28th Conference: Information Documents

Information Document: No. 1 Agriculture – An Overview

Biplab Das Gupta


In general, the Indian economy as a whole has done badly under the New Economic Policy. (NEP). Its performance in the field of agriculture has been no better.

Overall Performance

In the four and half years since 1991 July, when the New Economic Policy was first introduced, at the instance of the World Bank and the International Monetary Fund, the rate of growth of GDP has been no more than 3.5%, that is 2% less than the rate for the 1980s, which was around 5.6%. Similarly, the rate of growth of industries, at about 4% a year, is also about half the rate for the 1980s at around 8%. By 1993 (the latest year for which figures are available) India has remained the 20th country from the bottom, in terms of per capita income, out of a list of 132 countries for which data were collected by World Bank. At $300 dollars (that is approximately Rs 9000 a year and Rs 750 a month), the per capita income of an average Indian, is even lower than those for Pakistan ($430), Sri Lanka ($600) and China ($490), though higher than that for Bangladesh ($220) if that is any consolation. India has been promoted from the position of fourth largest debtor country in the world to the third position, with a debt figure of $92 billion (roughly Rs 31280000000000, or 3 lakh 13000 crores); only Brazil and Mexico having higher figures. In other words, there is a debt of Rs 34000 over the head of every Indian in this country – child, adult or old, man or women.

Agricultural Growth

Over this period food production has increased from around 176 million tons in 1990-91 to 185 million tons in 1994-95, that is at the linear rate of around 2% a year, which merely manages to keep pace with population growth. This rate is much lower than the average rate of growth of around 3.5% achieved during the 1980s. The growth was slow despite the fact that over the past four year rainfall had been excessively good. Till date we have had eight consecutive good monsoons with higher than average rainfall. Such run of good weather can not continue for ever. If India has done so poorly under favorable weather n conditions, then one shudders to think what the output is likely to be in years of bad monsoon, which are bound to come sooner or latter. Not only that the momentum generated by the introduction of high-yielding seed varieties and the associated modem inputs in the mid-sixties -labelled as ’green revolution’ – has slowed down, even the protagonists of the New Economic Policy are disappointed by this tardy growth. They were expecting a growth rate of around 4% to produce enough of agricultural products for exports.

Further, agricultural growth appears to remain confined to certain crops and certain areas. In these four years rice production has increased from around 74 million tons to 80 million tons, but wheat has registered a small increase from 55 million tone to 58.5 million tons, while the production of coarse cereals and pulses remains virtually stagnant. Generally speaking, commercial crops have performed better than food crops, given the market orientation of NEP, particularly oil seeds and cotton, while jute and mesta production has remained stagnant and sugar has registered a modest increase. The pattern of land use has shifted in favour of commercial crops – as about 4% of land under food has been diverted to commercial crops such as oilseeds, potato and rubber. However, not all commercial crops have benefited at the cost of food crops; fibres, tea, coffee, sugarcane (greatly) and tobacco have lost land over this period.

As for the areas, over the past four years food production has actually declined (between 1989-90 and 1993-94) in the following states: Andhra, Gujarat, Himachal Pradesh, Kerala, Orissa, Rajasthan. The production has remained virtually stagnant in Maharastra and Tripura. In contrast, the following states have registered some progress: Assam, Bihar, Haryana, Madhya Pradesh, Punjab, Tamilnadu, Uttar Pradesh, West Bengal. As we have indicated on many occasions in the past, only the areas with an assured supply of irrigation water can take full advantage of the modem agrarian technology. Vast areas of the country with low irrigation potential remain outside the pale of the advanced technologies. The phenomenon of large scale outmigration of the landless from the poorer areas to the richer enclaves of rural prosperity has remained a major feature of regional rural in-equality in our country.


Even with the progress achieved since the mid-Sixties, the rate of application of modern inputs is quite low in India by world standards, and, as a consequence, yield per unit of land, relatively low. The average level of fertiliser use (as kilograms per hectare of the cultivated land) is only 720 kg in India, which is less than the figures for Bangladesh (1032), Pakistan (1015) and Sri Lanka (964), not to speak of China (3005) or Egypt (3392). The domestic fertiliser production has increased by one million ton – from 9 to 10 million tons – while the domestic consumption of fertiliser has increased from 12.5 million tons to 14.1 million tons, necessitating further imports, the domestic production could have been higher had the government not followed a deliberate policy of closing down public sector fertiliser units, particularly in eastern India. On the other hand, domestic consumption would have been still higher, had the subsidies not been scaled down. The amount of subsidy given to fertiliser has declined from Rs 5796 crores in 1992-93 to Rs. 4000 crores in 1994-95. In last year alone, the fertiliser price has increased by 20%, the price of urea being Rs 3320 per ton. In fact the decline would have been steeper had the elections not been round the comer. There is no doubt that, if Congress or BJP win next election, there would be further, drastic reduction in subsidy.

Another aspect is the lack of balance in fertiliser use. There is a tendency to use more of nitrogen and less of phosphate and potash. Ideally nitrogen consumption should not be more than double the phosphate consumption; it is actually three times more. Similarly, ideally phosphate consumption should be no more than twice that of potash consumption, but actually it is three times more. In other words, because of lack of balance, the peasants spends more money on fertiliser to get less. Necessary extension work is lacking, as the market-oriented economy allows the suppliers of fertiliser play on the lack of knowledge of the ordinary peasants.

Subsidy reduction is not confined to fertiliser. The policy of World Bank/IMF/GATT/WTO is to reduce subsidies in other forms too-in power, irrigation, support prices given to farmers, in interests, in poverty alleviation programmes and in the public distribution system. Because of political compulsions, the government has not carried out subsidy reductions to the extent it desires, until now, but, as we have noted in case of fertiliser, the situation might change drastically, and adversely for the farmers, should the parties supporting NEP win the next election.


As for irrigation, by the end of 1993-94 a potential of 85.1 million hectares of irrigation (mostly in minor irrigation schemes) has been created, but nearly 9 million hectare of that potential has not been utilised by farmers, largely because supplementary on- farm work, such as constructing field channels or levelling land, has not been completed. By and large the Central Govt, has decided not to finance major irrigation projects and to leave it to the meagre resources of the state governments to undertake those. While a vast part of the country goes without irrigation facilities, the government is now seeking a price of water that would cover, in addition to operating and maintenance expenses, a part of the fixed coast of running irrigation systems. By fixed cost, in case of large scale irrigation projects, one means everything from the coast of bunding the river, constructing field channels, and other related expenses. In case of ground water irrigation that would involve the installation of deep tube wells, river lift irrigation pumps etc. In most areas of the country the peasants pay a part of the operating cost and hardly ever any part of the fixed cost; there are states where water is virtually free. The new economic policy would imply that the peasant would have to carry a sizable part of the total cost of water.

Linked with this is the issue of price of power. The central government has virtually stopped giving support for power projects. The private parties, both national and foreign, such as Enron, are asking for guaranteed profit, that- would imply enhancement of power price by a factor of two to three. The question to ask is, how many peasants would be able to afford such cost? If not how this would affect the spread of modern technology in agriculture particularly among the weaker sections.


As for the high yielding seeds, compared with the situation two decades ago, now they account for the major share of area under crop. More than 88% of wheat is already covered by the HYV seeds, while in case of paddy the coverage is nearly 69%. There has been no increase in coverage in case of maize and bajra, consumed mainly by the poorer section, over the past four years, though jowar and ragi have shown some modest improvement. The seed revolution has largely remained confined to cereals, and even within the cereal group, we are still far away from a technological breakthrough in developing high-yielding tall paddy seed varieties that would be as productive as the wheat seeds while would have the additional feature of surviving flooded field conditions. As we shall see below, free import of seeds as also patent rights on seed production have created new problems for the peasantry.


India’s consumption of pesticides has never been high, leaving aside certain areas and certain crops. The aggregate consumption is less than one million tons. But, under the impact of NEP, with the entry of agri-business firms, and their vigorous promotion of. plant protection along with supply of exotic seeds that are vulnerable to pest attack, there is likely to be a sharp increase in pesticide consumption.

High Input Prices and Small farmers

Generally speaking, with lowering of subsidy levels and higher input prices, smaller farmers would be at a serious disadvantage. What is happening in Punjab today – land becoming concentrated in the hands of richer farmers, smaller farmers leasing out their land to bigger and more resourceful ones, landlessness growing, more of land coming under the operation of rich farmers – would become universal for the entire country.

More significantly, the kind of pro-small farmer development strategy implemented by the left-wing government of West Bengal, would be increasingly difficult to follow. Since 1983-84, over the past decade or so, West Bengal has registered a high rate of growth in food production – averaging 6.7% – which is the highest among the Indian states, and considerably higher than the rate for Punjab at around 4%. This has been achieved mainly by way of land reform and decentralization of decision-making through Panchayati system. The level of mechanization, higher than in the past, still bears no comparison with that in Punjab. Tractors are fewer in number, deep tube wells are as a rule publicly owned, and combine harvesters are conspicuous by their absence. Shallow tubewells, distributed at a subsidized price, have been the main mechanized input, while husking mills have replaced traditional dhekis. Though landlessness is increasing in West Bengal too, because of demographic pressure, there has been few cases of displacement of a poor peasant by a richer one. The success of the panchayats in providing effective relief during flood, drought and other natural calamities, has obviated the need on the part of the poor farmer to sell or lease out his land for survival. All these accomplishments are now in jeopardy, as agriculture is becoming costly and going out of the reach of the small farmers. On the other hand, in Punjab, because of increasing land concentration, the average size of operational land holdings has increased from 2.88 hectares in 1970- 71 to 3.76 hectares in 1985-86, while it has declined in all other states.


