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• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00587R000300400002-1
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 18
• Document Creation Date: January 12, 2017
• Document Release Date: April 28, 2011
• Sequence Number: 2
• Publication Date: September 1, 1985
• Content Type: REPORT

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Directorate of
Intelligence
Political Impact of the
India: The Economic and
Green Revolution
eunfidentiai-
NESA 85-10180
September 1985
Copy 3 7 5
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Directorate of
Intelligence
India: The Economic and
Political Impact of the
Green Revolution
This paper was prepared byl I Office
of Near Eastern and South Asian Analysis. It was
coordinated with the Directorate of Operations.F
Comment and queries are welcome and may be
directed to the Chief, South Asia Division, NESA
Confidential
NESA 85-10180
September 1985
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India: The Economic and
Political Impact of the
Green Revolutioi
Key Judgments The Green Revolution in agriculture-the growth in production and crop
Information available yields through the adoption of high-yielding varieties, chemical fertilizers,
as of 19 August 1985 and expanded irrigation-has been one of India's major success stories.
was used in this report.
Progress in agriculture, which employs about 70 percent of the Indian work
force and accounts for nearly 40 percent of GDP, will play a more important
role in overall Indian economic development than highly touted Indian plans
to introduce new technology in industry.
Having virtually eliminated the threat of widespread famine, the Green
Revolution will allow India to become a wheat exporter in 1985 for the first
time since the mid-1970s. India probably will be an intermittent foodgrain
exporter in the future. Accordingly, the United States will have diminished
prospects for large wheat sales to India. Market opportunities for US
agrobusiness firms, however, are likely to grow as overall agricultural
performance improves.F__1
The Green Revolution has brought in its wake some economic and political
problems as well as benefits. Because the new production methods are
expensive, farmers have pushed for higher commodity prices, more sub-
sidies, and increased government investment in agriculture. The ability to
maintain incentives for farmers and a high level of investment while keeping
food costs and subsidies in line will be a major domestic policy challenge to
Indian planners over the next few years.F__1
On the political front, farmers have organized independent "unions" to
make their voices heard, sometimes violently. There is also mounting
evidence that the Green Revolution, by accelerating economic growth, has
had a destabilizing effect on the Indian village community, which has
increased the potential for social instability along caste and ethnic lines. The
headstart gained by states such as Punjab has aggravated regional dispari-
ties and heightened conflict between the states and federal government over
control of resources and economic policy.F__-]
iii Confidential
NESA 85-10180
September 1985
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Key Judgments
iii
Keys to Success
1
Expanded Irrigation
1
Subsidized Production Inputs and Agricultural Price Supports
1
Establishment of Production-Oriented Agricultural
Research and Extension Services
Spread of the Green Revolution
2
Wheat Leads the Way
2
HYV Rice Area Expands
3
New Directions in Other Crops
3
Economic Impact
4
Strengthening the Small Farmer
4
Growing Subsidies
6
Political Impact
6
Local and Regional Instability
6
Prospects for the Green Revolution
8
Economic Implications
8
Political Implications
9
Implications for the United States
11
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Figure 1
Estimated Percentage of Crop Land in High-Yielding Variety (HYV) Foodgrains in India, 1982-83
Pakistan
Nepal
Arabian
Sea
b
LAKSHADWEEP
Tamil Pondicherry
(India) no data Ke ala? Nadu
Dadra and Nagar Haveli
Maharashtra
10 to 20
20 to 30
30 to,40
40 and above
Major crop-growing area
Arunachal
J Pradesh
no data .
Bangladesh
DHAKA Ad
Bay
of
Bengal
ANDAMAN'f
ISLANDS
(India) ,
0
NICOBAR c no data
ISLANDS
(India) 013
Boundary representation is
not necessarily authoritative.
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India: The Economic and
Political Impact of the
Green Revolution
First introduced in the mid-1960s, the Green Revolu-
tion-the adoption of high-yielding seed varieties
(HYVs), chemical fertilizers, and expanded irriga-
tion-has begun to change the face of rural India. A
country that once faced perpetual scarcity and cycli-
cal famine has become largely self-sufficient in food
production and has the potential of becomin at least
an intermittent foodgrain exporter.
Keys to Success
Over the past 20 years, a combination of government
policies and private initiative on the part of India's
numerous small farmers have contributed to the
success of the Green Revolution.
