the political economy of agrarian policies in kerala

442 Pages·2014·8.66 MB·English

THE POLITICAL ECONOMY OF
AGRARIAN POLICIES IN
KERALA: A STUDY OF STATE
INTERVENTION IN
AGRICULTURAL COMMODITY
MARKETS WITH PARTICULAR
REFERENCE TO DAIRY
MARKETS
VELAYUDHAN RAJAGOPALAN
Thesis Submitted for the Degree of Ph D
Department Of Government
London School Of Economics & Political Science
University Of London
April 1993
UMI Number: U062852
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ABSTRACT
This thesis analyzes the nature of State intervention in
agricultural commodity markets in the Indian province of
Kerala in the period 1960-80. Attributing the lack of
dynamism in the agrarian sector to market imperfections,
the Government of Kerala has intervened both directly
through departmentally run institutions and indirectly
through public sector corporations. The failure of both
these institutional devices encouraged the government to
adopt marketing co-operatives as the preferred instruments
of market intervention.
Co-operatives with their decentralised,
democratic structures are^ in theory, capable of combining
autonomous decision-making capacity with accountability to
farmer members. The Government of Kerala believed that this
institutional mechanism would aggregate the interests of
peasants and thereby transform them into powerful market
agents.
We, however, argue that the nature of the
interest group process, both within the organisation and in
the larger polity, significantly, distorts policy outcomes.
First, the nature of the intervention - the deployment of
massive financial resources, the top-down approach with its
commitment to the achievement of quantitative targets and
the capital intensity of many of the projects- afford
2
opportunities to powerful groups such as professional
politicians and State bureaucrats to maximise their own
interests. Second, groups within the organisation such as
farmer-politicians with their proximity to decision-makers
and trade unions with their links to political leaders are
able to divert an increasing share of the organisation's
resources to themselves. In the process, farmers, in whose
name these policies are initiated, experience negative
consequences.
The above hypothesis is tested by analysing the
implementation of Operation Flood- India's dairy
development programme. Operation Flood (OF) was launched by
the Government of India with the avowed aim of increasing
farm incomes through an institutional framework( the Anand
Pattern Co-operative of Gujarat) in which farmers would
have control over their own resources. This research,
however, finds that owing to interest group processes, the
programme has produced sub-optimal results in Kerala.
Producer prices have remained stagnant, while production
costs have soared. Farmers have responded by restricting
supplies, which has led to massive shortages in the market.
Meanwhile the fiscal foundations of the organisations have
been undermined, as powerful groups appropriated an
increasing share of the organisations' resources. An
intervention intended to optimise benefits for farmers, in
fact, resulted in the dominant interest groups within the
polity maximising their benefits.
3
The thesis is based primarily on unpublished
material gathered directly from institutions in charge of
implementing the programme.The author was associated with
the implementation of OF in Kerala during the period 1988-
90.1 had, therefore, access to confidential materials such
as minutes of Board meetings, internal memos, balance
sheets and audit reports of OF institutions in Kerala.
Moreover, as an officer of the Government of Kerala, I also
had access to government documents and files. Documentary
evidence was supplemented by interviews with key actors
such as V.Ramachandran,the former Chief Secretary of
Kerala, Secretaries to the Government of Kerala and
officials of the departments of Animal Husbandry, Co­
operatives and Dairy Development. A sample survey was also
conducted to ascertain the response of farmers to the
programme.
TABLE OF CONTENTS
Title Page
Abstract ........................................... 2
Acknowledgments .................................... 6
Abbreviations ....................................... 8
List of T a b l e s .................................... 11
Introduction ....................................... 16
The Development Paradox of Kerala................. 63
Dairy Markets in the Pre-Operation Flood Period • 124
Interest Groups and Operation Flood in Kerala . • 166
Performance of Operation Flood in Kerala • . . . 223
The Politics of Milk P r i c i n g ............. 267
Operation Flood as a Role Model . . . . . . . . . 312
Conclusion.................................... 360
Appendix I .................................... 393
Appendix I I .................................... 395
Appendix I I I .................................. 403
Appendix I V .................................... 407
Bibliography ....................................... 408
ACKNOWLEDGMENTS
A number of people have contributed to this
thesis. I have drawn heavily on the resources of the Kerala
Co-operative Milk Marketing Federation (KCMMF) , Trivandrum.
The staff of KCMMF and its affiliated unions, have extended
considerable assistance to me during my field trip in
Kerala. I thank them all. While it is invidious to single
out any individual, I must put on record my appreciation of
the help given by A.Raja, Manager, Computer Cell, KCMMF and
his assistants. During the field trip, I interacted with
the presidents and board members of a large number of dairy
co-operatives. I shall always be grateful for their candid
and earthy comments on the implementation of Operation
Flood in Kerala. Officials of the Dairy Development and
Animal Husbandry Departments, the Bureau of Economics and
Statistics, the Coconut Development Corporation, "KERAFED”
and "MATSYAFED" have all extended to me a great deal of
assistance.
I wish to thank the officials of the NDDB at
Bangalore, Madras and Anand who went out of their way to
furnish me with up to date information on the status of OF
in India. I also thank Dr; V.Kurien, the Chairman of NDDB
and V.Ramachandran, the former Chief Secretary of Kerala,
both of whom, granted me interviews at very short notice.
My thanks are also due to the officials of the Tamilnadu
6
Dairy Federation who extended considerable assistance
during my trip to Madras in April 1991.
I wish to thank the Governments of India and
Kerala for giving me permission and the necessary leave to
write this thesis. My thanks also to the London School of
Economics, the LSE 1980s' Scholarship Fund and the British
Council for funding my studies in London. My thanks are
also due to Rosie Gosling for her support and Sanjay Bakshi
for his computer wizardry.
My supervisors - Tom Nossiter and John Harriss
have been my greatest source of strength. Tom has lavished
a great deal of attention and affection on me. His
encouragement, warmth and above all confidence in me made
this thesis possible. John has been a tower of strength and
his belief in me has helped me through many a dark moment.
I do not know how to acknowledge my debt to my
wife Geetha. To satisfy my whim of studying in London, she
accompanied me here leaving our children in Kerala. Her
love, support and belief in me made this thesis possible.
V.RAJAGOPALAN
ABBREVIATIONS
1) AI: Artificial Insemination
2) AIML: All India Muslim League
3) AITUC: All India Trade Union Congress
4) APCO: Anand Pattern Co-operative
5) CDS: Centre for Development Studies.
Ulloor,Trivandrum.
6) CITU: Centre for Indian Trade Unions
7) CMS: Calicut Milk Supplies Union
8) Congress-I: Congress- Indira
9) Congress-S: Congress-Socialist
10) Congress-U: Congress-Urs
11) CPD: Central Products Dairy
12) CPI: Communist Party of India
13) CPM; Communist Party of India (Marxist)
14) EEC; European Economic Community
15) ERCMPU: Ernakulam Regional Milk Producers '
Union
16) GB: General Body
17) IAS; Indian Administrative Service
18) IFS: Indian Forest Service
19) IPS: Indian Police Service
20) ICDP: Integrated Cattle Development Project
21) INTUC: Indian National Trade Union Congress
22) lUML: Indian Union Muslim League