Rajagopalan, Velayudhan
(1993)
Political economy of agrarian politics in Kerala: A study of state intervention in agricultural commodity markets with particular reference to dairy markets.
PhD thesis, London School of Economics and Political Science.
Abstract
This thesis analyzes the nature of State intervention in agricultural commodity markets in the Indian province of Kerala in the period 1960-80. Attributing the lack of dynamism in the agrarian sector to market imperfections, the Government of Kerala has intervened both directly through departmentally run institutions and indirectly through public sector corporations. The failure of both these institutional devices encouraged the government to adopt marketing co-operatives as the preferred instruments of market intervention. Co-operatives with their decentralised, democratic structures are, in theory, capable of combining autonomous decision-making capacity with accountability to farmer members. The Government of Kerala believed that this institutional mechanism would aggregate the interests of peasants and thereby transform them into powerful market agents. We, however, argue that the nature of the interest group process, both within the organisation and in the larger polity, significantly, distorts policy outcomes. First, the nature of the intervention - the deployment of massive financial resources, the top-down approach with its commitment to the achievement of quantitative targets and the capital intensity of many of the projects-afford opportunities to powerful groups such as professional politicians and State bureaucrats to maximise their own interests. Second, groups within the organisation such as farmer-politicians with their proximity to decision-makers and trade unions with their links to political leaders are able to divert an increasing share of the organisation's resources to themselves. In the process, farmers, in whose name these policies are initiated, experience negative consequences. The above hypothesis is tested by analysing the implementation of Operation Flood-India's dairy development programme. Operation Flood (OF) was launched by the Government of India with the avowed aim of increasing farm incomes through an institutional framework( the Anand Pattern Co-operative of Gujarat) in which farmers would have control over their own resources. This research, however, finds that owing to interest group processes, the programme has produced sub-optimal results in Kerala. Producer prices have remained stagnant, while production costs have soared. Farmers have responded by restricting supplies, which has led to massive shortages in the market. Meanwhile the fiscal foundations of the organisations have been undermined, as powerful groups appropriated an increasing share of the organisations' resources. An intervention intended to optimise benefits for farmers, in fact, resulted in the dominant interest groups within the polity maximising their benefits.
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