policies have always tended to hurt farmers and producers.
Compulsory procurement of food grains at below-market rates,
phenomenal corruption and inefficiency, unfavourable terms
of trade, restrictions on trading movement and storage of
farm produce, all undermined agriculture. Rural credit institutions
are extremely weak, and most farmers are forced to borrow
from usurious money lenders. Fair markets in general do
not exist, with the exception of the Mandis of Punjab and
Haryana (thanks to the foresight of Choutu Ram), and marketing
committees in most states are sources of political patronage
and corruption. The scams in cotton procurement are a good
illustration of government bungling.
saddest part of the story is the unconstitutional, vice-like
grip of politicians and bureaucrats over farmers' cooperatives.
The story of the dairy cooperatives in Andhra Pradesh
is a good illustration of corruption, incompetence, malice
and gross perversion of the Constitution perpetuating rural
Constitution clearly guarantees the fundamental right of
citizens to form and run cooperatives [19(1)(c)] and to
carry on any trade or business [19(1)(g)]. The state has
ignored this constitutional liberty for decades, and controlled
the cooperatives in a most brazen and arbitrary manner.
In time, corruption and incompetence of government bureaucrats
led to collapse of most cooperatives, forcing some rethinking.
The Brahma Prakash Committee (1990), the model cooperative
law (1991), the Vaidyanathan Committees (2005) and several
other expert reports emphasized the need for autonomous,
democratic and professional management of cooperatives free
from government control. The UPA government's NCMP reiterates
1995, AP was the first state to enact the Mutually Aided
Cooperative Societies Act (MACS Act), recognizing the constitutional
liberty of cooperatives in respect of societies which do
not have government share capital and do not seek government
assistance. Out of the eleven district cooperative milk
unions, 8 district unions and about 5000 primary milk societies
chose to be registered under MACS Act. The results over
the past few years have been stunning.
dairy cooperatives under MACS Act more than doubled their
turnover in five years, and profits and net worth soared.
The farmers get the highest price (Rs.195-225 per kg of
fat), and profits are shared by members as price difference
and bonus. The cooperatives provide other free services
- artificial insemination, feed, veterinary care, and medical
facilities for the families. In contrast, the dairy cooperatives
which remained under government control collapsed, losses
mounted, and are under liquidation. Farmers are forced to
sell milk to private companies which formed cartels and
offered less price (Rs.175 per kg fat). The government-controlled
dairy federation is a white elephant with large, over-paid,
inefficient staff and endless corruption. The federation
offers even less price than the private companies and both
provide no other services to farmers.
this backdrop, the AP government took an extraordinary decision
this month. By an ordinance, all the successful, well-functioning
dairy cooperatives under MACS Act were brought under the
repressive 1964 Act, all elected managements were dismissed
in the dead of night, and bureaucrats took over all the
5000 cooperatives at primary and district levels. The reasons
cited by the state are laughable if the consequences are
not tragic! The government, under whose control and watch
all district unions collapsed, claims that the law is to
improve the financial performance of diary cooperatives
and serve farmers! With 'friends' such as these, farmers
need no enemies! In the face of the Constitutional guarantees,
proclaimed public policies, and compelling and incontrovertible
evidence of financial collapse under government control,
it is shocking that states still keep playing these political
games for control and corruption in this day and age! Farmers
end up losing heavily, and this loss often marks the difference
between life and death in times of distress.
issues like this, the hapless farmers will eventually win
the legal battle, thanks to independent judiciary and a
written Constitution. But even then, enormous struggle has
to be waged not to improve formers' conditions, but simply
to stay where they were! This is a classic case of one step
forward, two steps backward!
states' actions in agriculture, cooperatives, education,
healthcare and local governments are going to determine
the economic future of rural India and urban poor. Governance
in states, rural incomes, constitutional liberties, and
citizen-centric administration are inextricably linked.
And yet, even in states which are ruled by major parties
with a powerful stake in the Union government, vindictiveness,
unconstitutionalism, adhocism and an attitude of 'might
is right' seem to prevail. The right hand does not know
what the left hand does! Clearly our economic future increasingly
depends on altering political incentives and reforming governance.