The Farmer Income Conundrum

Recently there has been a lot of hype about a few agritech companies having made impressive growth in revenues. Especially, the performance of DeHaat Kisan: Agriculture and Farming is in the news for having used "AI enabled technologies to revolutionise supply chain and production efficiency in the farming sector through an extensive network of15000+ centres and 503 FPOs serving12.8 million+ farmers."

I have always argued that the sordid reality is that farmers in this country do not get a fair price for their products which can even cover their household expenditure let alone allow them to earn a profit. As is borne out from the two graphics below that I have compiled from the results of the farmer situation survey and household consumption expenditure survey conducted by the National Sample Survey Organisation 77th Round in 2019.

Therefore, while agtech and FPOs can improve matters marginally it cannot substantially increase farmer incomes. Moreover, since there are huge costs for any aggregator of agricultural produce in transportation and storage, the only way such an aggregator can make money is by cheating farmers both in weight and price. This is what most agri traders do. Thus, if an aggregator is not cheating the farmers, then given the huge costs of transportation and storage it must be making losses.

I did some research on Dehaat's finances to test out this hypothesis of mine. It is registered as Green Agrevolution Pvt. Limited with the Registrar of Companies (RoC). The latest financials of the company as per the reports submitted to RoC are as follows -

TOTAL REVENUE: - ₹Crores 2,647.6 which is a 36.12% increase year on year.

EBITDA ₹ Crores -1,118.2

NET LOSS ₹ Crores -1,123.9

NET WORTH ₹ Crores -4,178.2

BORROWINGS ₹ Crores 5,119.6 which is a 24.73% increase year on year

ASSETS ₹ Crores 1,370.9

ROCE -41.72 %

Clearly, the company is making huge losses from its operations confirming my hypothesis that given the low prices of agri produce in wholesale markets it is not possible for an aggregator to make profits without cheating farmers. It is not known what prices it is offering for procurement from farmers but it looks as if it is offering more than the market prices so as to attract them to sell to it. This is not a financially sustainable business model and is not only running but also growing its revenues only because it is heavily funded by big investors. We run an organic store https://kansariorganics.in/

which too runs in losses as we offer the farmers a fair price. The losses are subsidised by our NGO https://mahilajagatlihazsamiti.in/

from grant funds. Therefore, instead of falsely stating that agtech and FPOs can solve the serious problem of lack of income of farmers, what needs to be done is to increase substantially the government support to farmers to pursue ecological restoration, ecological farming, distributed renewable energy generation and local processing and consumption of agri produce.

Whither Armed Struggle?

 An era is coming to an end. The killing of the General Secretary of the Communist Party of India (Maoist), Basavaraju and his security guard of 26 commandos of the People's Liberation Guerilla Army (PLGA) by the security forces on May 21st deep inside the jungles of Abujhmarh in Chhattisgarh was a decisive blow against Naxalism which will almost certainly bring this six decade long armed struggle to overthrow the state through a people's war to an end soon.

Naxalism emerged in 1967 initially as a movement of Adivasi peasants in West Bengal's Naxalbari village, from where it got its name, to sieze the land of landlords but soon morphed into a revolutionary movement to overthrow the Indian State altogether to establish a revolutionary peasants and workers state on the lines followed by the Communist Party of China (CPC).

However, unlike the CPC, the Naxals neither had a broad mass base nor a guerilla army of any strength and so were crushed very soon and within four years the movement had abated in West Bengal and a little later in Andhra Pradesh and Bihar where too it took off about the same time.

Nevertheless, it did leave a huge impression on some people who were troubled by the unjust development being pursued in India which had left the majority of its citizens in severe economic distress without proper education and health. The idea of a people's state still enthused people and especially the youth in the nineteen seventies and I was one of them. Like others so enthused I read up on Marxism-Leninism and Maoism and was in the student's wing of one of the many splinter Naxal organisations that were floating around then, still mouthing revolutionary rhetoric even if not engaging in armed struggle to actualise it!!

Even though by the early 1980s it became clear to me that Marxism-Leninism and Maoism, while providing a fairly incisive critique of the functioning of capitalism and feudalism, were by then a bit off the mark as far as conducting armed struggle to overthrow the modern capitalist Indian State was concerned, some others in Andhra Pradesh and Bihar continued to believe in this ideology and its programme of armed struggle and launched a fairly strong one. Eventually though the considerable power of the modern Indian state forced these armed groups into the dense jungles of Chhattisgarh, Odisha and Garhchiroli in Central India and in Jharkhand.

