FDI in Retail: Is Walmart Coming?

Every foreigner residing in India discovers things don’t work the same here as they do back home, especially if “home” is America or Europe. You have to learn a new way of navigating the tasks taken for granted elsewhere: where to buy groceries or any of the things needed to furnish your home, how to get around, how to hire someone to fix things or find the basics needed to do the job yourself, how to set up telephone service and what to do when it doesn't work. For the new expat, it’s all a big hassle but also part of the adventure of living in a new country, East or West.

I asked an Indian friend who lived in the US for twenty years what he missed most about America and he answered, “Home Depot.” I laughed but after thinking about it, I saw his point. “Do it yourself” types like me are not the norm here where homeowners typically call an electrician

to change a light bulb. I often find myself stumped not because I don’t know how to fix something but because I don’t have the right materials, can't find the proper tools and getting either is such a tremendous hassle. I believe anything can be bought in India but finding it easily it near impossible, at least for a foreigner. My solution in Pune, early on when I was new there and trying to get things built at our community, was to hire one fellow whose job was simply to find things for me in the market districts and then lead me to them. I turned a blind eye to the fact he would then go back to the store owner and get a kick back for bringing me in.

In India, big, multi-brand retail outlets like you find in the West are rare and where they do exist, they are nothing of the scale you would find in the United States. The entire Croma store, a very nice electronics and home applieance outlet near our ashram, is a fraction of the size of any Sears store at an American mall. And just so you understand, even Croma-type stores are not common. We have one close to where I live because our area of Gurgaon is “up-scale” enough to warrant it. In India, shops are typically small and locally owned, often specializing in a narrow line of products with limited selection. There was one shop in Pune I liked that sold only nuts and bolts, but not screws. If you needed a special bolt of any size or style, he probably had it, but getting to his shop demanded a special trip. If I wanted a selection of screws beyond the most basic, I’d go to the screw shop; for a good screwdriver, a special tool shop. So it went for most everything. If you have time and you know your way around, it can be a fun throw-back to the way things used to be in America long ago or still found in small towns. That was a time when you knew your local shop keeper and had time for tea and a chat, when services were provided by people you knew and where customers were greeted by the owner of the store. A part of me misses that, but if you lack time or local knowledge, it’s exasperating.

I mention all of the above because there is a national debate raging here about whether India should allow foreign, multi-brand retail outlets into the Indian market. This can be summed up with one word—Walmart. For now, foreign companies are not allowed to start multi-brand retail
stores in India but some in government would like to ease that restriction so that foreign companies can have a 51% ownership stake in such enterprises. The proposal has unleashed an uproar of hot debate and political maneuvers. For now, it looks like the proposal will be shelved because of the fierce opposition but my guess is that it's only a matter of time before the issue resurfaces. Will India follow the lead of most other majore Asian economies (China, Indonesia, Malaysia) who have welcomed the “big boys” into the neighborhood or will it go its own way.

A lot is at stake in the issue, whether you support or oppose the government's decision. Those against FDI (Foreign Direct Investment) in Retail represent a powerful constituency of small shop (known as kirana stores) owners and the middlemen who supply them. The retail industry is the second largest contributor, after agriculture, to the national economy with countless small shops a feature of the urban landscape. They fear supermarkets and large retail outlets will drive them out of business and completely change the commercial landscape, destroying their livelihoods and replacing them with an army of drone salesboys marching to the tune of Big Brother Walmart. The infrastructure of middlemen, traders and central markets (mandis) could be at risk and India's cultural identity might wither, or so they claim. Populists have threatened to set fire to the first such stores that dare come into their neighborhoods. Others see the “hidden hand” of neo-colonialism once again subverting the land. “The British came to India as traders two hundred years ago and look what happened. Do we want to do it again?” “Do we want to go the way of the West?”

Economists and mobile consumers are on the other side of the argument. Big retail represents

modernity. I'd put farmers as being if favor too but, as usual, they are unorganized and remain silent, letting others claim they speak for their interests. Proponents of economic liberalization say FDI in Retail will bring much needed efficiency to supply chains, a reduction in consumer costs, raise farm income, and increase selection. The arguments about jobs are complex. If the economy expands as predicted, there will be more jobs in the new sectors but those in the old could decrease. It's good to remember that a “job” and a “livelihood” are not the same.