Until the launching of the New-Economic Policy, Indian agriculture was by the large self sufficient, in terms of both food output needed to satisfy the consumption needs of the population (excepting the very poor who can not buy from the market, and, hence, suffer from under-nutrition) and of the input-seed, fertiliser, tractors etc,-that were required for producing that output. From the very first year plan in 1951 until the eighth plan, all the Indian plans advocated self-sufficiency in food production as one of the top three or four of the national economic priorities. Advise rendered by FAO and other UN organizations also stressed the need for food security. Such a policy was also in tune with a common-sense view that a country, relaying mainly on agriculture, and not producing many industrial goods, should try, at the least, to meet the food needs of its population.

Fund-Bank-WTO view : ’food security through trade’.

Over the past four years emphasis on food self sufficiency has been diluted. Bank/Fund/WTO trio are asking India to discard self-sufficiency as policy objective and to opt for a policy based on trade. Their slogan is ’food security through trade’. What they are saying is that in a globalised world market there is no need to achieve self-sufficiency in anything. A country should only produce what it can produce more and at a lower cost than other countries, sell that to the world market, and out of the money received from such sale buy what the country needs but does not produce within the country. It should stop producing what can be obtained from the world market at a lower price. Nor should the government give subsidy or protection (by controlling imports or making it more expensive by charging taxes) to domestic industries. According to the trio, free trade would benefit every one, there would be no losers. It follows logically from this kind of view, that, it is proper to divert paddy land to shrimp production in brackish water or to tea plantation, if the latter are more remunerative. The gain from production and trade in those would produce sufficient foreign exchange earnings for the country concerned to buy deficit goods in the foreign market.

The political economy of food trade and aid

Such a view rests on a dubious assumption that world trade is free, and anybody can buy anything from the world market, provided he has the means. The fact is that food is an item of strategic importance for which it is risky to rely on a foreign power. In the past USA has repeatedly used food as a weapon in its foreign policy. In case of India, in the years of the Sixties when the country became dependent on wheat and milo coming from USA by way of PL480. India was forced to devalue currency and to stop trade with Vietnam and Cuba as a condition for such food aid. In the last year also when India wanted to buy wheat from USA in order to bridge a temporary deficit, it was refused because it had sent a ship-load of paddy to Cuba. Realizing the political economy of food dependence, Japan, one of the economically mightiest countries of the world, which has enough money power to buy anything from the world market, is continuing to give protection to its agriculture and producing paddy at a very high cost, in order not to rely on other countries for food. If food security is so important to Japan, a country like India with limited capacity to buy in the world market and with agriculture as the mainstay of its economy can still afford to do without security.

Subsidies to agriculture in USA and European Community

Further, protection given to domestic agriculture in India is peanuts compared with the subsidy and support given both by the United States and European Community to its agriculture. In case of the United States such subsidy costs the government annually around $25 billion, which is equivalent to about Rs. 85000 crores, when subsidy to agriculture in India – taking subsidy to fertiliser, food and procurement into account – does not exceed Rs 10000 crores. Armed with such subsidy, US wheat exports are competing all over the world, but they will not permit India to continue with subsidies for her own agriculture.

In case of Europe also the imported wheat and several other agricultural items are taxed in such a way that their price is never less than that for the domestic agriculture. Export subsidies are given to European agriculture to make them compete in the rest of the world.

The total subsidy bill in the European Community also amounts to around $25 billion. In both the United States and Europe, helped by such subsidies and protection, agriculture has flourished. Whereas only a few years ago Western Europe was deficient in wheat production, now it produces a surplus and competes in the world export market.

Over-production because of subsidies is a major feature of the agricultural economy of both of these regions. In Europe, milk, butter and wheat are over-produced, often leading to serious problems as to how to dispose of those in the world market without bringing down their world prices. In case of USA, PL480 and other programmes of foreign food aid were ways of getting rid of such over-production. Now the overproduction in the United States has reached such a stage that the government is paying hefty subsidies to farmers who are agreeing not to produce and leaving their land fallow. Still these countries have the chick to suggest that India should not give subsidy or protection to agriculture.

Uruguay Round and Turn-Around in US Agricultural Policy

One of the reasons why agriculture was never discussed in GATT negotiations until the Uruguay Round was because the farmers in the USA and in many parts of Western Europe were opposed to such discussion. They wanted to enjoy protection given by the governments. What explains the turn around during the Uruguay Round? The most common explanation is that, facing heavy budget deficits, the government in the United States is finding it difficult to sustain the very high level of agricultural subsidies. The same is also true of the European countries. If they have now decided to do away with their subsidies, they do not want other countries to sustain those and compete with their exports.

India : Potential for Agricultural Exports

Coming to the idea that India should and can earn a great deal of foreign exchange by way of international trade, the question inevitably is, which are those commodities that India can produce cheaper and better than other countries? The advise rendered by the Bank/Fund/WTO trio is that India’s comparative advantage lies in producing and exporting agricultural goods and only textiles among the industries. Similar advise was given by World Bank to Japan, Taiwan and South Korea – and it was precisely because they did not pay heed to such advise that they have emerged as industrialized states. If India adheres to such advise the option of industrialization would be closed to her.

Had the advise been gi en to India and no other country, an had such policy been followed by India and no other country, the matter would have been different. The fact is that the same advise is being given by the trio to each and every poor country of the world. With all the poor countries following the same set of policies, what emerges is known as the fallacy of composition; what is right for one is not right when every one does the same thing. There is going to be too much of food, other agricultural goods and textiles, too much in relation to the overall world demand, and the prices of agricultural goods are going to fall sharply. In fact, all the predictions about the terms of trade – that is the relative prices of agricultural and industrial goods in the world market – some by World Bank and IMF, show that, at least until the first decade of the next century, the prices of agricultural products would fall relatively to those of the industrial goods.

If the trio really believe in comparative advantage they should ask the developed countries to abandon agriculture and textiles and to concentrate on industrial goods. The fact is that both the United States and Europe are major producers and exporters of wheat and many other agricultural item. The poor countries seeking to export agricultural goods would have to compete not only with one another but with these two giants too. Further, nearly all the major multinational corporations specializing in agri-business originate from these developed countries. One major consequence of import liberalization and the consequent opening up of the Indian market has been that many of the indigenous agricultural products are not finding markets or prices, and facing overproduction,while competing imports are undercutting them. The livelihood of producers of rubber, cashew nut, copra, silk worm etc. has been seriously threatened.


Here we will briefly summarize some of the major implications of the functioning of multinationals in agri-business – both as provider of inputs and producer of outputs, and both in relation to agriculture and rural industries.

Seed Imports

Take the case of the new seed policy of 1988. Between the mid-sixties and the late eighties, the Indian agricultural scientists, agronomists and seed breeders took the responsibility of producing seed varieties that were both high-yielding and adopted to the specific Indian environment. The ’mother seeds’ for this purpose – of very limited amount – were brought from CYMMIT in Mexico City for wheat and IRRI in Manial for rice, but the experimentations in India, cross-breeding of exotic varieties with the local ones, were done by the Indian scientists. Once the trials were successful, the new varieties were released to ’seed farmers’ who multiplied those and then sold those to the Indian farmers. This system had worked well and helped to augment Indian agricultural production. In 1988 the open seed import policy was declared. Though so far it has been confined to potato, fruits, some cuttings there is no doubt that soon it would be extended to rice, wheat and maize. In case of potato, this policy has completely undermined the valuable research done by the Indian scientists; if only they had been given and few more years’ protection they were confident of producing Indian potato varieties that could stand up to foreign competition. Now both the scientists and thousands are ruined, and self- sufficiency in a major area of agriculture is gone. The same is true of fertiliser, equipment etc.

The Issue of Patents

Further, seed production is now being brought under international patent regime, under WTO/GATT dictate. After this, Indian seed breeders and seed farmers would not be able to produce seeds that are based on foreign mother seeds without expensive royalty payment and without the permission of foreign companies concerned. Though the individual farmers are permitted to renew seeds, as every one knows, the new seed varieties can not be renewed for more than twice without experiencing a drastic fall in production. The international agri-business firms are now producing high-yielding varieties that become sterile after one round of use, so that the farmers are forced to buy new seeds every year from them. Further, pesticides, a market that the multinationals are keen to develop in India. The genetic variety that existed in the Indian fields only two decades ago are no diseases, only a limited number of varieties would be cultivated, which would make agricultural vulnerable to diseases, epidemics and pest attacks.

The Government of India, prompted by WTO, is trying to extend the patent regime to all life forms, plants, animals, the environmental consequences of which can be very serious. They are patenting trees – such as neem – whose multi-sided uses have been known to the Indian masses from time immemorial and which has become a part of the Indian folklore. Once patented anywhere in the world, they will deny the use and development of products, pesticides, medicines etc. from this plant by the Indians.