They held their own for four decades in these jungles till drone warfare aided by satellite surveillance and the induction of former Maoist surrendered guerillas into the security forces and betrayal by some Maoists from withing have finally taken their toll. Given the fact that there was just one fatal casualty on the side of the security forces while the ferocious and well armed elite commandos of the PLGA and the General Secretary were all killed, it seems that the latter were surprised in their sleep and surrounded by the former from all sides.

Moreover, Mao's famous adage - "The guerilla must move among the people as a fish swims in the sea" was also rendered ineffective as the PLGA was increasingly isolated from the mass base that it had among the villagers as the security forces set up camps in the villages. The urban intelligentsia which provided silent support, sometimes of a crucial nature, too has been decimated through better surveillance technology available to the security establishment.

On many occasions from within their ranks and outside and by the state, the Maoists have been asked to give up armed struggle and pursue justice within the rights framework of the constitution but their top leadership has always refused, saying that there is no alternative to overthrowing the capitalist state. Now with their ranks severely depleted it is unlikely that they will be able to continue with the armed struggle.

Contemporaneously to the Maoists, there have been many mass movements for justice within the constitutional framework in these five decades from the mid nineteen seventies. They too have been unable to bring about a people centric state. Primarily because the state is inimical to any mass mobilisation whether armed or unarmed that tries to foreground the fundamental rights of its citizens in the development policies of the state. In fact, the state has had no hesitation in labelling even mass organisations engaged in unarmed protests as naxals and incarcerating their members under the draconian laws enacted to curb the Maoists and other armed organisations.

It will be interesting to see how the struggle for justice evolves in future in Central India in the absence of the armed Maoists.

Universal Basic Income as a means to a Revolutionary Transformation

 Current late capitalist domination has so atomised the working class that we now no longer have a proletariat, a class for itself but only a precariat with little or no class consciousness as a prelude to organising for a revolutionary transformation to a more socio-economically just dispensation. Under the circumstances just fighting for better working conditions and wages will not only be difficult but will not achieve a progress towards revolutionary transformation. Consequently, there is a need to fight for a universal basic income as well as will be argued in this note.

1.       Primitive Accumulation

Karl Marx had in Das Kapital defined primitive accumulation as a pre-capitalist phenomenon that led to the initial accumulation of capital on the one hand and the creation of wage labour on the other hand, resulting in the establishment of capitalism in England in the eighteenth century (Marx, 2016). Marx, critiquing Adam Smith’s earlier assertion that the process was a peaceful one in which some labourers through their hard work had accumulated capital (Smith, 2018), contended with evidence that peasants were driven off the land, on which they were serfs or petty producers and even the commons were enclosed, through extra-economic means such as arbitrary violence and laws enacted by the state. However, Marx himself said that while this was at that time a one-off process in England, it was not so in the colonies where petty agricultural producers continued to be there in large numbers providing rent to the colonisers, who sent the surplus so extracted back to the imperialist countries for expansion of capitalist production there. Rosa Luxemburg, too, argued that the existence of a non-capitalist space was necessary for the realization of the surplus component of the value of a capitalist commodity as well as for primitive accumulation from exploitation of labour and natural resources from the colonial periphery for the continuance of capitalist development as capitalism internally would not be stable (Luxemburg, 2003).

Later, Louis Althusser argued that primitive accumulation has been an integral part of capitalism because even after capitalism was well established in Europe and America in the nineteenth and twentieth centuries, it continued to extract surpluses by extra-economic means from the colonies and later the nominally independent nations of the post World War II era (Althusser, 2006). The onset of the neo-liberal era from the 1990s onwards, led on the one hand to a withdrawal of welfare benefits and union rights which had been gained by the working class through hard fought battles in the industrialised capitalist countries of the West and a dismantling of the socialist apparatuses of the USSR, China and Eastern Europe on the other. Many Marxian theorists argued that this was a revival of primitive accumulation within the capitalist system since it involved the exclusion of a vast number of people from the social commons which provided free education, health and unemployment benefits combined with the squeezing of wages through outsourcing of jobs and the handing over of public enterprises to private capital (Harvey, 2003, De Angelis, 2004). Moreover, tax breaks and subsidies were given to corporations which led to their increasing profits further reducing the funds available for maintaining the socio-economic commons. The huge dominance of finance capital globally and the use of international financial organisations like the World Bank and the International Monetary Fund to impose cuts in public welfare spending in the developing countries and the transfer of the surpluses from them to the banks of the developed countries through debt and interest repayment were also considered to be extra-economic dispossession of the people of those countries and so a form of primitive accumulation.