Expanded Irrigation. Timely and adequate supply of
water is a prerequisite to the effective adoption of the
new farm technologies. Public investment in irriga-
tion, which tripled in real terms between 1965 and
1985, and the rapid increases in private investment in
small-scale irrigation have led to a near doubling of
gross irrigated area since the late 1960s.F_~
Subsidized Production Inputs and Agricultural Price
Supports. Recent scholarly analyses of Indian agricul-
ture indicate that production-oriented subsidies-
such as concessionary credit, cheap fertilizers, and
low electricity costs-have significantly spurred farm
output and income growth. As the largest foodgrain
trader, the government has set procurement prices
that have helped contain grain price fluctuations and
supported farm income. Steady and predictable prices
as well as input subsidies have reduced the risk to
cultivators and encouraged investment in the more
costly new methods.
Establishment of Production-Oriented Agricultural
Research and Extension Services. Modeled in part
after the US land grant colleges, India's state and
national network of agricultural universities and re-
search institutes, with initial US assistance, developed
indigenous high-yielding crop strains well suited to
the country's widely varying growing conditions. Al-
though the marriage of farm and university was often
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
40 1970 72 74 76 78 80 82 84
Although the erratic monsoon still plays a dominant
role in Indian agriculture, the Green Revolution has
gradually reduced its influence. Since the late 1960s,
the share of foodgrain production contributed by the
predominant Kharif, or monsoon, crop has progres-
sively declined in comparison with the largely irrigat-
ed rabi (winter) crop, which makes greater use of
high-yielding varieties.
Future expansion in irrigation should accelerate the
move toward new farm technologies and continue to
reduce the influence of the monsoon on annual crop
production. India still possesses a large irrigation
potential-optimistically estimated by Indian offi-
cials at about 113 million hectares, or about 70
percent of cultivable land compared with nearly 30
percent in CY 1983. We expect progress in developing
ground water resources in the eastern states and
improving the efficiency of existing irrigation sys-
tems. But high development costs, lack of electrical
power for irrigation pumps, a lowering water table,
and the threat of increased soil salinization make
realizing the full potential unlikely.F---]
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25X1
Figure 2
India: Foodgrain Production, 1970-848
306293 9-85
strained by a lack of communication, we believe the
steady stream of scientific advice, new crop strains,
and expertise has been instrumental in sustaining the
rapid expansion of the Green Revolution.0
more than doubled wheat yields and helped foodgrain
production grow from about 95 million metric tons for
the crop year (CY) 1967 (July 1967/June 1968) to a
record 151 million tons in CY 1983.0
Private Initiative of India's Farmers. Because most
agricultural land is divided among over 80 million
holdings-97 percent are farms under 6 hectares-
the participation of small farmers in adopting new
varieties has been essential. Experts initially believed
that most Indian cultivators were subsistence orient-
ed, wedded to traditional farming methods, and not
responsive to economic incentives. Recent experience
suggests, however, that farmers have been sensitive to
relative prices, respond to incentives, and often take
the lead in adopting modern farm techniques.0
Spread of the Green Revolution
Wheat Leads the Way. In India wheat has been the
crop most successfully adapted to Green Revolution
methods. New wheat varieties, first introduced in the
mid-1960s, provided a technical breakthrough that
Because HYVs were first introduced for wheat, the
initial economic impact of the Green Revolution
favored the wheat-growing north. As wheat produc-
tion rose, increased farm income in Punjab and
Haryana made the two states among the richest in the
country. With nearly all of its wheat and rice acreage
now cultivated in HYVs, Punjab alone accounted for
over 60 percent of the grain supplied to India's
national food stocks in CY 1984.0
In our view, future growth in wheat production is
likely to come from the states of Madhya Pradesh,
Uttar Pradesh, Maharashtra, and Gujarat because
HYVs are easily adapted to growing conditions in
these states, and the area remaining for expansion is
25X1
25X1
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Figure 3
India: Yield Growth Rates for
Major Crops, 1969-848
large. In the north, further HYV expansion is limited
by the scarcity of land, and the growth in wheat yields
is likely to slow.F___1
HYV Rice Area Expands. Rice, India's major food-
grain, initially suffered from the lack of effective
HYVs suitable to Indian consumer tastes and produc-
tion conditions. Now, however, more areas are being
cultivated with new rice strains than wheat.F__~
Because the eastern states have India's largest un-
tapped irrigation potential-only 23 percent has been
developed so far-we judge that this region is the
most likely area for expanded rice production.' The
region's agricultural growth has been plagued by
erratic water control, highly fragmented landholdings,
a poor transportation network, and limited access to
credit and technical services. Despite these problems,
' The eastern states include Bihar, Orissa, West Bengal, Assam,
Arunachal Pradesh, Mizoram, Tripura, Manipur, Nagaland, and
Meghalayar--]
Figure 4. HYV ricereld
official Indian data suggest that the extension of high-
yielding rice varieties has been brisk-a rate over
twice as fast as southern India, the other major rice-
growing region. With the government earmarking
increased investment for agricultural development in
the east, we judge that the rapid spread of HYV rice
area is likely to continue.F_~
New Directions in Other Crops. With wheat prices
sagging under the weight of massive stocks, Indian
farmers are likely to shift to more profitable crops.