Peasants Under Contract with Multinationals : Loss of independence

Another aspect of functioning of the multinationals in India has been their direct participation in agriculture. As we know, in the early days of British rule the colonial power introduced a number of commercial crops, a part of which was produced through contracts with the cultivators and another directly as plantations with labourers. Because of resistance from the Indian population, the British desisted from those arrangements, excepting in cases of some plantations like tea or coffee. In many other countries in Africa and Latin America, however, the colonial powers allowed European farmers to cultivate the land directly and./or its agri-business farms arranged production through contract farmers. Since 1991 India is moving towards this African/Latin American model. Major firms like Pepsis and Kellogs are insisting on the relaxation of land ceiling measures in order to permit them to hold a large chunk of land for their direct cultivation, while they are also supplying seed, fertiliser and other inputs, along with credit, to their contract farmers who are expected to produce under the direction of the company concerned and to handover the produce to the latter. The company decides, unilaterally, the price it charges for inputs and the price it pays the cultivator for the produce. In this situation, the farmer is no longer independent, because all the farming decisions are taken by the company concerned.

Wasteland Development Under Capitalist Firms

The government is also keen to hand over the overwhelming part of the so-called ’waste land’ for development by companies, in order to produce the inputs they need for processing and, in some cases, food for their employees. The only reason this idea, first mooted by Rajiv Gandhi in the mid-eighties, has not yet taken off, is because the companies are seeking wide-ranging tax and other concessions that even the Indian government is finding difficult to accept. With NEP the government resolve to make the programme work has strengthened, while the environmental and settlement implications of this has not been properly examined. In fact, there is hardly any “wasteland” in the country that is not put to some form of use, for grazing, for gathering wild fruits etc. Any economic activity sponsored by a company would displace those who are dependent on such wasteland for livelihood. As the increasing planting of eucalyptus for commercial purposes shows, the high level of water and nutrient use by this plant discourages undergrowth and grass land development, to the detriment of peasants using such land for grazing and gathering some food.

Rural Industries

The multinationals are also displacing rural industries mostly run by women, which have been involved in wide ranging food processing activities—such as producing juices, jams, papadams. Their massive advertising campaign through television and other media is attracting consumers—in both towns and villages and standardizing and influencing people’s tastes, preferences and choices.


Capitalist development in agriculture is a process which has been going on for a long time. But under NEP it has generated a new and powerful momentum, as the national monopolies and multinationals are increasingly penetrating in agriculture and the peasants—through buying inputs and selling produce in the market— is becoming increasingly enmeshed in the process.

The West Bengal Experience

However, as we have noted in our past documents, the process of capitalist development is uneven. Some parts, say Punjab or Harayana, are experiencing capitalist development in agriculture on a fuller scale than, say Bihar, where feudal interests are strong and semi-feudal class relations to a certain extent thwart such development. But even in West Bengal, where Left Front rules and land reform has been implemented nearly as far as it is practicable within the constraints of the Indian constitution, capitalist relations are flourishing. This is evidenced in increasing use of modern inputs and equipment in agriculture, in increasing production for the market, in increasing commercialization in terms of production of potato, oil seeds, tea and brackish water fishing and in the displacement of semi-feudal dependent relationship between landowner-employer and tenant-laborer by market-based impersonal relationship. This is not at all surprising. The Left Front government, operating within the framework of the Indian constitution, can not bring about socialism, while its land reform and panchayati measures are increasingly diluting semi-feudal relations. If feudalism declines and socialism is not achievable, only capitalism can flourish.

However, we have already noted that, unlike Punjab, in West Bengal the government has taken active measures to combat, as far as possible, the negative repercussions of growing capitalist penetration, such as increasing landlessness and concentration of land and other resources. Its development strategy, based on small farmers, has thwarted considerably the negative features of capitalist development, but, as we have noted already, it would not be easy to sustain such strategy in the face of higher input price under NEP. A strong co-operative movement that brings under its umbrella the multitude of small, dispersed peasants, and gives them the combined strength of the big farmers, is a possible way of fighting the adverse consequences of capitalist penetration. To make co-operatives successful it is necessary to branch out into new areas, the ’sideline activities’ promoted by the Chinese government, sch as poultry, piggery, dairy, fisheries, and to marketing. It would also be necessary to promote the habit of loan repayment in order to make the co-operatives viable and to keep the loan- sharks at bay.

On the other hand, it has not been possible to prevent the growing transfer of cultivated land in West Bengal to tea plantations and marine fishing, as the peasants concerned find the offers from the latter lucrative compared to their possible returns from agriculture and do not take into account long term environmental implications. Nor has it been possible for the powerful movement of the agricultural labourers in Kerala to stem the growing shift towards capital-intensive tree cultivation and away from labour— intensive paddy cultivation.

Declining Public Investment in Agriculture

The tendency towards privatization has also implied a significant decline in public investment in agriculture. Generally speaking, gross domestic saving in the country as a whole has declined from around 24% of GDP to around 20% during these four years. This is largely because of the policy of import liberalization and the release of a new array of dazzling luxury goods in the Indian market, and the consequent consumption of those has curtailed saving. The saving will decline further if the recommendation of the Narasingham Committee to prune unprofitable branches of state-owned banks is fully implemented. On the other hand, both public and private investment have declined-again from around 25% of GDP to around 20%. The public investment has declined because of a deliberate policy to weaken the public sector and social ownership, under the direction of the World Bank and IMF. It was thought that the decline in public investment would be more than made up by a substantial increase in private investment. That has not happened. In a backward country like ours the private investors are not prepared to take risks unless the risk and uncertainty have been considerably reduced by way of public investment in infrastructure—roads, irrigation, godowns etc. The low rate of growth of agriculture over the past four years has been largely due to this.

The gains from increasing capitalist development are unevenly distributed, while the negative consequences-on livelihood, employment, village resources and environment-are becoming increasingly pronounced. This, however, is the subject matter of another Commission in this conference.

Information Document: No. 2 On the role of Rural Self Governments & Cooperatives and Our tasks.

Surya Mishra, West Bengal

At the outset, it is important to recall the historical background of evolution of Panchayats in the country in brief. The pre-capitalist, self reliant village economy and institutions in rural India were shattered with the advent of the British colonial rule. All subsequent efforts of British Imperialism towards the formation of ’Local Self Governments’ were basically designed to consolidate its class rule in the countryside, in collaboration with its local henchmen serving colonial and feudal interests only. The aspirations of the anti-imperialist movement to promise, among other things, democratic decentralization in the form of autonomy to states with further decentralization to urban and rural institutions of self- government in a free and federal India. But the people of India, with their hopes belied, observed after independence that the bourgeois-landlord rule under the leadership of the big-bourgeoisie was not willing to implement even the Gandhian concept of Panchayat raj. The Directive Principles of the State policy, enshrined in the Article 40 of the constitution, that “The State shall take steps to organize village Panchayats and endow them with such powers and authorities as may be necessary to enable them to function as units of self-government” were not translated into action in the lack of political will. The Balvantray Mehta Committee (1957) and the Asoka Mehta Committee (1978) recommendations could not bring about any basic change in this situation. Whatever Panchayati Raj Institutions (PRIs) emerged in the country, except under the left regimes, continued to be dominated by the vested interest in the rural areas in the absence of any meaningful land reforms measure, the basic prerequisite for peoples participation. This holds good for the cooperative institutions of the rural India as well. The 64th Constitutional Amendment Bill introduced in May 1989 by the Rajiv Gandhi Government, in light of the report of the L.M. Singhui Committee appointed by it, was basically framed to destroy whatever remained of federal polity by forging direct link with district and subdistrict levels, bypassing the State Governments. This surreptitious at tempt to extent central control in the name of decentralization, though stalled for the time being, was renewed during the Narsima Rao Government. This time, Congress not having the required majority in the Parliament was compelled to reach a consensus with the opposition and the provisions blatantly encroaching into the right of the states could be removed from the bills during enactment of 73rd and 74th amendments to constitution. However certain inconsistencies and provisions, mechanically imposed over the states having diverse situations, in the name of uniformity are yet to be repealed from these two acts.


However, the bill cannot be any substitute to the political will. Congress(I) was more interested to enact than to act. The Congress(I) Governments of Andhra Pradesh, Karnataka & Kerala, for example, did not hold elections to three tier Panchayats within one year of these constitutional amendments as directed by the Central Government. Even the Supreme Court directions in this regard were not implemented. The Congress® Government of Orissa, soon after being voted to power, dissolved the Panchayats much before the completion of their scheduled five-years term. The trends of centralization continue to be strong. The Center is refusing to transfer the centrally sponsored schemes along with the funds to the states as resolved in the National Development Council. The funds meant for some of these schemes implemented through PRIs are being directly passed to the districts bypassing the states. The conference of Panchayat representatives from all over the country is being convened at New Delhi and the State Governments are being asked to invite Union Ministers to inaugurate similar conferences organized by the State Governments. The centre, while asking the states to devolve more power and finances to PRIs, itself continues to rob the states of their powers and resources. The big hoax can be clearly understood from their tall talks to build up Panchayats as local self governments when the status of the State Governments have been reduced to that of a glorified municipality. This nefarious game of Congress(I) regimes at the centre and the states must be fully exposed. It is equally important to see that people develop no illusion about their campaign to project themselves as the champions of democratic decentralization through Panchayats. At the same time, people must be reminded time and again that the record of BJP led State Governments is no better than this. They do not care even to insist in public on their declared opposition to any concept of strong states, decentralization and land reforms etc. The rural cooperatives in both Congress(I) and BJP regime continue to be the seat of power of vested interest and reaction in general with most of these institutions languishing in absence of democratization and regular elections. It is only in the left led states that PRIs and cooperatives have emerged as viable institutions of the people and in West Bengal alone these could enjoy the longest lease of life for uninterrupted eighteen years.