This analysis has been cogently extended by Prabhat Patnaik to the case of India since the 1990s when neo-liberal policies were introduced in this country (Patnaik, 2017). Patnaik writes –

“The neo-liberal regime, has increased the tendency to inflict primitive accumulation upon third world petty producers. In the name of free trade, this sector, and above all peasant agriculture, is now exposed to world market fluctuations, which bring ruin to large sections of the peasantry. In the name of bringing about fiscal rectification, input subsidies to this sector, including cheap credit, are withdrawn. International agri-business and domestic big capitalists are able to squeeze the peasantry.

The second way in which primitive accumulation is carried out is in the name of ‘development’ itself, peasant lands are taken over for a ‘song’ for industrial and infrastructural projects. Not only is the peasantry, that legally owned this land, squeezed in the process, but also the entire group of tenants and agricultural labourers whose rights on the land are not even recognized when such take-over of land occurs.

The third way of primitive accumulation is increasing the tax-burden on petty production. Take the case of the uniform Goods and Services Tax, under which, all products are taxed, including the products of the petty producers that had not been taxed earlier, on a par with the products of big capitalists. This has, needless to say, the effect of squeezing this sector.

The fourth mechanism of primitive accumulation is through the privatization of essential services like education and health that the neo-liberal regime effects, which raises the prices of these services. Since the new service providers belong to the capitalist sector, such a rise in price is analytically analogous to a rise in the ‘degree of monopoly’ (Kalecki, 1971), which clearly has the effect of compressing the real income of the petty production sector and of the workers of the capitalist sector itself.”

Patnaik, however, does not mention above the most important means of primitive accumulation, that of non-payment of statutory minimum wages due to extra economic pressure exerted on the workers, leading to huge extraction of surplus value. This is even more of a problem in India than in the developed countries because the statutory minimum wages are themselves very low in most states in this country (The statutory minimum wage is 15 Purchasing Power Parity dollars a day on an average in India as opposed to 120 dollars per day in the USA). Marx showed that the exchange value of goods and services produced, depended on the socially necessary labour time required to produce them (Marx op cit). This social determination of labour time is not simply a function of supply and demand but is also dependent on negotiation between the working class and the capitalists. Thus, over time the proportion of the value created that would be given to the workers in the form of better wages and working conditions, was decided by contestation through trade unions between the workers and capitalists and increasing workers’ power resulted in the State also legislating to provide for regulation of the capitalists. Consequently, the absence of unionisation in the large informal sector or the roll-back of unionisation from the formal sector as has happened since the 1990s all over the world and in India, mean that there is extra-economic extraction of surplus value from workers within the capitalist system and this is a basic feature of primitive accumulation.

2.       Labour Situation in India

The fact is that industrialisation in India has from the beginning been fuelled by primitive accumulation based on cheap labour resulting from state policies to prevent unionisation and keep down wages and through dispossession by displacement (Basu, 2008). Education, health and employment for the masses have never been provided adequately by the State unlike in the developed countries and so the vast majority have had to remain unskilled, unhealthy and underemployed providing a large industrial reserve army who can be cheaply employed by the capitalists. Attempts by labour to organise and get better wages and working conditions are met with state repression. The most infamous example of this in recent times is the state repression of the workers of the Maruti Suzuki Car factory in Haryana (Deshpande & Haksar, 2023). The State has enabled this exploitation as labour laws have been implemented only for a miniscule proportion of the total workforce that is formally unionised. Whereas, there were 11124 registered trade unions in India, only 2311 of them filed returns and the total membership of the latter was only 6,181,731 (GoI, 2022).  We can safely assume that those trade unions that are not filing returns are defunct and so given the industrial workforce in India to be about 130 million or about 25 percent of the total work force (CEIC, 2023), the effectively organised industrial workforce is just 4.6 percent of the total.  Thus, the overwhelming majority of the workforce, being not only unorganised but also prevented from organising, are being paid much less than the statutory minimum wages which are themselves very low.

Moreover, from the time of independence the draconian but now repealed colonial Land Acquisition Act 1894, the Indian Forest Act 1927 and later the post-independence Wildlife Protection Act 1972 have been used to dispossess millions of peasants, especially tribespeople, from their land for development projects like dams, steel plants, mines and industrial areas without adequate compensation or rehabilitation (Basu, op cit).