A couple of significant points are more difficult for the average citizen to understand. Multinationals such as Tesco, Carrefour and Walmart are attractive becauese they bring in huge

amounts of capital to invest in infrastructure such as efficient distribution systems, trucking, cold storage for fresh produce, supply networks and all the other things that are behind the scenes. With interest rates rising in India, local firms simply don't have the clout to do this on their own. The law would mandate a percentage of products be locally sourced and, considering the low cost of Indian labor, I would expect Indian manufacturers to benefit, similar to what has happened in China and Indonesia after their markets opened. Secondly, and perhaps of greater long term impact, Indian companies are eager to partner with the big multinationals to learn their systems and adopt their technology. Companies such as Walmart have cutting edge distribution networks and expertise second to none.

My opinion is that large, multi-brand retail stores are inevitable because of their economic efficiencies but there is little doubt, in my mind, that they will also be revolutionary. They will bring change. Is that good or bad? That's where the problem lies; they will upset the status quo. India must decide. The question, to my mind, is not if large retail comes to
India but when. It seems to me just a matter of timing. Indian companies can already engage in large retail if they have the will and resources to do so. Only foreign owned firms are prohibited. I expect local comglomerates will slowly expand their operations to create Indian versions of Walmart, Costco and Home Depot. Already Reliance Industries has opened grocery chains in many big cities but it will just take much, much longer for domestic companies to equal what Walmart could do in a short time. Can India afford to sit on the sidelines. (It should be noted that multi-brand outlets must also receive permission from state governments to operate. Some states prohibit even Indian companies from opening large, multi-brand stores.)

I'm reminded of when I visited India in 1995 and most of the cars where old-style, dumpy Ambassadors that hadn't changed much since the British left India in the late '40's. Foreign automobile firms weren't allowed into the country. When foreign investment was allowed a few years later, everything changed, car ownership exploded, pollution decreased, prices dropped, selection increased and almost everyone junked their Ambassadors except for government officials who can still be seen cruising around town, flags flying on the fenders of the old stand-bys.

I should mention that foreign owned "single-brand retail" is permitted even though multi-brand is not. That is why you will see a Levi's or Gap store in the local mall. All of the products in

those stores are sold under the one brand. The Levi store cannot sell Lee jeans or Wranglers. The rules for ownership now allow 100% ownership of these stores by foreign firms, making it likely a big IKEA store or something like it will soon pop up in Delhi. Walmart has been allowed, in partnership with an Indian firm, to set up a few wholesale outlets in strategic cities to supply the local kirana stores and seem to be popular, although local firms accuse them of selling to retail customers on the sly.

One final consideration is a worrying phenomena I've mentioned before (The Price of Onions). Inflationary pressure is pushing food costs higher at a pace faster than in other sectors of the economy. This seriously affects the poor because they must spend a high percentage of their income (50%-75%) on food. While India modernizes right and left in the cites, agriculture lags behind because of inefficiencies, out-dated regulations, lack of infrastructure and entrenched interests. Something needs to change. Whether the answer is foreign investment or some sort of domestic initiative remains to be seen but for India's sake, I hope it addresses the problem conscoiously rather than tempting fate by waiting. Alas, I suspect nothing much will happen.

A Flood of Books

The monsoon reached Delhi last Sunday with a drenching three hour downpour. The dry earth soaked it up as fast it came down and two days later it rained again. On Wednesday Priti from the Dihika School phoned to tell us two feet of water was in her basement and our Publications Department's books were getting soaked. Grabbing all hands available--cook, cleaner, guard, maintenance and our driver--Sangeeta and I hurried over to the school to assess the damage. What a mess!

The front gate was blocked by a huge, knee-deep puddle in front of the house. Wading through, we came out of the water at her front steps and immediately

knew we had a big problem because wet boxes were being brought up from the basement. I rolled up my pants and went down where I found boxes literally floating in water slightly above my knees. The level had been even higher but it was beginning to recede. The photos accompanying this post are from the next day by which time the water had gone down to a depth of about six inches.