During last two decades, West Bengal has been the only State in the country to have held elections to all three tiers of PRIs, in a single day, at regular five years intervals, for four consecutive terms. With the political parties contesting with their elections symbols and a turn out rate even higher than the Assembly and Parliament election (85% in the last Panchayat General Election held in 1993) the entire process assumes the shape of intense class and political battle. Presently more than 35% of the members elected are women and a significant number of candidates belonging to Scheduled Castes and Tribes community have been returned from the constituencies not reserved for them. More than 70% of the Panchayat Members belong to the rural poor and toiling sections, a class composition, diametrically different from that of the Panchayat of the non Left led states. Similarly the class compensation of the Cooperatives has undergone a sea change with massive enrollment of vested land allocates, sharecroppers, the agricultural labourers and the poor peasants under the universal membership scheme. Thus the State Cooperative Bank, majority of the District Central Cooperative Banks and all the Zilla Parishads have come to be chaired by the CPI(M) and Kisan Sabha activists. This has its basis on the successful implementation of some land reforms measures backed by the political will of the state government combined with the organized struggle of the peasantry. West Bengal while having only 2% of total land in the country, accounts for about 20% of the total ceiling surplus lands distributed in the country. As per NSS data, nearly 60% of the total agricultural lands in West Bengal has come to be avoid by small and marginal farmers (as against the corresponding national average of 29% only) and adding to it the land cultivated by about 1.45 million recorded share croppers this will exceed 70 percent. Out of the 2.21 millions families alloted with vested lands, 56% belong to SC and ST communities constituting only 27% of the state’s population. The lands matched with the credit from the cooperatives and other non land inputs delivered through the Panchayats resulted in a major breakthrough in the agricultural production in the state since independence . West Bengal having only 2% of the total land in the country, has to support 8% of its population and right now it grows 15.8 percent of rice, 30.4% of potato, 60.5% of jute and mesta, 21.3% of tea, roughly one third of fish and three fourth of the fish seeds of the country as a whole. During the seventh Plan period the State achieved the highest growth rate in food grains production (34%) with Haryana (24%) and Punjab (23%) occupying the second and third position respectively. It is also the first among the Indian states to become the recipient of prestigious international awards e.g. UNESCO’s NOMA award for literacy and J. Paul Getty award for conservation of forest and bio-diversity. It is the devolution of over 50% of the State Plan Budget to the command of District Planning Committee chaired by the chairpersons of Zilla Parishads and further devolution to the sub-district levels through he PRI with the leading role in all spheres of rural developments that these could be achieved. The mandatory provisions to ensure participation of electorate through Gram Sabhas and Gram Sansads, the anti-detection low to checkmate violation of political mandate and the provision of District Council headed by the leader of the opposition in Zilla Parishads with the status similar to that of Public Account Committees are some of the distinctive features of the West Bengal Panchayat Act.


It is precisely this alternative growth path based on land reforms and Panchayats as opposed to the bankrupt anti people policies perused by the Congress(I) and BJP, that the AIKS should propagate to rally the entire peasantry around it. Devolution of more power and resources to the states from the Centre and to the PRIs from the states should continue to be the integral part of the demand in our struggle for democratic decentralization even in the Congress(I) and BJP ruled states. This is inseparable from the battle for national integration in a multinational country like ours. Our Kisan Sabha activists working in the PRIs and cooperatives must be able to utilize these institutions as instruments for forging broadest possible unity of the peasantry and also as the instruments of unleashing class and mass struggle in the rural areas to bring about a decisive change in the correlation of class forces in the desired direction. The movement against the social disparities like caste and gender disparities must be linked up with these class battles. While doing so one should have no illusion that real rural self government can be established within the framework of existing bourgeois landlord order, without radical land reforms. Neither the Panchayat can assume the role of self government nor the cooperatives can be utilized as the instruments of real self reliance when the country is forced to abandon self reliance in the name of structural adjustments. Nevertheless we must leave no stone unturned to get hold of and utilize these institutions to realise whatever partial demand of peasantry can be realized . The PRIs, wherever our Kisan Sabha activists have a majority, can and must be successfully utilised in the struggle of realizing the realizable demands for land, wage, homsted, credit, water, seed, fertilizer, technology and many such other partial demands. Where we are in opposition, we must act in a principled and organized fashion inside the Panchyat body, while, at the same time, utilizing the meetings of Gram Sabhas for rallying masses of peasantry in our favour. All these struggles of partial demands have to be linked with the propaganda on the basic demands of radical land reforms so that more and more people get convinced from their own experience about its necessity. It is only by maximizing the participation of the peasantry and other democratic forces in the rural area in this process that the ultimate goal of the Kisan Sabha can be realized.

Information Document: No. 3 Land Reforms in Kerala

E. M. Sreedharan

The land reforms initiated by the Communist Party in Kerala was a product of decades old struggle. This paper attempts to put in brief, its origins.

The present state of Kerala was formed on November 1,1956 by merging three geographical segments which had different political systems during the British rule. The six northern districts of present-day Kerala known as Malabar were, before 1947 , directly under the British rule, as part of the Madras Presidency. Two central districts were under the Maharaja of Cochin and the rest of the area, six southern districts under the rule of the Maharaja of Travancore. As such there were differences in the land tenure which led to different patterns in the development of the agrarian movement.

The land tenures in Travancore were mainly of three kinds (a) Jenmom lands (b) Pandaravaka lands, and (c) other tenures like Edavakai and Thiruppuvarom lands. The most important system of tenancy was Kanappattom. It was a combination of a simple lease and a mortgage. It should be observed that in Travancore the Kanom holders enjoyed more security in their possessions than their counterparts in Cochin and Malabar.

The tenures in Cochin were almost the same as in Travancore. The land revenue settlement of 1905 has reduced the main tenures in this region as Pandaravaka Verumpattom, Pandaravaka Kanom, Puramvaka and Inams. The important tenures by which lands were held in Malabar were Jenmom, Kanam, Kuzhikanom, Verumpattom etc. unlike in Travancore and Cochin, the government never owned any land in Malabar except what it had acquired by escheat and acquisition. The British recognition of Jenmom right as an absolute property right led to the declaration of Kanam as a mortgage and Verumpattom as tenancy-at-will. The Kanakkaran leased land from the landlord in lieu of payment of a lump sum (Kanam) and annual rent. It also became necessary to renew the tenure at the expiry of every 12 years on payment of renewal fees. This kind of interpretation of the British courts led to the assumption that the tenants could be evicted at the expiry of the lease.

The tempo of the tenancy movement was different in the three regions. The native rulers of Travancore passed certain progressive tenancy legislations in the 19th Century. By the royal proclamations of 1865 and 1867, fixity of tenure, fair rent and free transfer was granted to the ryots of Travancore. It facilitated propertyship and investment of Capital in coffee and tea plantations by European capitalists and joint-stock companies.

The Cochin Tenancy Act of 1915, on the other hand, gave fixity of tenure to the tenants and they were also entitled to compensation for improvements in the event of eviction. However, this act failed to redress the grievances of the tenants of the region and they had to wait for decades to get the benefit of a progressive act as in Travancore State.

The situation was quite different in British Malabar. The full weight of the British land policy was felt in the 19th century. The emergence of rich Kanam holders hastened the process of subinfeudation increasing exploitation of the actual cultivator. The monopoly of land by big landlords in its total socio-economic context was the Chief characteristic of the agrarian scene in Malabar.

Despite the recurring Mappila riots and the Logan Special Commission report on Malabar, the government of Madras did not dare to weaken the Jenmis by introducing any legislation.

The emergence of the English educated Kanakhars in the beginning of the 20th century changed the character of the tenancy agitations in Malabar. The tenancy movement became the mainstream of the nationalist movement. All leaders of the tenancy movement were also Congressmen. This in turn led to he enlargement of the Congress in Malabar with the inclusion of tenants in its fold in 1920’s. The leaders of the Kanakkar tenants also succeeded in capturing control of the Malabar Congress Committee by 1920.

There was also a link between the Khilafat agitation and tenancy agitation. In the 1920’s many Muslims had joined the Congress in response to Gandhiji’s call for Hindu-Muslim unity. The ill-effects of landlordism and the general hatred towards Jenmi’s had played an active role in the Malabar rebellion of 1921.

The Jenmis endeavored to convince the government that it was the cultivating tenants who deserved legal protection than the intermediaries like Kanakkars. If the system of KANAM were abolished the JENMIS would have gained more income by way of rent. The KANAKKARS, on the other hand, projected themselves as the back bone of the society. The election to ’the Madras legislative Council held in 1924 made the KANKKARS a powerful political force to be reckoned with. The Government had to concede to their demands and passed the Malabar Tenancy Act of 1930. Thus, the KANAKKARS became a socially and politically organized force in Malabar. The peasant aspirations were not fulfilled in this Act either. Further, the region of Kasargod was left out of the scope of the Act.

At the outbreak of the Second World War in 1939 the Congress Socialists in a meeting held at Pinarayi turned themselves to be the Communist Party. Meanwhile Karsha Sangam had been formed its Malabar, which had got affiliations to AIKS. By this time, the Kuttikrisha Menon Tenancy Committee, appointed to recommend a comprehensive tenancy legislation, had completed its work but the legislative measures were suspended on account of the war situation. While the Committee was in favour of the continuity of tenant-landlord relations and rent-payment system, EMS Namboodiripad in a dissenting minute suggested abolition of landlordism in an age of capitalism.

