Corruption in Agriculture in India

By Ankita

India is the fourth largest food producer in the world. Ironically, we are also the country facing farmer distress and unrest year after year. Clearly, we produce enough to feed our 1.3 billion citizens but the economic re-distribution of this production is blotchy. In this paper, I will try to highlight how corruption in the agricultural sector in India perpetuates inequality in an agrarian society.

Corruption can be defined as an unethical act for getting economic or non-economic benefits. It is observed in the form of nepotism, favoritism, bribery, coercion, patronage etc. In the agricultural sector, all these forms of corruption can be seen across various levels. It percolates to lower levels of bureaucracy and reaches up to the highest political level possible. The rupees 900 crore Fodder Scam in (then undivided) Bihar[1] shook the nation in the early 1990s where money was withdrawn from the state treasury to buy non-existent fodder for imaginary livestock. Private companies, senior bureaucrats and department assistants were found to be involved in fraudulent purchase of poor-quality seeds in the Kerala State Seed Development Authority[2] scam worth rupees 13.65 crores. Incidents like this highlight how corruption is deeply rooted in the day-to-day activities of everyday bureaucratic and political life. This corruption may occur at different stages in the production process- land ownership disputes and arbitration, land acquisition, access to credit, marketing and distribution of produce, coverage in government schemes etc.  Even Bollywood movies like Mother India[3] (1957), Upkar[4] (1967) and Peepli Live[5] (2010) have attempted to highlight the plight of farmers, helplessly trapped in the vicious cycle of the corrupt system.

Jeffrey, in his article Caste, class, and clientelism: A political economy of everyday corruption in rural North India (Geography et al. 2019), has highlighted the corruption in sugarcane marketing in western Uttar Pradesh. In 1998, UP Government unearthed rupees 24 crore scam by sugarcane societies which handle the procurement of sugarcane to government sugar mills. They maintained a shadow market during fluctuations in supply in a season. The clerks in the Cane Society acted as brokers who chose which farmer would be favored during the procurement process. It was also an interplay of the land held by the factor and the caste he belonged to (for instance, Jats in Meerut). Even higher officials charged a “fixed” rate for the estimation of the number of hectares planted with sugarcane. Payment of this fixed rate (read bribe) ensured that the surveyor would over-estimate the production. This over-estimation helped farmers as it ensured higher quota of procurement by the government.  This whole structure signifies that right from the low-level officials to high-level bureaucrats, everyone had their share well-defined in the process. Such a systematic and organised way of getting “on-the-top” incomes!

Gupta and Chaudhuri, in their article Formal Credit, Corruption and the Informal Credit Market in Agriculture: A Theoretical Analysis (Bengal 1997), tried to analyse interest rate determination in the informal credit market. They used multiple models to come up with different scenarios involving farmer, officials and money-lenders in formal and informal market and the reaction(behavior) curves of each. The paper finds that the supply of formal credit to farmers is controlled by officials who ask for bribes. The effective interest rate in the formal sectors may at times be higher than the informal lending via moneylenders.  The bribing rate and informal sector lending rate simultaneously gets decided by the moneylender and the official and reaches a Nash[6] equilibrium condition. Thus, a lot depends on how efficient the government is in detecting the corrupt official.

There are several other aspects linked to agricultural corruption in India. The problem lies not only around who is involved in this act of corruption but also about the fact that state machinery (mostly) helps in perpetuating such activities. Most often, the money-lenders are rich farmers owning large tracts of land. They work for hand in glove with the local police administration. Any voice raised to uncover a corrupt practice gets muted. It is a patron-client network strengthening the class-caste differentiation in society. There is also a strong correlation between access to effective police and judicial assistance and economic and social status of the people. In these circumstances, I feel it is unfair to say that only political class gets involved in corruption, a notion widely perceived in our society.  Isn’t the clerk a middle-class worker? Isn’t the local hawaladar probably a lower-middle-class person trying to rise up? Ultimately, it’s the rural poor who becomes the ultimate victim of this entire process and has absolutely no means of being heard to get his issues resolved.

Government schemes and programs are definitely one way to help our farmers. But it may not show the desired results as the implementation gets thwarted at multiple levels due to bureaucratic and local corruption. A systemic change might be needed to curb such deep-rooted corruption. After all, how far can even the Lokpal[7] probe into such micro-level corrupt practices?

Ankita is a student of Masters in Public Policy at Jindal School of Government and Public Policy.


References

[1]https://www.thehindubusinessline.com/news/national/fodder-scam-sc-seeks-cbi-response-on-lalu-yadavs-bail-plea/article26542798.ece

[2]https://www.thehindu.com/news/national/kerala/seed-scam-hits-agriculture-department/article19126756.ece

[3] Shows the struggle of a woman farmer against greedy moneylender.

[4] Shows grain broker who buys at low price from the farmers and sells at higher rates to the city.

[5] Satirical comedy on farmer suicides and subsequent media and political attention.

[6] In Game Theory, it is a stable state of a system involving the interaction of different participants, in which no participant can gain by a unilateral change of strategy if the strategies of the others remain unchanged.

[7]  Anti-corruption ombudsman under the Lokpal and Lokayuktas Act, 2013.

Image Source: TOI

Bibliography

  1. Bengal, West. 1997. “Formal Credit , Corruption and the Informal Credit Market in Agriculture : A Theoretical Analysis.” : 331–43.
  2. Geography, Source Economic, No Jan, Published Taylor, and Craig Jeffrey. 2019. “Caste , Class , and Clientelism : A Political Economy of Everyday Corruption in Rural North India Author ( s ): Craig Jeffrey Stable URL : Https://Www.Jstor.Org/Stable/4140822 Caste , Class , and Clientelism : A Political Economy of Everyday Corruption in Rural North India * Rent Seeking in Rural North Draft and to Stephen Clibbery for Assistance In.” 78(1): 21–41.

2 comments

  1. Thanks for posting the article.

    It provides an insight into the actual issues plaguing the agriculture sector than what’s shown on the news.

    Like

  2. Thank you for your important insight. I particularly appreciate the emphasis on the plight of the rural poor. The entire system seems to coalesce against them.

    Like

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