HYVs of commercial crops such as irrigated cotton
and oilseeds have shown promise. Since the late
1960s, our analysis indicates that the expansion of
cotton hybrids has boosted quality, increased average
yields 43 percent, and, by CY 1984, accounted for
over half of all cotton production. Since CY 1979,
growth in new oilseed cultivation has been even more
dramatic, with soybean production nearly tripled and
sunflower seed output raised over elevenfold. Accord-
ing to press reports, over the past few years, West
Bengal farmers have responded to higher oilseed
prices by raising production 60 percent and cutting
back on wheat cultivation.F___1
Considerably less effort has been devoted to develop-
ing HYVs for India's rain-fed crops, which account
for nearly 70 percent of cultivated land. The lack of
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Figure 5
India: Area Growth Rates of
High-Yielding Varieties by Region, 1972-83 a
a Data for crop years beginning in July of the stated year.
b West: Gujarat and Maharashtra
East: Assam, Bihar, Manipur, Meghalaya, Nagaland, Sikkim,
Orissa, Tripura, West Bengal
North: Haryana, Himachal Pradesh, Punjab, Jammu and Kashmir
Central: Madhya Pradesh, Rajasthan
South: Andhra Pradesh, Tamil Nadu, Karnataka, Kerala
effective improved varieties of protein-rich lentils and
coarse cereals (millet and sorghum)-which account-
ed for nearly 30 percent of India's foodgrain produc-
tion in CY 1984-as well as certain edible oil crops
have resulted in stagnant yields for these products.
We expect, however, that the use and development of
new drought-resistant varieties over the last few
years-combined with proposals to increase research,
investment, and support prices to dry-land crops-
could lead to a gradual improvement in coarse grain,
lentil, and oilseed production.F--]
Economic Impact
Strengthening the Small Farmer. In our view, the
Green Revolution has strengthened the overall eco-
nomic position of small and medium landholders and
yielded a net benefit to the rural poor. Where the
In the years after independence, most academic and
official opinion in India agreed that the slow growth
in agricultural production and persistent rural pover-
ty resulted from poorly distributed land and unequal
access to credit and product markets. To remedy the
situation, almost all Indian states passed land reform
legislation. But, with the exception of nationwide
tenurial reforms in the early 1950s, most laws passed
at the state level aimed at distributing land were
never implemented because of administrative difficul-
ties or political resistance on the part of farm inter-
ests.F__~
The rapid spread of the new HYVs brought into
question the view that social and economic inequities
were major impediments to agricultural growth. Al-
though New Delhi and state governments will contin-
ue to push selected tenancy reform programs to assist
laborers and small farmers, we judge that the empha-
sis in agricultural policy will move away from issues
of distribution to increasing farm efficiency and
productivity.
Green Revolution has been most successful, such as
Punjab and Haryana, per capita incomes are the
highest in the country-on average, 25 percent more
than those of key industrial states of Maharashtra and
Gujarat. A recent analysis of Punjab shows that
higher incomes have raised overall living standards
and reduced the disparity in food consumption be-
tween large and small farmers. F_~
The Green Revolution probably has also accelerated
the long-term trend-driven mostly by population
pressure and increased fragmentation due to irriga-
tion-toward smaller, more productive, and more
equitably distributed landholdings. Between CY 1970
and CY 1976 average farm size declined 13 percent
nationwide with large holdings declining most rapidly.