Following the peasant struggles against the war situation in Morazha and Kayyur, the Karshaka Sanghom and its units were banned by the government. This situation was well exploited by the landlords to evict the tenants under the existing laws. After the termination of the War, and before the independence and after, the Communists and their peasant organization had initiated militant struggles in the agrarian front at Karivellur, Kavumbayi, Onchiyam, etc. The Party was also banned on account of these struggles.

These struggles by the leftists particularly for the elimination of the feudalistic agrarian system and for establishing solidarity among the labourers and the peasant elevated them in 1957 into political power in the reorganized state of Kerala.

Immediately, through ordinance, the government stopped all evictions of peasants and implemented measures to introduce a comprehensive land legislation for entire Kerala State. After the Kerala Agrarian Relations Bill was passed in 1959 the government itself was dismissed by the President of India on the pretext of law and order question. The Communists had not introduced their own programme but only the programme given by the Congress and Planning Commission. Even that minimum programme was not acceptable for the dominant classes and subsequently a diluted act was introduced by the Congress led coalition government as Kerala Agrarian Relations Act of 1960. As the Act was suspended from operation by the high court, again the Kerala Land Reforms Act was introduced by the government. In 1969, again the CPI(M) led coalition ministry introduced a drastic amendment to the KLR Act of 1964. After the resignation of that ministry, the Achutha Menon Ministry implemented the KLR Act of 1969 on 1st January, 1970, which caused the abolition of absentee landlordism introduced by the British in 1793 as a matter of permanent revenue settlement.

These developments highlight certain historical facts. The agrarian question had been a vital force in articulating the national sentiments and anti-colonial feelings among the agrarian classes. The Indian National Congress as a party had totally failed to mobilize such sentiments in the struggle for freedom. The leftists had been responsible for the initiation of movements in this direction among the peasants. They came to power mainly because of their party policy and attitudes towards the peasant emancipation from the clutches of exploitation. Their participation in the government was responsible for implementation of the agrarian reforms which had been a programme given by the Congress and the Planning Commission. Even when such a programme was introduced, the leftists were dismissed from power by the dominant class interests. Now in the implementation of land reforms and allied aspects, Kerala has become a development model for many other states in India. In this conversion of a feudal and colonial state, into a progressive one, the major role had been played by the Communists under the inspiration of Marxism-Leninism.

Information Document: No. 4 Cooperatives and Agriculture A Critique of the Kerala Experience

E. M. Sreedharan

  1. The economic development of a country which has chosen the path of capitalist development, depends to a great extent on the changes occurring in agriculture. Unless there is a complete overhauling in the agrarian relations, followed up by the establishment of proper institutional and social mechanisms for agricultural growth the base for the economic development cannot be laid. As the 27th Conference of the All India Kisan Sabha noted, “without completing the land reform….It is neither possible to end poverty conditions, abolish the system of bonded labour nor is it possible to obtain full benefits of technological up gradation of agriculture to feed our people better and earn foreign exchange through exports of substantial amount of farm produce.
  2. However, land reforms alone need to necessarily lead to either technological upgradation or boosting production and productivity. Unless appropriate institutional and social mechanisms are evolved the full benefits of land reforms may not pass on to the peasantry, and through them to the society as a whole. Kerala is a prime example. Here is one State which, inspite of carrying out radical land reforms, faces stagnation in agriculture. Here is one State which, in spite of establishing agricultural co-operatives at grass root level, lag behind many other states in agricultural production and productivity. In this paper we attempt to probe the reasons for this State of affairs.


  1. The Kerala land reforms has been hailed as a success story by several independent observers. The Kerala Land Reform (Amendment) Act 1969, which was implemented from January 1,1970 was hailed by a foreign scholar as “the most drastic of any land reform legislation passed by any State legislature of India (John Mencher, 1976).

The 1959 and 1969 Acts together changed not only the land ownership pattern but also contributed a lot to the social transformation of rural Kerala. Feudal landlordism was abolished, ownership of the land was given to the tenant, and the agricultural workers, who were the hutment dwellers of the landlord, were entitled to the ownership of 10 cents of land. Major gains were also made in the matter of taking over and distributing the surplus land.

  1. The impact of the land reforms on the pattern of land holding is shown in its Table annexed. Whereas in 1955-56 the highest segment, viz those holding more than 10 hectare of land and above constitute 1.4% of the total number of owners, held among themselves 31.0% of the land, their share has come down to 0.1% and 9.8% respectively in 1990-91. At the same time those holding less than one hectare, who had only 19.5% of the total area now command ownership of 48.8% of the land. Similarly the share of those in the 1-2 hectare category also has gone up while that of 4-10 hectare category has drastically come down.
  2. However, the reading of this table alone is not sufficient. In fact it conceals certain undesirable trends, especially with regard to the average size of holding. As per the Government records the total land under cultivation in the State is 18,01,823 ha. In 1970-71 the average size of marginal holding, viz below one ha. was 0.29 hectares, which was the lowest in the country. As per records, the total number of holdings in 1990-’91 was 54,19,189 which workout to an average size of 0.33 ha per holding. Out of this 54 lakh households 92.5% fall in the less than one ha category (50,12,749). This shows that the average size of the marginal holding has come down to 50% in the post-land reform era.
  3. This raises a lot of practical problems. For one, such a small size of the farm may turn out to be uneconomic, if only the traditional farm practices are followed. It may not support the family and they may hold on to the land only in the expectation of capital appreciation. In fact there is a wide spread feeling in the state that, especially due to the Gulf boom, land in Kerala is not a productive tool but just a piece of real estate.
  4. Secondly, once land becomes just a piece of real estate, there is not attempt on the part of the owner for its development for productive purposes. He is not concerned about its productivity and he dare not invest capital for technological upgradation. Unattended farms are a very common feature every where in the State.
  5. Thirdly, since the land he owns is uneconomic, the owner has to look for other sources of income. He may get a job away from his home and visit his plot only once in while. Absentee ownership is widely prevalent, which once again results in non-investment for productive purposes. This has led to a new trend—return of the rent system. The small holder gives his land to a big holder for a specific rent, mostly for seasonal farming. In several parts of the State this has become wide spread, raising new issues in agrarian relations.
  6. Finally, there is the question of the degradation of the land also. In several districts paddy fields have been converted into brief kilns. The fertile land is used not for cultivation, but for making bricks, an industry which has boomed since 1970s as a result of Gulf remittances.
  7. The reason for this state of affairs, we many argue, is that though radical land reforms were implemented, appropriate mechanisms were not evolved for enthusing and enabling the peasant to increase production and productivity. Though there is the predominance of agricultural co-operatives, due to the lack of an integrated approach, the peasants, especially belonging to the marginal category, have not been able to draw full benefits from it. The woes of the Kerala peasantry are intrinsically connected with the lack of this integrated approach.


  1. As per the 1991 census figures 31.4% constitute the work force, of this 12.27% cultivators and 26.59% agricultural labourers. The share of both these categories in the work force has come down since 1981. While the percentage of cultivation has come down 1.5% from 13.7%, the reduction in the case of agricultural labourers is more glaring by three percentage points, from 29.5% to 26.5%. It may be noted that there is no reduction in actual numbers. In fact the number of cultivators and agricultural labourers have gone up during the period.
  2. Agricultural growth in the state is stagnating. During 1960-61 to 1970-71 the average annual growth rate was 2.59%. Between 1970-71 and 1985-86 it fell to 0.61 and it was only during 1985-86 to 1990-91 that agriculture could make some headway. The growth rate during that period, when the Left Democratic Front was in office, was 3.52% . Since then it has come down again.
  3. Perennial plantation crops dominate Kerala agriculture. 8.8 lakh hectares are under coconut, 4.4 lakh hectares under rubber and about five lakh hectares under pepper, cashew, coffee, tea etc. Only 5.3 lakh hectares are available for rice. The area under rice is diminishing at an average rate of 25,000 ha per year.
  4. The Kerala peasant faces two major problems-a) the increase in the cost of inputs and b) the unpredictability of the price of their produce. The price of inputs are fixed either by the Government or by the monopolies. Over year these have increased several fold. At the same time the price received by the farmer does not increase in proportionally. The prices of most of the produce in Kerala are determined either at international markets or by the Indian monopolies, who always try to suppress it for increasing their profit. As a result of these two factors the Index of Parity between the prices paid and received by the farmer stands to his disadvantage. While the index of price paid by the farmer was 1435 in 1991-92 (1952-53=100) the index of price received by him stood at 1315, which was only 92% of that paid by him. As per Kerala Government records since 1977-78 only in two years was the index more than 100, showing the pauperisation of the peasantry.
  5. This might be one reason for the stagnation in Kerala agriculture. The farmer is not enthused to invest in his land, with the intention of increasing production and productivity. Except in the case of rubber and rice the productivity is abysmally low. In the case of rice, in 1992-93 while the national average was 1744 kg/hectare it was 2018 kg/hectare in Kerala, However, this is much lower than that available in the Green Revolution areas, in the case of coconut the productivity was only 5843 nuts compared to 7032 nuts at all India level. In Tamil Nadu it is much higher, something like over 11,000 nuts per hectare. As far as pepper is concerned Kerala’s productivity is lower than the all India average by 40 kg. The all India productivity stands at 310 kg/hectare while in Kerala it is only 271 kg/hectare. Since Kerala is the major producer of rubber it determines the all India productivity.
  6. This brings us to the question of prices. As noted earlier, the prices of most of the Kerala products are fixed at either international markets or by the Indian monopolies and therefore the prices, instead of increasing, either stagnate or experience a steep- fall.

