consumer class? Naturally, the emerging middle class in China, India and other populous countries are moving to become the next global consumers under the changed set of conditions. But the policy support to achieve such a rebalancing is not easy in these countries facing different lacunas. In short, Asian consumption is tied, according to many analysts, to long-term institutional changes.

Shifting Nexus Of Power
At this decisive phase, as economies in Sub-Saharan Africa and the Middle East develop and open up to trade, links between Asia, the Middle East, and Africa are expected to grow further. Economic integration between these regions and the emergence of south-south trade will certainly result in the formation of influential trade hubs. The trade of the future will be determined by the availability of cheap resources and the destination of final demand; this would be a big accomplishment for these hitherto tail-spinning economies. Big corporations from the developed economies have already begun to question whether the challenges of outsourcing their production processes outweigh the benefits of producing locally. In this respect, Africa and the Middle East offer both low-cost production capabilities as well as a rapidly growing domestic market.
It is becoming rather obvious that China may be losing its status as the "manufacturing leader." Cost economics that have long worked in China's favour have come full circle: domestic wages are on the rise, eroding much of the cost arbitrage offered to foreign companies. Even Chinese companies are affected as improving living conditions in the hinterland discourage potential migrants from seeking work in urban coastal provinces. Furthermore, an aging population in the next decade will likely weigh down labour supply and impact wage competitiveness. As Chinese production moves up the value chain, workers are demanding higher wages, better working conditions, and added welfare benefits. Thus, rising labour costs, along with pressure to loosen control on its exchange rate, could pose a serious threat to China's international competitiveness if productivity does not correspondingly improve.

Intermediate production, rather than locally produced finished goods, as an economic structure presents immense opportunities for emerging markets to develop specific capabilities and capture a bigger share of the supply chain. From a company's perspective, an emerging trade network with a wide portfolio of capabilities allows for diversification in the supply chain rather than extreme reliance on a single country whose competitiveness may be decreasing.

Nonetheless, China will remain an important, if not dominant, player in the future. The country's burgeoning middle class is set to become more affluent and boost consumption levels in the next decade. The head of emerging markets at Morgan Stanley, Ruchir Sharma's newly published book, Breakout Nations: In pursuit of new economic miracles gives some lucid views about the new wave of competency coming from the side of emerging economies.

Challenges On Home Ground
The cheap flow of foreign capital had made Asian economies such as China and Japan exclusively powerful in the region for a long time before opening of other economies, primarily India. But lately both Chinese and Japanese economies are under excessive strain because of their over integration with western nations. The case with India is different because liberalisation took place later and with active regulatory restraints.

Raghuram Rajan in his remarkable work, Fault Lines mentions India's growing income inequality and the dangers that a social underclass poses to the country's economic future. His strong emphasis on the ills of maturing cronyism in India's power centre is worthy enough to be considered as a grave threat to the essence of India's constitutional mandate. Rajan is right in pointing out the growing numbers of Indian billionaires are mostly products of networking rather than enterprise.

For the last several months, the Indian economy has been consistently juggling between controlling inflation and maintaining robust economic growth. In order to control spiralling inflation, the Reserve Bank of India chose to sacrifice growth in order to check the inflation. The 20-month period, until October 2011, of rising interest rates has slowly but surely put the brakes on economic growth.

For keeping alive the basic mandate of India's growth, the wave of policy/regulatory laxes need to be checked at any cost and synergising efforts should be made to retrieve Indian economy's lost confidence. Instead for unwarranted follow-up laws, we require an overhaul in the existing regulatory framework;India can't afford an ill policy regime.

Inflation, that had threatened to derail India's growth for several months, had shown signs of weakening in the recent past weeks. However, inflation is on the rise again, and it is likely to stay in the 7.0-9.0 percent range in the coming months. The central bank cannot afford to conclude that inflation will stabilise in the medium term. So far in 2012, the RBI has already eased the reserve requirements for banks, infusing liquidity into the economy. It is likely that further liquidity could be infused into the economy in the coming months. Measures to ease liquidity may, however, not be enough to provide a much-needed fillip to the economy.

Growth is slowing down, investment is falling, and business sentiment is on the decline. In the absence of any credible government action, the central bank may not be able to stave off calls for reducing interest rates for too long. Questions about whether or not the interest rate will be reduced ahead are giving way to when and how dramatically it will be cut.

Leading social historian, Ramchandra Guha's assertion that the India's economy is a fifty-fifty economy, best reflects the trend, and our economy has been following since 1991. Making Indian economy hundred percent functional should be the prime task of policy makers-the two basic ideas cam materialise this dream-growth with equity and emancipation of the marginalised with ensuring lowest possible economic disparities. Under a mixed or market driven economy, nothing more could be anticipated.
Atul Kumar Thakur
Email: summertickets@gmail.com
(Published in Businessworld, May16th 2012)