One major reason is that most of those owning
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Figure 6
India: Index of Real Farm Income,
Foodgrain Prices, and Input Costs, 1970-838
Foodgrain
prices b
1
60 1970
71 72 73 74
a Data for crop years beginning in July of the stated year.
b Wholesale foodgrain prices.
76 77
irrigated land-a precondition for the adoption of
HYVs-are small farmers with less than 4 hectares in
25X1 holdings.F_~
The adoption of modern farm techniques has also
raised the income of India's impoverished rural labor-
ers, many of whom are landless. Both Western and
Indian scholars had predicted that the Green Revolu-
tion would lead to greater exploitation of farm labor-
ers, but recent academic studies show higher real
wages-a 26-percent increase between 1966 and 1980
in Punjab-and a near doubling of employment op-
portunities. One study of rural labor in Punjab main-
tains that rising farm productivity contributed to
higher real wages despite the depressant effect of
increased immigration of Hindu labor from poorer
neighboring states. F__1
Higher Costs. The Green Revolution has been suc-
cessful in raising agricultural production and farm
income, but it also has been expensive. The new farm
technologies require increased use of costly inputs
78 79
81 82 83
such as chemical fertilizers, hybrid seeds, and pesti-
cides, as well as diesel fuel and electricity to power
irrigation pumps.
input costs have increased nearly twice as fast as the 25X1
growth in agricultural output. Also aggravating the
problem of.higher cultivation costs are inefficient
farm practices that have caused unit production costs
to rise even as yields improved.
Even though most farmers have generally prospered
as a result of the Green Revolution, over the past few
years rising production costs have hit India's numer-
ous and increasingly politically active small and mid-
dle landholders hardest. Studies show that small
farmers' profit margins are slim, and escalating input
costs tend to affect them more severely. Such cost
increases combined with sluggish prices have led to
nationwide farm protests.F_~
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25X1
25X1
Figure 7
India: Food and Fertilizer Subsidies,
1974-84 a
11
1974 75
Fertilizer
I I I
78 79 80 81 82 83 84
Growing Subsidies. Beginning in the 1960s, New
Delhi initiated an extensive subsidy system to control
production costs, stimulate production, and keep food
prices in check. Over the past few years, higher farm
production and food storage costs have become an
increasing burden on Indian finances. The fiscal year
1985 (April 1985/March 1986) budget projects that
food and fertilizer subsidies will soar to over $2
billion, a sum nearly equal to the estimated overall
budget deficit. At the state level-which isl more
vulnerable to rural political pressure-
subsidies to irrigation, rural
power users, and farm credit institutions nearly dou-
bled in real terms between FY 1974 and FY 1981.
Nearly half of all concessionary short-term agricul-
tural loans are overdue and, as such, threaten the
integrity of India's extensive rural credit cooperative
system.F_~
Although subsidies and price supports have encour-
aged farmers to adopt the more expensive Green
25X1 Revolution technologies, we judge that they probabl
have induced production inefficiencies as well.
Confidential
direct and indirect subsidies
are likely to distort price signals, minimize true costs,
exaggerate farm profits, and encourage misallocation
of resources. Subsidies also negatively affect rural
income distribution, since larger or more prosperous
farmers who do not need assistance and use more
services benefit disproportionately. In a poor country,
subsidizing high-cost agriculture both increases public
deficits and limits investment in new development
projects.F___1
New Delhi, like the farmer-dominated state govern-
ments, is reluctant to antagonize cultivators. In
1984-an election year-the federal government add-
ed to the food subsidy burden by raising wheat and
rice procurement prices more than 7 percent and
allowing fertilizer subsidies to double. There are no
plans for a rollback in the FY 1985 budget. New
Delhi has also instituted politically motivated "loan
fairs" to distribute cheap credit to farmers, many of
whom are already in arrears to government-supported
financial institutions. F__1
Political Impact
Local and Regional Instability. The Green Revolu-
tion has had a destabilizing effect on the village
"community," which is the bedrock of India's social,
political, and economic system. In our view, rapid
economic change has begun to loosen traditional
social and economic ties in those villages where the
Green Revolution has taken root. Because the new
hybrid varieties are much more costly to cultivate and
provide a larger marketable surplus, academic studies
show that many low-caste small farmers have begun
to abandon their old, high-caste-dominated village
credit and market networks in favor of new govern-
ment credit institutions and urban merchants and
creditors. Similarly, farm laborers, who were once
paid in grain and forced to accept low wages by
higher caste overlords, have begun to bargain for
better cash wages and more favorable terms.F___1
Weakened traditional social and economic ties have
led to increased disputes over access to resources and
sparked communal violence. For example, press re-
ports over the past two years claim that massacres of
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Agricultural Prices and
Food Surpluses
The rapid expansion of the Green Revolution has
been assisted by a production-oriented agricultural
price policy. In 1964 New Delhi established both the
Agricultural Prices Commission (APC) and the Food
Corporation of India (FCI) to implement its long-
term policy goal of achieving food self-sufficiency.
