Running India into the ground

Not to be left behind, every state government has created an environment ministry. The environment never had it so good. State after state can now send its ministers and officials to Washington D.C. and Manila to have discussions with the world8217;s super-bureaucrats about the environment. I am now waiting for municipalities, city corporations, zilla parishads and panchayats to create departments of environment. We can as a country have a world record for jobs and paperwork in the environment 8220;space8221;.

Of course, none of us want to discuss the fact that it is a matter of deliberate and conscious state policy to encourage and pay for environmental degradation. We have a policy of subsidising the production of chemical fertilisers. The principal beneficiaries of this subsidy are the businesses which set up 8220;gold-plated8221; fertiliser plants in the good old permit-licence days. Our subsidy policy encourages them to produce inefficiently as they are guaranteed profits despite their inefficiencies. A gold-plated plant is one where the capital costs have been deliberately inflated as the government guarantees returns on the stated invested amount. Who have been the beneficiaries of gold-plating is a question that is best left unasked and unanswered. The point to be noted is that the beneficiaries of fertiliser subsidies are not the destitute landless poor of India.

Subsidies keep fertiliser prices lower than what they would be otherwise. Rich farmers pay less for fertilisers than they would if the markets were free. Please note that landless labourers do not buy chemical fertilisers! Any economist will tell you lower prices will lead to higher consumption. That is exactly what is happening. Our agriculture systematically consumes more chemical fertilisers than it would if the normal price mechanism had been allowed to ration its use.

Excess consumption of chemical fertilisers pollutes and degrades the environment8230;.not just in the field where they are used, but as the fertilisers run off with the rains, they pollute the entire land. But because the vested interests for fertiliser subsidy are so strong and are so well disguised behind socialist pro-farmer rhetoric, the environment8217;s case is lost. The sad Indian tax-payer is subsidising and positively encouraging lazy businesses to pollute the environment.

The same holds true for subsidised pesticides. If they were priced right, farmers would use them sparingly paying proper respect to a scarce resource. Price them low8230;and then why complain if they over-use them and literally poison the environment and our very own food chain? One might want to argue that pollutants should be taxed and priced high to control their consumption. But to actually subsidise them must take really convoluted logic.

And I have not even mentioned the worst culprit. State after state continues to subsidise electricity for pump-sets. Some give it away free. Our central government subsidises diesel which is used widely in pump-sets. We are encouraging rich farmers again, only the rich farmer can afford a pump-set to dig deeper and deeper tube-wells and pump out the life giving waters from the depths of our land. The water table across the India continues to sink. If you were to mine coal or oil, we would charge you royalties. But for 8220;mining8221; waters from 8230;.hey, please be our guest, take out more of it8230;.here is some more free electricity8230;.elections are around the corner.

The great tragedy is that we are encouraging changes in crop patterns that are dangerous. I frequently visit the Rayalaseema region of Andhra. For centuries, this ancient region has been known as a drought-prone area. All our literary texts and epigraphic inscriptions testify to this. This is not a region for cultivating sugar cane or having rice paddies. Sugar cane should be grown in tropical climates where it rains daily and rice in fertile river valleys. And yet, using invaluable ground water pumped out from deep tube-wells, one can find acres and acres of rice and sugar cane cultivation. Ground water is getting depleted at an accelerated pace. The water table is now hundreds of meters below the surface. We are running the risk of desertification on a massive scale. And what is true of Rayalaseema is true of regions in dozens of states be it Maharashtra, Tamil Nadu, Gujarat or Punjab. Surely our leaders of today do not want to go down in history as the creators of the 8220;great Indian peninsular desert8221;.

The argument against subsidies is almost always made from the perspective of fiscal rectitude. 8220;We cannot afford it8221; is what the mandarins say. The trouble with this argument is that the Indian welfare state wastes so much money on so many vested interests that this argument has very little credibility. Fertiliser companies and their lobbyists, pump-set manufacturers and their lobbyists, rich farmers and their vote-gathering terror squads8230;. all supported by loud and vacuous pseudo-economists are able to checkmate the seemingly soulless opponents of fiscal deficits. We need to make the case that at least some of these subsidies are bound to cause us to leave to our children a polluted, poisoned desert8230;. simply because of the distorted signals that they give. One can only hope that no Indian leader consciously wishes to be the 8220;desert-maker8221; of the 21st century. This, I believe is the best for our environment. I hope someone is listening.

The writer is chairman and CEO, Mphasis. You can write to him at jerryraoexpressindia.com