A major labour phenomenon in India has been circular migration, which by definition, is a transitory phenomenon but it has been a long-standing feature of industrialisation right from its inception. Incipient industrialisation in the nineteenth century attracted migrants from rural areas. In the case of the jute mills of Bengal these were workers mostly from the rural areas in Bihar and Uttar Pradesh and also from Odisha and Andhra Pradesh (De Haan, 2022). The cotton mills of Mumbai also had migrant workers from Ratnagiri to the south of the city and from Uttar Pradesh (Chandavarkar, 1994). These workers were men who lived alone and maintained close relations with their families back in the villages. Industrial or other urban jobs gave these migrants an opportunity to supplement meagre family incomes and farm livelihoods but did not result in a permanent transition from rural to urban life. It was only later in the twentieth century and especially after independence that the migrant workers settled down in cities as industrial growth spurted with greater public investment under the Five Year Plans and the need for permanent skilled labour increased (Joshi, 2008).

However, even after independence matters did not improve much because the nascent capitalist class drew up a plan for economic development of India based on primitive accumulation that is known as the “Bombay Plan” after the industrialists from Bombay who conceived of it (Thakurdas et al, 1944). This plan envisaged the rapid development of basic infrastructure through heavy state spending garnered from exploitation of the labour of the masses and the vast natural resources. It specifically mentioned that the state must intervene to maintain law and order and restrict individual freedoms given the possibility of dissent from the masses against such a policy and the new independent Government in India followed this path of development.

Consequently, the new Indian Constitution adopted in 1949 did not give fundamental rights status to the rights of education, health and employment and instead put them into the section on Directive Principles of State Policy which are non-justiciable. In fact, the Constitution was largely a copy of the colonial Government of India Act of 1935 and mirrored its anti-people provisions. So much so that G.D. Birla the doyen of the Indian capitalists gloated at the time, "We have embodied large portions of the 1935 Act, as finally passed, in the Constitution which we have framed ourselves and which shows that in the 1935 Act was cast the pattern of our future plans" (Birla, 1968). The Five Year Plans that were implemented from the 1950s, followed the anti-people guidance of the Bombay Plan. So, right from the time of independence people have been displaced from their land and have been forced into increasing the industrial reserve army, mainly as migrant labour. The state has actively promoted this policy. As a result, the unionisation of labour has always been weak in India and been restricted to a few big private firms, government departments and the public sector enterprises leaving the vast majority of workers at the mercy of primitive accumulation. Unfortunately, the Governments in the states and the centre which are mandated to enumerate the number and type of migrant workers as a part of the regulatory provisions of the Interstate Migrant Workmen Act 1979, do not do so. Therefore, there are no reliable estimates of migration in India apart from the Census data, which are both suspect and outdated. The Labour Bureau under the Ministry of Labour and Employment is conducting a large sample survey covering 1.2 Lakh households but the results have not been published as yet. According to one estimate there are 140 million migrant workers which amounts to about 27 percent of the total workforce (Ajeevika Bureau, 2023). Assuming that 25 percent of these migrant workers are working in industries, this comes to a fairly large number of 35 million and they are overwhelmingly unorganised.

Thus, migratory labour, continues to be of relevance and constitutes a large part of India’s urban workforce as was vividly shown by the 2020 COVID-19 pandemic when hundreds of thousands of workers returned to their villages from the cities (Khan and Arokkiaraj, 2021). Migratory labour is preferred by employers because of their lesser ability to unionise and demand better wages and working conditions as compared to local labour and so they are the mainstay of primitive accumulation in India. This process has been further enhanced with the spread of outsourcing and the gig economy in the neo-liberal era (Madan, 2023).

3.       Characteristics of Late Capitalism

The working class globally and in India received a major blow from the 1990s onwards as computerisation and the internet made it possible to outsource manufacturing to anywhere in the world where labour supply was high and state regulation was low and consequently wages too were low, so as to facilitate primitive accumulation. Not only did manufacturing shift out of the western capitalist countries but even in countries like India it shifted out of traditional manufacturing centres and even in those, contractual labour was used in large numbers. Moreover, in India, to further avoid the possibilities of the unionisation of workers, local recruitment of workers was reduced and migrant workers were brought in. This huge migrant work force is invisible simply because there are no records of their migration with the government or the employer industries as they are employed informally by contractors. They did become visible for some time during the initial Covid Pandemic in 2020 but they have once again become invisible.

This is a global phenomenon and so it is not possible for workers to fight for their rights locally beyond a point. Simply because a company that does not adopt these practices of primitive accumulation will go out of business as it will not be able to compete with others which are practising primitive accumulation elsewhere. States too are wary of regulating the capitalists because they will just pack up and leave as it is very easy to relocate manufacturing with the new technologies that are available. India, in fact, has seen a progressive whittling down of workers’ rights so as to increase the ease of doing business for capitalists (Jenkins, 2004).