The APC administers farm commodity prices to
provide incentives to producers, while FCI purchases
foodgrains and maintains national stocks to ensure
consumer price stability and adequate supplies.
To stimulate domestic production and maintain farm
income, the APC has steadily raised real procure-
ment prices since CY 1980. Higher procurement
prices and depressed open-market prices enabled the
government to increase its annual purchases of wheat
and rice 50 percent since CY 1980. Bumper harvests
and increased procurement have swollen public gra-
naries but surplus foodgrains are costly to store and
distribute-a factor that has led to over $900 million
in food subsidies in FY 1984.F_~
Food subsidies are designed to help the urban poor,
but this year wheat farmers have benefited because
official procurement prices were higher than those in
the open market. The government now faces the
untouchable laborers in Uttar Pradesh by farmers and
battles over land between high-caste and low-caste
groups in Gujarat reflect growing rural tensions.
The uneven regional impact of the Green Revolution
has also created political problems. One of the ele-
ments worsening the Punjab problem over the past
few years was the perception by many Sikhs that their
state was being exploited by the federal government.
As a result, the Sikh Akali Dal Party was able to
wage a successful campaign accusing New Delhi of
transferring Punjab's wealth derived from the Green
Revolution to poorer regions while the state was
denied industrial investment and fair prices for its
25X1 farm produce.
policy dilemma of lowering procurement prices and
antagonizingfarmers to assist consumers or raising
politically volatile food prices to protect sagging farm
income. As the Green Revolution spreads, we judge
that maintaining a balance between adequate food-
grain stocks, remunerative farm prices, and moderate
subsidies will be a major domestic policy issue for
New Delhi for the remainder of the decade.7 25X1
The greater water demands of the Green Revolution
have added another dimension to the longstanding
struggle between Indian states-as well as among
South Asian nations-for access to major water re-
sources. Finding a lasting solution to the Punjab
problem is likely to be complicated by long simmering
water-sharing disputes with border states. Press re-
ports indicate that two key southern opposition states,
Andhra Pradesh and Karnataka, are now feuding over
access to surplus irrigation water. Embassy reports
indicate that India and Bangladesh probably will start
new negotiations over Ganges River waters, although,
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The Village Community
and Agrarian Change
Village community organization pivots on a complex
social, political, and economic interaction of caste,
land, and labor. Most regions of India possess domi-
nant castes-Vellalars in Tamil Nadu, Sikh Jats in
Punjab, or Patels in Gujarat-who are, for the most
part, the major landholders in their region. By virtue
of their landed status, they often control local eco-
nomic and political institutions. Marginal farmers
and landless laborers, on the other hand, are usually
from the more numerous low-caste groups and un-
touchables.F___1
In the 1970s scholarly analyses of the Green Revolu-
tion focused on the perceived growing social and
economic inequities that the shift in agricultural
trends would bring. Many Indian and Western aca-
demics predicted that the Green Revolution would be
detrimental to small farmers' economic interests and
increase conflict between rich and poor in India's
villages. Numerous academic studies now show that
small farmers have not been unduly disadvantaged or
denied access to commodity markets, credit, land, or
farm inputs. Also, rural conflict, though undimin-
ished, seems to be more the result of caste rather
than class differences.7--_1
in our judgment, financial, political, and technical
problems are likely to make an agreement difficult to
achieve.)
