[Commentary] The environmental impacts of the economic package

In recent weeks, the situation in India was a throwback to two historical events. The sight of millions of internal migrants cycling and using any mode of transport to return to their homes far away in this large country brought back images of the mass migration following India’s partition in 1947. The second – with the prime minister and the finance minister announcing a series of policy changes – was a reminder to the launch of the economic reforms in 1991. 

The Partition of 1947 divided the country into two. Families migrated across the newly-formed boundary. The COVID-19 lockdown of the past weeks again divided the country into two – those who stayed at home, and the others who had lost their jobs and incomes and walked. 

The desperate reverse migration starkly brought out the economic links of the pandemic which is believed to be environmentally-caused. The crisis also provided an opportunity to reset some of the structural environmental-economic issues that brought the situation to such a pass. 

In his televised address to the nation on May 12, Prime Minister Narendra Modi had focused on using the opportunity of making India self-reliant. He launched a mission, Atmanirbhar Bharat Abhiyan, calling the 21st Century to be that of India. He called for turning the crisis into an opportunity to build a self-reliant India on the five pillars of economy, infrastructure, technology-driven systems, demography and demand. 

He announced a Rs 20 trillion economic package to support the revival. Finance Minister Nirmala Sitharaman followed through with the details of the economic package and reform measures through a series of press conferences.

Migration and the rural bottlenecks

While the national government announced the economic package with much fanfare, after the dust had settled analysts estimated that the actual governmental stimulus was only 1 percent of the GDP and not 10 percent as announced. The rest, they stated, was a repackaging of old schemes and also money supply measures announced by the Reserve Bank of India.

This is a big slip between the cup and the lip. The need was for fresh governmental spending to bring money into the hands of the people, so that they can buy their immediate needs and also help to restart the economy. Instead, they were told that more funds are available with banks, which they can borrow and use at a time when nobody wants to adventure to their already dangerous financial situation. 

Even so, the larger question is whether these measures can ensure that the human tragedy that followed the COVID-19 lockdown be averted in the future. The lockdown immobilised 1.3 billion people, who had a lead time of a mere four hours after the prime minister’s announcement on March 24. 

With daily earnings on standstill, and no guarantee on when this would end, they had no support systems to continue staying in the places they had migrated to across state boundaries. Long walks, police batons, hunger and death on roads and rail tracks followed.

If millions had to reverse-migrate within their country, then why did they move away from their homes in the first place? If agriculture and its associated sector provides only 16 percent of the GDP and employs 50 percent of those employed, it is obvious that those working in the manufacturing and services sectors that constitute the remaining 84 percent have higher per capita earnings than the farmers. This provides the pull factor for migrants into cities and areas abutting industrial estates, which usually in turn are located near urban centres.

There are structural limitations in agriculture too, which push people out of villages. The work that the Green Revolution started in the mid-1960s never got followed through completely. The Green Revolution was a historically opportune intervention when India was living on food aid and the associated risks to its sovereignty and political stability. It was a package of good seeds of high-yielding varieties, fertilizers and pesticides that increased crop productivity and production in areas that already had irrigation. Less than one-third of the farmed land in the country had access to irrigation when the Green Revolution was launched. According to the Economic Survey 2017-18, today it is around 48 percent.

This bottleneck is further complicated with the decreasing size of agricultural landholdings in the country. Smaller holdings reduce the economic viability of the farms. According to the latest Agriculture Census, the average size of an operational holding declined to 1.08 hectare in 2015-16 from 1.15 ha in 2010-11. The small and marginal holdings (up to 2 ha) accounted for 86.08 percent of all farm holdings. About 91 percent of the operational holdings were in 14 states – Andhra Pradesh, Bihar, Chhattisgarh, Gujarat, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh and West Bengal. 

Some of these states have been able to balance out their high number of economically unviable farm holdings with manufacturing or service-sector industries, and thereby reduce the number of people migrating to other states. The current migrant crisis has highlighted that the most number of migrants are from Bihar, Chhattisgarh, Madhya Pradesh, Odisha, Uttar Pradesh and West Bengal. 