While the price of rubber is the best example for the former, coconut, coffee etc fall in the latter category. This can be explained as follows.

  1. Coconut is the mainstay of Kerala’s economy in view of its multifarious contribution to income and employment. During the last decade the coconut production was something between 3500 to 4000 million nuts per annum. The average price of coconut was more or less stable around Rs. 4/- per nut. However during the past three years it has plumettered to Rs. 2.50 to Rs. 3.00. On an average the Kerala coconut farmers have lost something like Rs. 500/- crores per year, it is the Indian monopolies who made a given buck, coconut being a raw material! for scabs and perfumes, the industrialists have got it cheap, without a corresponding reduction in the price, of their products.
  2. In the case of rubber stagnation in the price at the behest of the tyre lobby, is the main problem. It is the Government of India which declares the bench-mark price which they refuse to increase resulting in price stagnation. For three consecutive years-1989-90 and 90-91 and 91-92 —it hovered around Rs. 21/- per kg. There was small increase next year, without corresponding change later.
  3. The some is the case with coffee, pepper etc. The peasants are at the mercy of international tycoons who control the prices of these products. With the retreat of the Government from Market operations the farmers have started feeling the pinch. The farmers have started realizing that the solutions to their sufferings does not solely depend upon prices. If they have to survive they should look into the problem of raising productivity. How can the productivity be increased only through innovative approaches in production.

The average size of the farm becoming smaller every day tradi­tional techniques are of no help. The small farmer does not have the capital to invest with the intention of attaining higher production and productivity. What can be done in this situation, is the big question.

  1. We may suggest that co-operative action is the solution to the problem. It may be either institutionalized under co-operative societies or just a voluntary affair as was experimented during the LDF regime, under the name of group farming. Whatever be the form wherever possible, procurement of inputs, the agricultural operation as such and the marketing of the produce should be converted into a collective action. This not only results in economies of scale but also bad to higher investment in water management and the like and in the end achieve higher productivity. Once the land reforms were implemented this approach should have been viewed as a natural corollary. We know from history that the voluntary action, mentioned above, was of recent origin. What we intend to examine is whether the institutional form, viz the cooperation has been used with this aim. The question before us is whether the Kerala Co-operative movement has done anything in this situation to alleviate the sufferings of the peasantry and if so its achievements weaknesses and the lessons of experience. Before that a brief resume of the co-operative movement in India is appropriate.


  1. The Co-operative movement in India had its origins in the first decade of the 20th century. After independence the movement spread throughout the country and its number stands at approximately 3.53 lakh now. Together they have a membership of 16 crores and working capital of Rs. 70,000 crores. It is one of the largest in the world. Agricultural credit societies constitute the most significant segment in the co-operative sector.
  2. The Indian Co-operative are partially appendage of the Government. Instead of being developed into a mass movement, to protect the interests of the farmers, artisans and weaker sections from the exploitative private sector, their powers are curtailed and strength eroded, systematically. The Indian Co-operatives are mainly state sponsored and the basic act framed in 1904 by the colonial regime continues to govern their working without much modification. The Registrar is supreme and the whole set up is bureaucratized. Though representing thousands of members the leaders of the society have little authority on their own. For every important decision they have to get concurrence from the Department and the governing committee can be dismissed at the whims and fancies of those holding political power. Democracy remains in paper.
  3. This has hampered the development of the movement to a great extent. The general mood is that of disenchantment and lack of vision about the co-operatives. When the private capital is making an all out attack on the people, especially the peasantry and the rural folk, the movement which ought to raise the flag of resistance is failing in its duties. And with liberalization the fate of co-operatives hangs in balance. While the Eighth-Five Year Plan hardly mentions this sector, the New Agricultural Policy paya lip service to the rejuvenation of the co-operative movements, that too in the area of the processing of agricultural produce and development of the non-farm sector. The situation being such, it is high time that the AIKS pays a little more serious attention to these problems.


Having said this we propose to examine the Kerala experience. We have noted that, to a certain extent, the woes of the Kerala peasantry lay in the failure of the co-operative movement to develop an integrated approach towards agriculture. This is not to minimize the importance of co-operative movement in the rural life. It mainly caters to the credit needs of the peasant. But it is not only credit that is required by him. Once the peasant has been provided with the land, through land reforms, easy credit should be made available to him towards the cost of inputs and a mechanism should be evolved for marketing of his produce, to save him from the exploitation of middle men. In agriculture co-operatives are considered the most suitable institution which comes to the aid of the farmer in both production and marketing. In Kerala this has special relevance, since as noted earlier, over 90% of the farmers fall in the below one hectare category, who do not have either enough capital or the strength to resist the attacks of the middle men.

  1. As far as the credit needs of the farmer is concerned, Kerala does not have much to grumble. D.K. Desai maintains that Kerala is the only state where agricultural credit needs of farmers are fully met. The supply of credit was 10.2% of demand as against 12% for the country as a whole in 1984-85. There are two reasons for this. One is the development of commercial banking and the second, the predominance of co-operative credit societies. Since our theme is the latter, we confine our discussion to the co-operative sector only.
  2. Co-operatives have played a major role in the rural life of Kerala during the past three decades. There are 1580 Primary cooperative societies in the state with a membership of 10 million in 1993. One third of the population are members of such societies. Between 1987 and 1993, the increase in the membership was phenomenal. In six years it has gone up by almost 50%, from 68 lakhs to 100 lakhs.
  3. With the increase in membership, the share capital also has gone up several fold. From Rs. 16.58 crores in 1987, it increased to Rs. 86 crores in 1991 and further to Rs. 115 crores in 1993. These societies together have reserves amounting to Rs. 100 crores and deposits to the tune of Rs. 1506 crores in 1993. The total loans out­standing as on 30-6-93 was 1494 crores.
  4. Even though named Primary Agricultural Societies, they finance not only agricultural operations but also the other requirements of the peasantry. Infact, the latter has overtaken the former in recent times. In 1987 out of Rs. 585 crores issued as loans Rs. 281 crores were for agricultural purposes and Rs. 305 crores for non-agricultural purposes. In 1990 these were Rs. 274 crores and Rs. 486 crores respectively. By 1993 there was great leap towards non- agricultural purposes. That year out of the total outstanding dues of Rs. 1494 crores only Rs. 538 crores were for agricultural purposes, with Rs. 956 crores going for other purposes.
  5. Agricultural co-operatives should have an integrated approach, meeting the credit need s of the farmer, supplying inputs like fertilizers and providing marketing arrangement for the farmers supply vital inputs like fertilizers. Almost 90% of the fertiliser needs of the farmers are met by the co-operatives. Where the cooperative sector lags behind is in the matter of marketing. This is a major issue since Kerala Agriculture has a predominance of cash crops, especially of perennial variety. The main problem faced by the peasantry apart from the increase in the cost of inputs, is the fluctuation in price. Here the involvement of the co-operative sector is, to say least, negligible.