Farm Unions and Politics. One of the major out-
growths of the Green Revolution is the independent
farm "union" movement. As cultivation costs rose and
farm profits were squeezed, farmers in states most
affected by the Green Revolution joined independent
farm unions in increasing numbers. So far, unions
function in eight of 22 states. Although press and
academic reporting alleges that the movement is
controlled by a few wealthy farmers, the bulk of union
support comes from small and medium landholders
who have been most affected by stagnant farm prices
and higher input costs.F-1
Farm unions direct their efforts at protecting farmers'
interests by pressing for higher commodity prices and
input subsidies. Since 1980 thousands of farmers have
courted arrest, and over 100 have been killed in union-
sponsored protests. The new farm "unions" are large-
ly non-Marxist and profess a populist agrarian ideolo-
gy. For the most part they have shied away from
direct affiliation with political parties, preferring in-
stead to establish their own rural power base and
support candidates of their choice. F__-]
In the recent parliamentary and state elections, farm
"unions" played an active role fielding candidates and
disrupting the political campaigns of opponents. Ac-
cording to press reports, support for opposition candi-
dates by members of the independent Shetkari Sangh-
athana farm union nearly defeated Congress Party
candidates in Maharashtra. Similarly, we judge that
the Karnataka Farmers' Association was instrumental
in assisting the Janata to retain power in that state.
The most powerful and best organized farm union, the
Punjab BKU, could not participate because elections
in Punjab had been postponed, but they will play an
important role once voting is reinstated.
In our view, farm unions have been increasingly
successful in wresting concessions from both state and
national governments. Since 1980, press and US
Embassy reporting indicates that union-inspired pro-
tests have resulted in higher procurement prices,
lower electricity and irrigation rates, and the post-
ponement of overdue loans in the states of Punjab,
Karnataka, Maharashtra, Gujarat, and Tamil Nadu.
Farm group pressure contributed to New Delhi's
decision to adopt parity pricing. According to press
reports, Rajiv Gandhi has recently acceded to a major
farm union demand to restructure the Agricultural
Prices Commission and to allow farm representatives
to participate for the first time in setting national
procurement and support prices. F_
Prospects for the Green Revolution
Economic Implications. We judge that extending the
Green Revolution will be one of the major goals of
Prime Minister Rajiv Gandhi's new administration.
25X1
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Tamil Nadu Agriculture Association
The TNAA, established in 1970 by the late C. N.
Naidu, is one of the oldest independent farm unions
in India. It claims over 1 million members, the
majority of whom are rice farmers with small and
middle-size holdings. The TNAA has been successful
in organizing a series of demonstrations to lower
electric power rates and reschedule overdue loans.
Shetkari Sanghathana
Organized in 1980 by the mercurial, populistic, and
self-styled national farm leader Sharad Joshi, the
Maharashtra-based union has successfully conducted
a number of protests for higher farm prices, loan
rescheduling, and increased agricultural wages. The
union has an estimated 60,000 active members and
considerable support among Maharashtra'sfarmers.
Joshi has gained a national reputation as a farm
organizer and hopes to develop close links between
his and other farm unions to place the movement on a
national footing.
Karnataka Farmers'Association
The Karnataka Rajya Raitha Sangha, headed by
H. S. Rudrappa and Professor M.D. Nanjundas-
wamy, is one of the largest and most influential of
Indian planners estimate that agriculture will have to
grow at 4 percent per year-well above the 2-percent
rate of population growth but near the average of the
past five years-to sustain a projected GNP growth
rate of 5 percent over the 1986-90 Five-Year Plan.
Because crop yields are still relatively low, we believe
that favorable weather, more efficient use of existing
farm technologies, and improvements in rain-fed
farming are likely to boost agricultural growth near
the planners' targets. F_~
Food stocks are likely to grow, and Indian planners
will have to cope with the problems posed by full
granaries if agricultural growth comes close to the
desired 4 percent per year. Food giveaways or a
fivefarm groups in Karnataka. In 1980 and 1981 the
KFA was involved in violent protests over cotton and
tobacco prices and was instrumental in bringing down
the previous Congress Party administration in Karna-
taka state. Recently it led massive farm protests in
the state, which tied up road and rail traffic and
filled the jails with over 27,000farmers. It supported
`people's" candidates and the opposition Janata Par-
ty in the parliamentary election last March.0
Bharatiya Kisan Union
Reorganized in 1981, the powerful Punjab-based
BKU is headed by All-India General Secretary Balbir
Singh Rajewal. Currently one of the most effective
unions in India, the BKU has strong support among a
large number of Punjabi farmers, both Hindu and
Sikh. Over the past few months it has led successful
protests to gain concessions on electric power rates
and loan repayment schedules. The BKU-inspired
boycott of grain markets and threat to stop foodgrain
shipments probably were afactor in New Delhi's
decision to take military action in Punjab.
reduction in consumer prices through the public dis-
tribution system would be politically popular, speed
up stock reduction, and help feed India's poor, but
would also push up already high subsidy levels.