Thus, the situation has changed drastically as there is no more a proletariat – a working class that is assured of its jobs and only has to fight for better working conditions and wages. Instead, what exists now is a precariat – a working class that is not assured of employment in addition to suffering from bad working conditions and wages due to extra-economic pressures. Organisation work requires money which traditionally used to come from the contributions of the workers who were assured of their jobs. However, now with workers not being assured of their jobs and mostly working on contract as migrants, not only are they unable to make contributions to their unions but they are also fearful of losing whatever low paying jobs they have by unionising. The new Labour Codes that have been legislated by the Union Government and whose implementation is presently stalled, not only do away with many protections that were there in the earlier laws but in the case of the unorganised sector and migrant workers, leave them high and dry without any social protection (WPC, 2020).

Expectedly Industry associations like Federation of Indian Chambers of Commerce and Industry (FICCI), Conference of Indian Industries (CII) and Associated Chambers of Commerce and Industry (ASSOCHAM) have welcomed the reforms resulting from the new Labour Codes, since they facilitate industrialists to further casualise the workforce in their factories and reduce the workers’ collective bargaining powers and dilute the state’s regulatory institutions. The removal of the protective framework of labour rights and entitlements will result in further informalisation of the already small organised workforce in the country and reduce the possibilities of formalisation of the informal workers and especially migrants (Shyam Sundar & Sapkal, 2020). Thus, the whole project of organising workers in trade unions has been rendered very difficult. It has become even more utopian than it used to be earlier to propose the formation of a class for itself organised into a party of the working class seeking to overthrow the capitalist order beginning with the formation of trade unions.

Matters have been compounded by the fact that consumerism is being aggressively promoted among the workers also and so they are more interested in working long hours to earn more money to satisfy their consumerist desires rather than organise to improve their wages and limit primitive accumulation. Moreover, whatever little organisation there is, is being diabolically deflected into sectarian conflicts between different castes and religious communities further dividing the working class and preventing mobilisation for workers’ rights.

4.       Universal Basic Income

This increasing tendency of primitive accumulation is difficult to roll back in the present milieu of late capitalist dominance in which neither are states prepared to uphold workers’ rights and nor are the workers in a position to agitate for them on a sustained basis.  This precarity of the working class can be countered only by ensuring that they have a universal basic income (UBI) from the state given that welfare measures like free education and health that form part of the social commons have been cut back in recent decades (Gentilini et al, 2020). The state has to step in and provide a life long universal basic income to all adults so as to both provide a dignified life to workers and shore up the demand in the economy. The eternal problem for capitalism is that even after primitive accumulation and even more so because of it, crises of over production will beset it from time to time as there is not enough demand for the goods and services that are produced due to the poverty of the vast majority (Marx, op cit). For instance, in India the per capita annual income is dismally low at $ 2400 and 70 percent of the population earn less than this and so there is always a recessionary trend despite high overall growth in GDP which gets aggravated from time to time, as is currently the case, with high inflation. From the 1930s onwards, capitalist states have adopted welfare measures, the social commons, to counter this. However, these have been progressively dismantled over the last three decades of neo-liberal economic policies. Consequently, the social commons have to be restored through a new welfare measure like UBI. This will also enable the working class to organise for their rights as they will have some funds instead of being on the economic edge as they are now. As opposed to the utopian programmes of organising the fragmented working class to become a class for itself, the fight for an UBI holds more promise though it too is utopian given the present capitalist control of the world.

The resources for the UBI will come from a tax on all financial instruments and transactions that there are, most importantly the huge international trade in currencies which is not being taxed at all at present. The trade in currencies is more than twenty times the value of the trade in goods and services and is totally speculative in nature. It goes on 24 x 7 across the world and its profits come from exploitation of labour through primitive accumulation. So on the one hand labour is not being paid a living wage and on the other currency trading which is profiting from this is not being taxed at all in a blatant show of power by late capitalism.

Therefore, the working class movements the world over and in India will have to bolster their local battles for better wages and working conditions with a wider battle to put pressure on the state to provide a universal basic income so as to restore the social commons that has been whittled away. This will considerably reduce the precarity of the working class and allow it to once again organise not only for better working conditions and wages but also for a revolutionary transformation to a more just and inclusive socio-economy.

References

Ajeevika Bureau (2020): Labour and Migration in India, accessed on 30.08.2023 at url https://www.aajeevika.org/labour-and-migration.php.

Althusser, L (2006): Philosophy of the Encounter: Later Writings, 1978-1987, London and New York. Verso.

Basu, P. K. (2008): Globalisation: An Anti Text; A Local View. Delhi: Aakar Publications.