  1. It is in the matter of marketing that the co-operative sector has failed completely. The Economic Review 1994, the official publication of Kerala government notes, “most of the commodities produced in the State move out of Kerala in their raw form for processing and distribution. As the cropping pattern of Kerala is predominated by export oriented cash crops and their production is concerned in the small farm sector, marketing support is critically important for Kerala agriculture…. As the production is spread over millions of tiny holdings, mobilizing marketable surpluses, primary processing, transport etc are all becoming difficult as well as costly. Even though co-operatives are operating in the market they are yet to gain any effective control on the market forces.”
  2. The main agencies functioning in the co-operative sector for marketing of agricultural produce are the Kerala State Cooperate Marketing Federation Ltd (MARKETFED). The Kerala State Co-operative Rubber Marketing Federation. Rural Agro Industrial Co-operative of Kerala (RAIDCO), Central Arecanut and Cocoa Marketing and Processing Co-operative (CAMPCO), Kerala Kera Karshaka Co-operative Federation (KERAFED) and Cashew Apex Industrial Co-operative Society (CAPEX). It is pertinent to study the activities of these State-level agencies to have an idea of their influence in the agricultural produce market.
  3. The MARKETFED is supposed to do market operation to help the farmer realise remunerative prices for his produce. It deals in all types of products like copra, pepper, cardamom and cashew nut. However their interference at the instance of the coconut, pepper cardamom growers is very very poor. Millions of tonnes of Copra (dried coconut) are produced in the State every year. According to official sources, the inter-state trade of the product is around Rs. 600 crores per year. However the business of MARKETFED was limited to 4550 MT worth Rs. 8.43 crores in 1990-91. This went down next year to 2005 MT valued at Rs. 4.06 crores. In the case of Pepper while the production is around 50,000 MT the MARKETFED handled 202 MT in 1992-93 and 300 MT in 1993-94. Regarding Cardamom the MARKETFED handled only half per cent of the total production in 1992-93 . While the production was 1400 MT it did business in seven MT. Cashew nut used to be the major item in the inventory of MARKETFED, since it was appointed as one of the agencies for procurement of raw nut in Government owned factories. In 1992-93 it handled about 25000 MT valued at Rs. 63 crores. However with the procurement policy having been given a decent burial and the government factories returned to private parties that operation also is on the wane.
  4. RUBBERMARK is one institution which is making some impact on the peasants. This agency gives not only market support but also assist in production. For example in 1990-91 it supplied through its own outlets and the PACS fertilizers to the tune of 207975 MT. It also undertakes aerial spraying for pest control. In 89- 90 the area covered was 44650 acres which went up in 90-91 to 60,000 acres. In the field of marketing also it is very active. It has a market share of approximately 10%. It purchased 28662 MT of rubber in 90-91 and 41500 MT in 93-94.
  5. Karnataka was intended to help the arecanut and cocoa growers its operations are on the down swing. While it purchased 2399 MT of arecanut in 89-90 it had come down to 1628 MT in 92- 93. One reason may be the lower production and higher prior. The value of its purchase has gone up from Rs. 67 crores in 89-90 to Rs. 108 crores in 92-93. Regarding cocoa it is still worse. The purchase was only 330 MT in 89-90 going down to 245 MT in 92-93.
  6. One major agency in the coconut market is KERAFED. It purchases Copra, processes it and sells coconut oil. However the experience of the coconut growers is that at times of distress the Federation does not come forward with a helping hand. 1990-91 was a good year for the farmer, when the price of coconut hovered around Rs. 4/-. Since then as noted earlier, the price has gone down to Rs. 2.50/-. However, it is at this time that KERAFED had reduced its market operations. While in 1990-91 it purchased 28490 MT of Copra the purchase when down to 24482 in 91-92 and 20091 in 92- 93. Next year it was slightly better, at 22,169 MT.
  7. Having reviewed the performance of these state-level cooperative agencies in the agricultural marketing segment we may look into the operations of the Primary Agricultural Credit Societies also. As per official documents the value of agricultural produce marketed through these societies in 1987-88 was Rs. 44 crores only which went up in 89-90 to Rs. 58 crores. Though in 1991-92 it achieved a turnover of Rs. 80 crores, next year it went down to Rs. 58 crores. This should be compared to the total agricultural income of the State which stood at over Rs. 5,000 crores. It shows that the PACS deal in only about one percent of the total agricultural produce of Kerala.


  1. Having implemented land reforms what Kerala should have done was to evolve suitable mechanisms with the aim of raising agricultural production and productivity. However it was viewed as though lack of credit was the only thing hampering agricultural production. It was thought that once the farmers are given easy credit, both production and productivity would pickup. The policy makers never addressed themselves to the problem of marketing, stabilization and periodical hike in prices and so on. This created precarious situation, leaving the peasants to vagaries of the market including exploitation by middle men , Indian monopolies and the international capital. This in turn had an adverse impact on production and productivity, with millions of small producers becoming unable to invest capital. Had the grass root level co-operatives also been given the task of acting as the agency for marketing agricultural produce, the situation, to a certain extent, could have been different. The PACS with the active involvement of the State level agencies could have made an impact on the market and thus, to a certain extent, checked the exploitation of the peasantry.
  2. While discussing some of the undesirable trends which have emerged during the post-land reform era, we have made a point regarding absentee ownership. We have noted that the owner being away, farms lie untended. However of late, a positive trend also has emerged at least in some isolated parts of the State. We have reports that in certain areas, the PACS have been authorized by the absentee owners to tend their farm, market the produce and credit the amount to their account. These maybe isolated cases,but it opens up new possibilities, which in turn may augur well for Kerala agriculture.
  3. Productivity is one of the main concerns in the State’s ag­riculture. The average size of the farm being very small it is practically impossible for the individual owner to acquire better technology for raising productivity. Collective effort is the remedy for this. During 1987-91 period we started the group farming system. Even though the ownership of the land remains with the owner, agricultural operations in a specific area are done jointly which results in economies of scale. PACS was to have actively participated in this programme by providing agricultural machineries etc. However, under the UDF regime, like many other projects, group farming also has been shelved, though it remains in paper even now.
  4. The potentials of the co-operatives have not been utilised to the maximum possible extent. It can be rated as the biggest mass movement in the State encompassing 10 million people, which is one third of the population. However at times it has been used by vested interests, for private gain which is happening now. Democratic functioning of the societies have been hampered with the imposition of bureaucratic raj. Therefore serious discussion should be held to find ways and means for preserving the democratic functioning of the co-operative sector.


The conclusions that we draw from the above discussion are as follows:

a. The land reforms in Kerala have completely overhauled the land ownership pattern. However, it has also raised several practical issues relating to agricultural production and productivity which have not been taken up for solution with due concern.

b. Agricultural co-operatives could have in the post land reform era, acted as the nodal agency in the village, giving impetus to production and helping the farmer in marketing his produce.

However, our experience is that they have mostly confined themselves to the role of a financier. Integrated approach with the aim of increasing production and productivity is thoroughly lacking.

c. The full potential of the co-operatives, as a mass movement, have not been exploited.

1955-5’6 1970-’71 1980-’81 1990-’91
Size Class No. of Holding Area No. of Holding Area No. of Holding Area No. of Holding
Below 1 ha 76.7 19.5 81 31.1 89.2 41.6 92.5
1 ha-2 ha 11.3 13.3 10 19.6 6.9 22.0 5.2
2 ha-4 ha 6.5 14.9 5 21.2 2.9 18.4 1.8
4 ha-10 ha 4.1 20.5 2 15.7 0.9 10.8 0.4
10 ha and above 1.4 31.8 12.4 0.1 7.2 0.1
100 100 100 100 100 100 100

Source: a. 1955-56 Kerala Government (1957), Second Five Year Plan.

b. 1970-71 and 1980-81 Agricultural Census Report

c. 1990-91, Government of Kerala, Economic Review, 1994.

Information Document: No. 5 Some Facets About Rural Development in India

Nilotpal Basu

India has been historically a predominantly rural country. And it continues to be so. According to 1991 census, 73.87% of India’s population of 846 million lives in the villages. Their are 5.75,000 villages while the number of cities and towns are a meagre 4700 in comparison.

Naturally, discussion on rural development has been a central agenda in the overall development thinking in the country. This has been more so, because incidence of poverty in India is much more severe and widespread in rural areas as compared to that in urban habitations. Over 30% of India’s rural population lives below the poverty line with rural per capita income estimated at less than half that of the urban one.

In defining the problems facing rural development, we are at awe with the fact that though 75% of Indian population lives on agriculture, its contribution to the GNP remains as low as 40.9%. As because, activities in the rural areas towards development, primarily encompasses agriculture, the issue of relatively low agricultural productivity is a major challenge that the process of rural development is faced with. In fact, the extent to which non- agricultural activities towards rural development can be undertaken also depends crucially on the surplus that can be generated from the agricultural activities.


Defining rural development is indeed a challenging task. Because, though it is an old theme, it is evolving around new content and responding to fresh concerns. Therefore, any meaningful definition of rural development has to be time-space specific.

The concept of rural development in India was born in the context of agriculture and has remained synonymous with agricultural development for a long time. To exemplify, the Royal Commission on Agriculture (1928) remarked – “We cannot too strongly state our conviction that the directorship of agriculture is one of the key posts in rural development”. Nearly 54 years later the Planning Commission’s Task Force on Integrated Rural Development observed in 1972 – “After careful consideration we have belatedly decided to take what might be considered a rather restricted view of the expression ‘rural development’. We have chosen to equate it with agricultural development in the widest sense so as to embrace, besides crop husbandry, all the allied activities.”

However, since the 70’s, the concept of rural development became more confined in its interpretation. Indian official thinking became largely influenced by the views of the World Bank on the subject. The Bank suggested a shift in the emphasis and defined rural development as a strategy designed to improve the economic and social life of a specific group of people – the rural poor.

It would however, be wrong to assume that the Bank ideologues were moved by compassion towards the rural poor in the developing countries. That they were essentially prompted by a more prosaic concern becomes evident from the subsequent arguments advanced by the concerned World Bank paper [World Bank: Rural Development (Sector Policy Paper) page-3]. The paper argued that since rural development intends to reduce poverty it must be designed to increase production and raise productivity. The Paper further pointed out that the provision of improved food supplies and nutrition, together with basic services such as an health and education, not only contribute to physical well- being of the rural people, but also to raise their productivity and ability to contribute to the national economy. Therefore, in the views of the Bank the objectives of the rural development could not remain restricted to any single department but should spread over several, and the resultant mix will serve to raise agricultural output, create new employment, improve health and education, expand communications, provide housing, etc. Of course, what the Paper did not spell out in so many words and what discerning functionaries of an organization like the AIKS should have no difficulty to understand is that all these concerns for the improvement of the rural poor was influenced by the imperatives of an expanded global market. The economic empowerment of the rural poor with purchasing power in the developing countries was an absolute prerequisite for facilitating the reach and sweep of the global big business.