Declining farm holding size has added another kind of pressure, especially in forest-edge villages. Agriculture has encroached into the edge of the larger forests and has erased smaller forest patches on government and private lands, leading to greater human-wildlife conflict. Greater interaction between humans and wildlife increases the risk of transmission of zoonotic diseases such as COVID-19.

Together, these factors have caused declining farm yields and income over recent decades. Even the communities that the Green Revolution had made wealthy were unhappy. Farm unrest had come out into the streets before the national elections.  

Support for the rural economy

Finance Minister Nirmala Sitharaman dealt with the rural issues in her early press meetings. The first focus was to make credit available to micro, small and medium enterprises (MSMEs), and food support for the internal migrants for two months. While the latter is meant to provide immediate support to the migrants, the stated logic for making collateral-free credit for MSMEs was for restarting that part of the economy which employs a disproportionately higher proportion of the workforce.

Though agriculture (and its allied sectors) only contributes to about 16 percent of the GDP, it employs half of those employed in the country. Thus, if value can be added in the agriculture and rural sector, the logic is that the benefits can reach more people.

Additional funding of Rs 400 billion for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) was a measure to provide some money in the hands of the rural economy. 

This along with agricultural marketing reforms that were announced are aimed at increasing incomes in the rural areas. The promise is that a new law will provide adequate choices to the farmers to sell their produce at the best price, barrier-free trading across state boundaries and an e-commerce framework. Financial support has been promised for establishing farm gate infrastructure such as cold and post-harvest storage facilities. 

In addition to support for food crops, fruits and vegetables, the finance minister also announced support for fisheries, livestock rearing and beekeeping. For tribal communities, support was announced from the compensatory afforestation fund.

Privatisation 2.0 and a fossil-fuel fizz

Like during the launch of the economic reforms of 1991, the recent economic package also had a strong impetus for privatisation. More airports were held out for privatisation under the public-private partnership (PPP) route. Power distribution companies in union territories would be privatised, announced the finance minister. Private sector investment was also promoted for social infrastructure, space and even the establishment of atomic research reactor (in PPP mode) for the production of medical isotopes.  

Falling out of sync with India’s intended nationally determined commitments (INDCs) to reduce fossil fuel use to mitigate climate change, the economic package has measures to privatise the mining of coal and other minerals. The government will introduce commercial mining of coal and enhance private investment in the mining sector.

Read also In a pandemic, a chance to make India’s recovery and growth equitable. 

A zero-sum game?

It is unfair to expect one economic package to change all the issues in one instance. However, this was a package announced under unprecedented circumstances. So it should at least lay the foundation for changing the environmental and economic factors that caused the human tragedy.

The economic package also has to be seen concurrently with other developments. The government is in a hurry to amend the Environment Impact Assessment (EIA) notification, to make it easier for industries and development projects to get their environmental clearance.

As reported earlier by Mongabay-India, the new draft EIA notification aims to exempt certain kinds of projects from the public hearing process, which is the only opportunity where people living near where a project is to sited have an opportunity to get their views heard and recorded into the official document. When their views are not heard, and they lose their lands, livelihoods and access to natural resources, communities are forced to move out in search of alternate occupations.

Projects such as the Etalin hydroelectric power plant have almost got its clearance with the forest advisory committee of the environment ministry refusing to look at the objections that people had raised from across the country. Located in a biodiversity hotspot in the eastern Himalayas of Arunachal Pradesh, the project could mean the destruction of 280,000 trees and all the associated biodiversity. 

The meta picture emerging reveals that the focus continues on the ease of doing business, indifferent to the environmental and social costs. If not so, how could the state governments of Uttar Pradesh and Madhya Pradesh act on removing labour laws that provided safeguards for the workers? The Karnataka Government did not want to permit migrant labour to return to their home states after the relaxation of the lockdown saying that it would hamper the state’s economic activities. 

The lockdown due to the COVID-19 pandemic had given the country an opportunity to introspect on what got the country to the crisis, and what can be done to avoid its occurrence in the future. The indications are that business as usual will continue, with increased vigour to try and catch up with lost time.

Read also It is not the COVID-19 alone, but also the environment and the economy.

Banner image: A farmer in a paddy field. Photo by Nandhu Kumar/Unsplash.