Birla, G. D. (1968): In The Shadow of The Mahatma, Mumbai, p. 131 quoted in S. K. Ghosh, 2001, The Indian Constitution and Its Review, Research Unit for Political Economy, Mumbai.

CEIC (2023): Labour Force Participation in India, accessed on 30.08.2023 at url https://www.ceicdata.com/en/indicator/india/labour-force-participation-rate

Chandavarkar, R (1994): The Origins of Industrial Capitalism in India: Business Strategies and the Working Classes in Bombay, 1900–1940, Cambridge University Press, Cambridge.

De Angelis, M (2004): Separating the doing and the deed: Capital and the continuous character of enclosures, Historical Materialism, Vol. 12: 57-87

De Haan, A (2022): Labour in South Asia from mid Nineteenth to mid Twentieth Century, Cambridge University Press, Cambridge.

Deshpande, A. & Haksar, N. (2023): Japanese Management, Indian Resistance:  The Struggles of the Maruti Suzuki Workers, Harper Collins, New Delhi.

Gentilini, U., Grosh, M., Rigolini, J. & Yemtsov, R. (2020): Exploring Universal Basic Income: A Guide to Navigating Concepts, Evidence, and Practices, World Bank, Washington, DC.

GoI (2022): Report on Trade Unions in India 2019, Labour Bureau, Ministry of Labour and Employment, Government of India, Chandigarh.

Harvey, D (2003): The New Imperialism, Oxford University Press, New York.

Jenkins (2004): Labor Policy and the Second Generation of Economic Reform in India, India Review 3(4): 333–363.

Joshi, C (2008): Histories of Indian Labour: Predicaments and Possibilities, History Compass, pp. 439-454.

Kalecki, M (1971): Selected Essays on the Dynamics of the Capitalist Economy 1933-1971, Cambridge University Press, Cambridge.

Khan, A & Arokkiaraj, H (2021): Challenges of reverse migration in India: a comparative study of internal and international migrant workers in the post-COVID economy, Comparative Migration Studies, Vol 9.

Kumar S, Heath AF, Heath O. (2002): Changing patterns of social mobility, Econ. Polit. Wkly, Vol. 37 No. 40 pp 4091–96.

Luxemburg, R. (2003): The Accumulation of Capital, tr. Agnes Schwarzschild, London and New York, Routledge.

Marx, K (2016): Capital Vol 1,2,3. Fingerprint Publishing, Delhi.

Madan, A (2023): Dark Side of the Gig Economy, Economic and Political Weekly, Vol. 58 Issue 19.

MoSPI (2010): Migration in India 2007-08, National Sample Survey Organisation, New Delhi.

Patnaik, P (2017): The Concept of Primitive Accumulation of Capital, Marxist, Vol. XXXIII, No. 4, October-December.

Saxena (1993): The Hindu Trade Union Movement in India: The Bharatiya Mazdoor Sangh, Asian Survey, Vol 33, No 7.

Shyam Sundar, K. R. & Rahul Sapkal (2020): Changes to Labour Laws by State Governments Will Lead to Anarchy in the Labour Market. Economic and Political Weekly 55(23)

Smith, A (2018): The Wealth of Nations, Fingerprint Publishing, Delhi.

Thakurdas, P., Tata, J.R.D., Birla, G.D., Lalbhai, K., Dalal, S.R.A., Shroff, A.D. & Mathai, J. (1944): A Brief Memorandum Outlining a Plan of Economic Development for India, Mumbai

Vaid, D. (2014): Caste in Contemporary India: Flexibility and Persistence, Annu. Rev. Sociol. No. 40 pp 391–410.

WPC (2020): Why the New Labour Codes leave the Workers even more precariously poised than before, September 23^rd, Scroll, accessed on 31.08.2023 at url https://scroll.in/article/973877/why-the-new-labour-codes-leave-workers-even-more-precariously-poised-than-before

 

 

 

A Fair Income

 The FAO has estimated that a healthy diet costs about US$4 per person per day, which applying the purchasing power parity conversion rate of ₹23 to the dollar works out to ₹92. So given an average household size of 4.4 currently this works out to a food expenditure of roughly ₹400 per household per day. The latest consumption expenditure survey conducted in 2022-23 by the National Statistical Organisation says that food expenditure constitutes about 43% of the total household consumption expenditure. So for a healthy diet combined with other associated requirements for a good life the annual household consumption expenditure should be at least (400/0.43)*365= ₹340000.