Therefore, it does not appear surprising, if seen in the context of this World Bank thinking, the almost ’revolutionary’ tenor of the official Indian view on the subject. Rural development thus is currently being viewed as a strategy to bring about an improvement in the economic and social life of the rural poor. The 8th Plan reiterating the formulation of the 6th emphatically asserts – “The recent Five Year Plan’s have emphasized the importance of the direct anti-poverty programmes. This is a highly relevant approach and 8th Plan should continue with this approach, even though the specific nature and contents of the anti-poverty programmes may need certain modifications for a more effective direct attack on poverty.” Similarly, the Rural Development Ministry sounds almost repetitive – “Rural development has come to mean a direct attack on rural poverty through special employment programmes, land reforms, area development programmes and measures to provide safe drinking water, water supply and rural housing and rural sanitation ” (Annual Report of the Rural Development Ministry, 1992-93, P.l)


The fact that brave words are no substitutes for the transformation of the grim reality that threatens rural India becomes obvious from the continuing ’wretched of the earth’- status of the rural poor in the country. It is impossible to transmit the positive impact of the so-called ’direct attack on poverty’ to the rural poor, unless the power balance in the countryside shifts decisively in favour of the rural poor.

The fundamental shortcoming of the official approach towards rural development lies in the fact that it does not touch the subject of refashioning the existing power structure of rural India. Therefore, notwithstanding repeated references to poverty alleviation in Plan after Plan the absolute number of people crawling over the poverty threshold has remained abysmally low. The governments cannot therefore escape the question as to what happens to the supposedly huge investments that it claims that it is making. The late Prime Minister Rajiv Gandhi once gave a candid reply by pointing out that out of every rupee on development only 15 paise reach the legitimate beneficiaries. 85 paise disappears somewhere midway.

It appears that there has been no fundamental change in this situation. The pro-rich bias of the implementing agencies ensures that the benefits do not find their way to the rural poor as will be evident from the project wise evaluation of the different schemes of the government. The government simply does not have the political will to refashion the power structure.


While the democratic kisan movement cannot lose sight of this fundamental and inherent weakness of the rural development programmes, it will be absolutely unwise to outrightly reject them as ineffective. In fact, the struggle for proper implementation of these programmes as theoretically enunciated by the government can become rallying points for broad sections of the rural poor. In order to effect such a course of development, it is necessary to raise issues and demands, specific to projects, at all levels right from the village to the national. While this approach can pave the way for partial gains in respect to specific programmes, on the other hand it can also lead to the elevation of the level of political awareness of the peasantry – more particularly the poor and the marginalized sections’- in so far as recognizing and realizing the basic limitation of the rural development programmes is concerned.


There have been a large variety of rural development programmes since independence. The following table gives a fairly exhaustive list of such programmes at different points of time.

Plan period Programme Year of Introduction
First Community development Five-Year Programme 1952
Plan National extention Service 1953
Second Khadi and Village Industries
Five Year Programme 1957
Plan Village Housing Projects Scheme 1957
Multipurpose Tribal Development Blocks Programme 1959
Package Programme 1960
Intensive Agricultural District Programme 1960
Third Five Applied Nutrition Programme 1962
Year Plan Rural Industries Projects 1962
Intensive Agricultural Areas Programme 1964
High-yielding Variety Programme 1966
Annual Plan Farmers’ Training and 1966
Education Programme 1966
Well Construction Programme 1966
Annual Plan 1967 Rural Works Programme 1967
Annual Plan 1968 Tribal Development Block 1968
Annual Plan 1969 Rural Manpower Programme 1969
Composite Programme for Women
and Pre- School Children 1969
Fourth Five Drought- Prone Areas programme 1970
Year Plan Crash Scheme for Rural
Employment 1971
Small Farmers’ Development
Agency 1972
Tribal Area Development Programme 1972
Pilot Projects for Tribal Development 1972
Pilot Intensive Rural Employment Programme 1972
Minimum needs programme 1972
Command Areas Development Programme 1974
Fifth Five Hills Areas Development Programme 1975
Year Plan Special Livestock Production Programme 1975
Food for Work Programme 1977
Desert Development Programme 1977
Whole Village Development Programme 1979
Training Rural Youth for self-employment 1979
Integrated Rural Development Programme 1979
Sixth Five National Rural Employment Programme 1980
Year Plan Prime minister’s New Twenty point Programme 1980
Development of Women and Children in Rural Areas 1983
Seventh Five Rural Landless Employment Programme 1983
Year Plan National Rural Employment Programme 1985
Indira Awas Yojana
Eighth Five Jawahar Rojgar Yojana with its components: 1989
Year Plan i. Indira Awas Yojana
ii. Development of Women and Children in Rural Areas
iii. Million Wells Scheme

It will be difficult to discuss at length about the features of all these programmes. But it has been mainly three approaches which has dominated the design of the projects since independence.

The first was manifest in the Community Development Programme (CDP) which evolved a completely new feature of having a multi-function Village Level Worker (VLW) co-ordinating the activities of different departments. It emphasized on agricultural development and was conducted in areas which were either endowed with irrigation facilities or had assured rainfall. The basic critique of this programme remained in its failure to arouse and sustain people’s passionate interests in it. This has been recognized by observations of a number of evaluation reports of the Programme Evaluation Committee.

The second approach was articulated in the Intensive Agricultural District Programme (IADP). This concentrated on providing and unleashing intensive efforts for enhancing improved agricultural production and productivity in these selected districts. This programme was an offshoot of and dovetailed with the new agricultural strategy of the mid- sixties which later on came to be looked upon as the ’Green Revolution’. The fundamental weakness of this programme was that while it augmented agricultural production, it also gave rise to a sharp imbalance along regional lines and also between different stratas of the peasantry.

And the third stream which is currently in vogue is the approach which has come to be recognized as the Integrated Rural Development Programme. The main features of this Programme consist of a direct anti-poverty approach, multi- functionary and integrated nature and combine simultaneous initiatives in many directions. In the main this Programme underlined the need for improving the overall conditions of the ’marginal man’ – the rural poor. It naturally had certain associated programmes like the Training Rural Youth for Self-Employment Programme (TRYSEM) and Development of Women and Children in Rural Areas (DWACRA). This approach is supplemented with and reinforced by Jawahar Rozgar Yojana (JRY) and its component streams like Indira A was Yojana (IAY) and Million Wells Scheme (MWS). The JRY combined elements of infrastructure development in rural areas and wage employment. While this third stream in the official approach towards rural development appears to be more relevant in meeting the objectives of the new emphasis which the concept of rural development in the contemporary context has assumed — that of eliminating rural poverty, it suffers from the basic shortcoming that we have pointed out earlier.

The IRDP approach is being sought to be implemented with other long term development programmes which seek to optimize the potential of land, water and other bio-resources. These are the Drought Prone Areas Programme (DPAP) and Desert Development Programme (DDP). Apart from these there are two other Programmes which aim strengthen the human and physical infrastructure in the rural areas. These are the Rajiv Gandhi Drinking Water Mission of the accelerated Rural Water Supply Programme and the Rural Sanitation programme. The allocation for these Programmes are also supplemented from the Minimum Needs Programme (MNP) there are also special plans and sub-plans for specific groups like tribals or people in the hilly areas.

Another new feature of the official thinking is to involves the Governmental Organizations (NGO) to implement certain programmes through the Council for Advancement and Promotion of Rural Technology (CAPART). The difficulty with this approach is that once the elected panchayats come into full play these organizations’ activities can come into conflict with those of the panchayats. Already there has been quite widespread allegations about many of the NGOs which have been funded by the CAP ART pointing out that many of them exist only in paper.


It appears that the investment of Rs. 30,000 crores for rural de­velopment in the Eighth Plan is a major campaign plank for the Government. But when one sees that, the rate of increase in allocation in this sector is less than that of the overall Plan size, ie, the percentage allocation for this sector in the Plan has actually decreased, one can call the bluff that the Government is indulging in.

What is really important in this respect is to find out what is the quality of the delivery system? And, more importantly what is the impact of the investment in terms of meeting the basic objective of rural development — poverty alleviation? The census and the NSS data available with us do not tend to show that there has been any appreciable change in the magnitude of rural poverty. Apart from the basic shortcoming of the orientation and implementation of these Programmes, specific problems are also showing up in a very big way. One of the major problems pertain to the non-availability of adequate and appropriate rural credit. For example, one of the major schemes of the ongoing rural development activity — the IRDP involves a massive credit component. It is seen that the commercial banks which is a major contributor towards lending for the IRDP has an outrageous performance with their entrenched anti-poor orientation. The ceilings for the project cost also in the context of the current grim price situation also makes a particular project inviable in the first instance. And then it becomes a vicious circle. As the project is unviable the beneficiary is unable to repay the credit and the poor rate of recovery a stigma against any further credit for the schemes. I clear that even by the admissions physical achievements do not show any great increase if not stagnation.

The corruption at different levels is also a major impediment towards the registering of any positive impact in commensurate with the investment for such programmes. ’


It is incumbent on the democratic Kisan and Agricultural Workers Movement to take up demands flowing from the manner of implementation of the ongoing rural development programmes. It is needless to say that there is a tremendous potential for mobilizing broad sections of the peasantry—in particular the rural poor in these struggles. The experience of these can on the one hand strengthen the unity and sense of achievement on the basis of whatever achievements may be scored. On the other hand, it can raise the political awareness about the iniquitous nature of the power structure in the rural area which is the major hurdle to ensure the avowed goals of rural development. Printed at Progressive Printers, Shahdara, Delhi-95 (Ph: 2282847)tion and the release of a new array of dazzling luxury goods in the Indian market, and the consequent consumption of those has curtailed saving. The saving will decline further if the recommendation of the Narasingham Committee to prune unprofitable branches of state-owned banks is fully implemented. O

Date: 19-22 November. 1995

Author: AIKS