We hired extra labor and immediately directed our efforts toward bringing all dry boxes up to ground level. We then separated boxes completely soaked from those that were only partially so and returned the next day with a truck and to move all the dry boxes to Guru Kripa (Swamiji's house).

I mentioned in a previous letter how we had moved the books to the Dihika basement from the Ananda Center to make space for our temple renovation. It seemed like a good spot because there was lots of space, it was well ventilated and not far away. That it might flood had never occurred to us, and the reason it did is very reflective of what's happening in Gurgaon and other places in India under heavy development pressure.

The Dihika School flooded because it sits next to a natural drainage channel (a nullah) that was filled over the last year with excavated construction soil from neighborhood projects. A large community clubhouse was recently built on the other side of the nullah and some of the soil ccould have come from there. What had historically been a watercourse is now a raised flat space blocking upstream water and leaving it nowhere to go when it rains. One of my first thoughts was to hire a JCB (backhoe) to dig a channel through the fill to prevent future lakes but I was told this can't be done because the locals who control the property won't allow anyone to touch it.

Priti lives on the edge of a housing development created by DLF (Delhi Land and Finance), possibly the largest development company in India. The neighboring plot's ownership is disputed but probably belongs to the historic village that existed here before DLF came on the scene. The village panchayat (governing council) won't allow anything be done on their parcel, is at odds with DLF, and probably cares little about their problems. Who knows if tthey allowed the land to be filled intentionally to increase its value?

This story can be retold throughout Gurgaon and India. Whenever it rains, lakes form on the roadways because planning and infastructure can't keep pace with developmwent, natural channels are filled to

create building lots, there is little effective regulation and what government oversight does exist is easily corrupted as land values skyrocket. Gurgaon's plight is a regional joke but no one seems to know what to do about it because things are changing so fast and so much money is at stake. I suspect, after enough damage is done, pressure will be brought to bear on the various parties to force a solution but it will take time. In the meanwhile, it will be interesting to see what happens as this year's monsoon progresses.

Although our Publications Department suffered a serious blow, it's been wonderful to see people rally to help. Have you noticed how adversity often brings out a noble spirit? We estimate at least half our inventory is gone, amounting to a financial blow of many, many thousands of dollars, maybe even tens of thousands by the time we get an accurate count. We'll see which book titles were most affected and then find out the cost of reprinting those we most need.

In some strange way, I feel there is a hidden blessing in this. I know it sounds strange to say that but I suspect good things will come from this if it taken in the right spirit. Who knows what fresh energy will flow? It'll be a challenge I'm sure but our local Sangha will help us and Publications will soon be strong on its feet getting Master's teaching out to devotees in India again. We'll be telling those of you who live in India more about how you can help in the weeks ahead.

Tomorrow and in the coming days, we'll also decide what to do with the wet books and how we can help Priti clean up her school. She too has suffered a loss and is left with a huge challenge because this is the last week of summer break and classes begin again on Monday. As the saying goes, "When it rains, it pours."

We'll post news on our local website www.anandagurgaon.org to keep you abreast of developments.

For photos, go to: https://picasaweb.google.com/jayahelin/BooksFloodedAtDihikaSchool

The Wishing Tree

I stopped by The Wishing Tree last week to buy a couple of gifts for when I go to the USA in July. It had been a year or two since I had last visited Ananda's "boutique" in the Metropolitan Mall in Gurgaon, and I was impressed by how beautiful the store is now and what a nice, peaceful vibration it has. The colors are so attractive and the displays nicely arranged. "Uncle" Vijay has done a great job of managing it these last few years and from what he told me, sales have gone up since the new Metro line has gone into operation. A local station is directly outside the doors of the mall.