Ideally a household should have a savings of 20% and so a decent annual household income is ₹425000.
Therefore, when we as development workers talk of improving the incomes of the people at the bottom of the pyramid and say we have impacted their lives positively we have to benchmark our impact against this desired basic income. To what extent have we been able to ensure this level of income for the beneficiaries on a sustainable basis. So far I have not seen such an analysis anywhere. Instead organisations proudly say that they have increased the incomes by a few thousand rupees or so.
In fact given the kind of low prices that farmers and craftspersons get for their produce and the low wages workers get for their labour, it is doubtful that such a high income as estimated here can be ensured by NGOs through development interventions. Therefore, there is a strong case for the provision by the government of a lifelong universal basic income equal to the statutory minimum wage to all adults funded by a tax on bank deposits and other financial assets. This can be tied to various projects of ecosystem restoration, sustainable farming and craft and renewable energy generation to ensure sustainability in the long run. This will not only solve the problem of low incomes resulting from low productivity and lack of well paying employment opportunities but will also push up both demand and supply in the economy.

Revisiting Machla

 Three decades ago Subhadra Khaperde and I came to Indore from Alirajpur to start rights based work in a new area so as to expand the mass base of the organisation. We stayed on the campus of the Gramodyog Vidyalaya of the Sarvodaya Shikshan Samiti in the village Machla situated about 13 kilometres from the city for about two years. At that time we had very little money so we used to live at subsistence levels initially. We used to go around on a bicycle trying to sell copies of a monthly magazine that we used to publish at the time to eke out some funds. Slowly, we started doing consultancies and then landed a project for organising Bhil Adivasi women to fight for their reproductive health and rights and work got under way in the nearby districts of Dewas and Khargone and today the organisation (https://lnkd.in/dV-nhpBz) has a vast spread across the whole of Western Madhya Pradesh working to make the independence gained 77 years ago more meaningful for the masses who still lead a precarious subsistence existence at the margins. So this campus in Machla has a special place in our hearts.

Some of the shootings for the film on our love story, Rah Sangharsh Ki, episode four in the series Lovestoriyaan on Amazon Prime Video (https://lnkd.in/dKbUsT6C), were shot in Machla and so we had an opportunity to visit it again last year and revive those sweet memories. Ravi Uchhe, one of the cinematographers of the film, has shared a lovely photo of us that he took at that time.

The Adverse Agricultural Terms of Trade

 Globally and in India the big problem is that market prices for farm produce do not cover the costs. Consequently, governments have to subsidise farm production either by direct transfers to farmers or farm input producers or by providing support prices and insurance covers. However, these subsidies are not enough and so farmers are perpetually in the red and have to sell their produce immediately after harvest to pay off debts. This problem is more acute in India as the average landholding and the subsidy given is very low as compared to the high income countries, which are members of the Organisation for Economic Cooperation and Development.

Some amount of relief can be had if farmers can hold their produce for some time to get better prices rather than selling at the time of harvest but this requires both storage space and money which are not available to most farmers. Therefore, theoretically, if a company steps in and provides warehousing facilities to store the produce of farmers and provides cheap credit to them against this collateral, then the farmers can earn more at a later date by selling their produce when prices firm up and still carry on their operations in the interim. However, this is fraught with problems for the intermediary company as there is no guarantee that the prices will firm up enough later to cover the costs of warehousing, weight and pest attack loss and operational expenses. The traders who work in this space generally cheat the farmers by giving them even lower prices than the low ones which prevail in the market and they also provide the inputs to them at higher prices and usurious interest rates and so are able to make profits at the expense of the farmers. Therefore, it is unlikely that any intermediary company can make profits by giving farmers a fair deal.

There are a few agri startups in India which are trying to do this work. However, none of them are making any money because of the inherent constraints detailed above. One such company started off on a small scale by hiring warehouses and providing loans to farmers cheaply against the grains they stored in these warehouses. This boot strapped company worked at a small scale with a small turnover making small losses for a few years before it was funded by venture capital of a small amount of Rs 2 crores and then with a large amount of Rs 40 crores to scale up operations. The turnover shot up tremendously as a result but so did the losses as is evident from the graphics below!!

So, much higher government subsidies and investment are needed not only to shore up the economics of farming currently but also to gradually transition it away from chemical inputs towards natural farming. Unfortunately, the outlay in this year's budget, where it has been claimed that 1 crore farmers are to be transitioned to natural farming is only a paltry Rs 365.64 crores amounting to Rs 365 per farmer, which is less than the daily statutory minimum wage for skilled labour.