Although increased exports are a possible outlet for
food surpluses, New Delhi is more likely to extend the
public distribution system and increase allocations to
"food-for-work" programs to reduce temporary gluts.
We expect that wheat farmers, frustrated with slug-
gish prices and rising production costs, are likely to
shift their land to more lucrative crops such as rice,
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Rajiv Gandhi's Comments on Agriculture
and the Green Revolution
"We have seen that, by working on the foundations
laid down by Jawaharlal Nehru, our farmers have
trebled our foodgrain production. It is only this
which has saved our independence. It is only due to
this that we are now able to stand erect and face the
world. "I
`Agriculture, which was stagnant at independence, is
today strong and dynamic. There has been a steady
increase in agricultural productivity resulting from a
wider spread of scientific knowledge. "I
`American scientific and technological assistance
played a crucial role in helping bring about the Green
Revolution. "I
"We shall continue the emphasis on key areas such
as agriculture, irrigation, and the development of
infrastructure. "I
"The latest advances in biogenetics can help to
further our efforts at agricultural development. So-
phisticated techniques of weather forecasting can
make an immense difference in agricultural produc-
tion. "I
fruits, vegetables, oilseeds, and cotton. Over time, this
process would help diversify production and spread
the benefits of the Green Revolution. By the end of
the decade, crop diversification could help cut the
growing import bill for edible oils-estimated near $1
billion in FY 1984. Over the next five years, this is
likely to help offset a deterioration in the balance of
payments aggravated by lower concessional aid, pay-
ments to the USSR for arms, and International
Monetary Fund loan repayments.
The spread of the Green Revolution probably will
help reduce India's massive employment problem and
slow urban immigration. The new farm technologies
have increased the demand for farm labor as well as
provided job opportunities in agriculture-based indus-
tries in India's numerous small towns. With more and
India's agricultural exports-about 13 percent of
total exports in FY. 1984-are likely to increase in
importance as a result of the expansion of the new
technologies. Burgeoning wheat surpluses have al-
ready encouraged New Delhi to market some of its
surpluses overseas. For the first time since the mid-
1970s, India plans to export nearly 1 million metric
tons of wheat to the Soviet Union, Poland, Romania,
and the World Food Program.
better paying jobs in rural areas, the urge to emigrate
to India's overcrowded cities probably will slacken.
Political Implications. The new farm "unions," in
our view, will make agriculture an increasingly politi-
cal issue in the years ahead. We expect farmers will
use the unions, rural cooperatives, and political parties
to push for higher prices and subsidized credit at the
state and national levels. To expand its farm constitu-
ency the Congress Party's platform is likely to include
more emphasis on agricultural issues such as mainte-
nance of production subsidies and higher farm support
prices. Farm groups will also take a more active role
in promoting their views on national agricultural
policy and push for reduced imports and increased
farm exports.F___1
We judge that increased rural issue group participa-
tion will help generate new political leadership and
widen the benefits of economic development. Because
the new rural elites who are likely to emerge do not
share the same political values and economic interests
as those of the postindependence urban leadership, we
judge that national issues probably will tend toward
more populist, regional, or caste themes. As a result,
Indian politics is likely to be further complicated by
an urban-rural contest for power and influence. F_
In our view, improved agricultural performance is
likely to strenghten New Delhi's resolve to proceed
with efforts to reduce controls'and establish a more
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open economy: A buoyant rural economy will provide
a growing market and a source of raw materials for
expanding domestic industries. More rapid agricultur-
al growth will help reduce food imports, increase
exports, and help ease impending foreign payments
strains that threaten to slow the pace of Indian
economic liberalization.
Implications for the United States. The spread of the
Green Revolution should continue to reduce the US
role as a foodgrain exporter to India, except in periods
of major droughts. Strong Indian agricultural per-
formance is also likely to create market opportunities
for US agrobusinesses such as food processing, hybrid
seed producers, pesticides, chemical fertilizers, and
farm machinery, as well as provide a cushion for more
expansionary economic policies. Because progress in
oilseed production is likely to be slow, India will
continue to be a potential market for US edible oil
processors over the next few years.0
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Confidential
Confidential
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