Subsidies Can Be Polluters

ONE reason for the sharp rise in grain prices that has hit the poor in the last three years is the stagnation of cereal production, particularly so in the case of wheat. And one important reason for this arrest in production is ecological degradation. This insidious cancer is spreading through the length and breadth of our country but is neglected badly in economic debate.

In the north-west, the granary of India, we have the paradox of growing water-logging in some areas, along with an alarming draw down of groundwater in other areas. Pests and diseases are emerging stronger than ever. The problem is well-known to agronomists, yet politicians seem uninterested in checking the menace.

Why is this so? The sad answer is that much of ecological degradation can be traced to farm subsidies, which politicians are afraid to tackle. These subsidies encourage the overuse of .scarce resources in the short run, which yields immediate profits. But in the longer run this overuse is bound to cause ecological damage that can ruin the very foundations of farming. Unfortunately our politicians are too myopic to see that their obsession with subsidies leads to an unsustainable pattern of agriculture.

It is not obvious to the layman that subsidies lead to pollution and degradation, and this needs explanation. Canal water is supplied to farmers at throwaway prices which do not cover even the maintenance costs of canals, leave alone the cost of building them. Nor is the water usually charged on the basis of the volume of water used – most states have a flat charge. So the farmer has no incentive to economise on the use of water.

Indeed, he has been given a perverse incentive to switch to the most water-intensive crops even if these are ecologically inappropriate, and deprive farmers’ downstream of water. In Maharashtra, the hogging of canal water by sugar farmers means that millions of poor grain farmers are deprived of irrigation. The overuse of water is one reason why so many canal regions are getting waterlogged and saline. This exacerbates other causes of degradation like poor canal design and insufficient drainage.

WASTEFUL USAGE: Rural power is highly subsidised in all states, and is supplied free to small fanners in southern states. Even where there is a charge, this is often a fixed rate per year, not a metered rate linked to actual consumption. These subsidies mean fanners have no incentive to conserve energy. Many pump sets are inefficient and use twice as much power as a modern pump set, but fixed annual tariffs mean they have no incentive to replace power-guzzlers with power-conserving equipment. The system encourages wasteful over-pumping of groundwater for both inefficient irrigation techniques and inappropriate water-guzzling crops.

This is an important reason for the alarming fall in the groundwater table in many states, which has led to the tragedy of lakhs of tube wells running dry.

Nor can the problem always be solved by digging a bit deeper. Cheap centrifugal pumps cannot lift water much more than 45 feet. If the water table dips further, these pumps have to be replaced by expensive submersible pumps. So a drop in the water table beyond a point necessitates huge maintenance investments totaling hundreds of crores of rupees in the north-west.

Pruning subsidies will not by itself stop degradation. We also need community-level arrangements to share scarce water, cut consumption to sustainable levels, and grow appropriate crops. But this organisational issue will be made easier by prices that reflect the real scarcity of water and power.

In coastal areas like Saurashtra, overpumping causes a different sort of tragedy. The drop in the water table allows sea water to intrude into acquifers, ruining them permanently.

POLLUTION: The ecological damage does not stop at the farmer’s end. The higher power consumption encouraged by subsidies also means more emission of smoke and greenhouse gases by power stations, and more coal mining that devastates the countryside. Instead of levying a tax to discourage such misuse, our policies have long subsidised it.

Pesticide and fertiliser subsidies are much less of an ecological problem in India than in Europe, since our levels of application are relatively small. Still, pesticide subsidies encourage overuse, and lead to increased pest resistance. Far better than squirting ever more pesticide is integrated pest management, which focuses on selective spraying and crop rotation. Excessive fertiliser use can lead to the pollution of groundwater by nitrates.

The finance minister, Dr Man-Mohan Singh, has been arguing for a reduction of subsidies, including farm subsidies to shrink the budget deficit. He never seems to emphasise that there is also a powerful ecological argument for pruning subsidies, and for charging farmers per unit of water and power in place of flat fees. Nor does Mr Kamal Nath, the minister of state for environment Minister, show much appreciation of the fact that what is good, for the budget is also good for the environment. Above all Mr Balram Jhakar, the Agriculture Minister, needs to appreciate that higher subsidies mean more farm degradation.

What do you think?