Economics of Food Delivery Personnel

 Ishaan Khaperde has studied the economics of food delivery by Zomato India and here are the results from the point of view of the delivery person. The data has been culled from videos shared by delivery boys like the one linked here. The delivery frequency is the least on Mondays and reaches a peak with dinner time on Sundays when it is three times that of Mondays. The base delivery payment for up to five kilometers distance combined for pickup from the restaurant and delivery to the customer is Rs 22 on an average while above five kilometers the delivery person gets Rs 11 per kilometer on an average in addition to the base delivery payment. The pickup plus delivery time is about 30 minutes on an average for short orders of less than 5 kilometers while it is 50 minutes on an average for long orders above 5 kilometers. The daily mix is about 30% short orders and 70 percent long orders with the short orders on an average being 2 kms or so and the long orders being on an average being 9 kms or so. The delivery persons on an average operate for 12 hours. Thus, by solving for these parameters and rounding off [30 x number of short orders + 50 x number of long orders = 12 x 60, number of short orders/(number of short orders+number of long orders)=0.3], assuming that they are continually delivering orders, delivery persons can at the most squeeze in 4 short orders and 12 long orders per each 12 hour day. The payment for this is [4 x 22 + 12 x (22 + 4 x 11)] Rs 880.

The total distance covered on an average is 120 kilometers per day. Assuming a coverage of 40 kms per litre in stop and start city traffic at higher driving speeds this means a petrol consumption of 3 litres at a cost of Rs 330. Add another Rs 50 per day towards two wheeler depreciation, insurance and maintenance cost and the total cost comes to Rs 380. Thus, the net earnings are Rs 500 for a 12 hour day which comes to Rs 333 per eight hour day. Whereas the statutory minimum wage in Madhya Pradesh in urban areas for semi-skilled labour like driving a motor cycle is currently Rs 411 per day. Conversely, assuming double wages for the extra four hours of work done, statutorily the wages for 12 hours of work should be Rs 822 and not Rs 500.
Moreover, the delivery persons face many challenges like having no place to sit in the shade in restaurants, having to climb up the stairs of buildings where there are no lifts or where use of lifts are prohibited to service persons and also face jams and diversions enroute to delivery which further adds to their troubles.
An analysis of the prices charged by Zomato for the food ordered as compared to the prices that the restaurants charge for in dining, shows that there is a mark up of about 10%. So Zomato is not only grossly underpaying its delivery persons but also overcharging its customers 😜.

https://www.youtube.com/watch?v=Q-NDWpzCF1Y

Universal Basic Income

May Day is celebrated in the memory of those valiant workers who gave up their lives fighting for better working conditions and remuneration. Many legal rights were won by workers organised in trade unions in factories. However, from the 1980s developments in computer technology not only made workers redundant in factories but the work could also be outsourced to distant locations. Even in factories apart from a few skilled workers to run the automated machines the rest could be employed through labour contractors. Consequently, the power of trade unions began to decline and both working conditons and wages grew much less than the productivity as most of the surplus was appropriated by the corporations.
Thus, there is very little to celebrate currently on May Day as there aren't permanent factory workers in enough numbers who can agitate for labour rights. The vast numbers of casual workers, a considerable proportion of whom are migrants, are in such a precarious condition that they cannot think of organising for better terms of work.
I am associated with the Khedut Mazdoor Chetna Sangath and the Centre for Labour Research and Action which are fighting for the rights of Adivasi migrant workers in Western India and we are unable to get even the Minimum Wages Act implemented let alone secure other benefits.
The problem is compounded by the fact that outsourcing and underpaying of labour is a global phenomenon and so if one factory or industry pays more to workers then it will become uncompetitive and go out of business. Therefore, it is an economic compulsion for corporations to under pay labour as much as they can. The Governments go along with this so as to prevent the companies from fleeing elsewhere in search of low cost labour. That is why currently all over the world and especially in India there is a lack of decent paid work and it especially affects the youth who are without livelihood options.
So, while it is all very well to come out with demands for the statutory right to work and implementation of protective labour legislation it is unlikely that they are going to be met given this sordid economic reality. Consequently, what is necessary is to launch a campaign for the Government to provide a lifelong universal basic income to all adults. This will considerably ease the distress being suffered not only by casual workers but also farmers and self employed small traders and artisans who together constitute 98% of the workforce. Moreover, by providing money at the bottom of the pyramid this will create huge demand that will revitalise the whole economy. Another benefit will be women's empowerment as paid labour participation of women is abysmally low in this country. This needs to be augmented with investment for ecosytem restoration, sustainable agriculture and distributed generation of electricity so as to counter the threat of climate change which is now the most serious challenge to human civilisation.