When Swami Kriyananda moved to India late in 2003, it wasn't long before he suggested Ananda have a store of its own in one of the upscale shopping malls rapidly coming up on MG Road, not

too far from our ashram. Swamiji enjoyed visiting the Metropolitan Mall when he wanted a break from writing, browsing there in the Om Bookshop or having a snack at the barrista in the indoor courtyard. It was natural choice for us to lease a space there in 2004. Biraj headed up the project and served as manager until handing over the duties to Vijay when he shifted to Pune in 2008.
(Left: Vijay at The Wishing Tree)

Vijay told me a few facts about his customers and the store. Murtis (statues) have always been one of the biggest sellers and The Wishing Tree is now known as the place to go for anyone wanting a good quality murti. It also sells the best incense and puja accessories and many customers come especially for that. Vijay admitted these items don't bring in much money but his customers rely upon him for their supply, coming again and again. They also know that he is willing to procure whatever items they need, resulting in many of his sales being special orders. The store does not bargain but is recognized for always charging a fair price. Many foreigners come to the store as they browse the malls for items to take home and many have recommended The Wishing Tree to their friends for when they too come to India. Word of mouth is the best advertising.

One of the primary reasons for opening the store in the first place was to have a outlet for Ananda books and products to the general public. This is still an important aspect of the

store and it carries a full line of Swami Kriyananda's publications and music in addition to complementary spiritual literature, all of which sell well. If they don't have what you want, Vijay will get it for you. Anyone interested in Ananda's classes or other activities can get all the information they need at the store.
(Left: Kanta helps at the store when she can.)

So what's next? In the first years, the goal was to simply to balance the financial books but now that the store has begun to run a little bit in the black, Vijay is starting to think about expanding or even opening another outlet in Gurgaon. Who knows? The city is in a tremendous growth phase with few signs of things slowing down so I don't doubt another store could succeed if a good location is found. Another store (or stores?) would allow an expansion of the line of products and to buy in larger quantities. Maybe we could even have a store in Pune City too but maybe it's best to be careful about such plans because as the ancient tale says, whatever you wish for under the magical "wishing tree" is bound to come true.

Guru Kripa

This is a story told to me by Jasbir Singh, a friend of Ananda Sangha in Gurgaon and the owner of a fabric shop in the Qutab Plaza Mall, a short distance from our Gurgaon ashram.

I was first introduced to Swami Kriyananda in 2004. At that time, I had made kurtas for a few of the Ananda monks and one day a group of them came to my shop and said that Swami Kriyananda wanted to meet me. I had seen him

once before but had never been introduced to him so I asked my husband what he thought I should do. He said, “If a saint invites you to meet him, you should go.” I asked if he would go with me and when he said, “Yes” we went to where Swamiji was living at that time, in the building that is now the Ananda ashram. (Jasbir and her husband, Brigadier Singh, at left.)

Swamiji was very gracious and we were served tea and snacks and we talked about this and that. Finally, Swamiji looked at me and said, “Madam, I am looking for a house and you are going to buy it for me!” You can imagine my surprise. I had just met him and said, “Swamiji, I don't know anything about houses and buildings or about prices and things like that,” but he didn't say anything more about it. I kept wondering what he could mean because I didn't have money to purchase a house if that was what he meant. It was all very strange.

A little bit later, I received a call saying that Swamiji was negotiating with a fellow about a house and was asking if I could come and take part in the conversation. I said I would and went to where they were meeting and was introduced to this man who asked, “Do you recognize me?” At first I didn't but then I remembered him as someone I had not seen in a long time, a man who had lived in a house of my uncle's when I was young and who, many years ago, had caused him lot's of trouble. I immediately called Dharmadas into another room and told him, “Don't have anything to do with this man. He will take your money and cheat you for sure. He's dishonest and not a good man.” After awhile, we went back into the room where this man was speaking with Swamiji. Dharmadas thanked him for coming and told him he would think about their offer but I think the fellow knew I had said something against him because he gave me a dirty look. Swamiji said he was glad I had come because he felt something was not right.

Some days later, I was walking in the neighborhood and I saw a sardar (Sikh man) standing by the gate of a new house. Since I am also Sikh, I said “Hello” and asked if he lived there. “No,” he said, “I am a builder and I have just finished this house.” I was curious so I asked if he would be willing to show it to me, which he did. I liked it immediately and he and I sat down to talk about it. “Sir”, I said “I know nothing about houses and construction but I want to buy this house for a swami and I trust you to help me and to

give me a good, fair price. You must understand that this house will be for a very spiritual man and the money will come from many donors around the world. This is a not a normal buisness deal. The cloth on your head (referring to his turbin) is the same as that on my husband's. We are well known in this neighborhood and if it should come back to us that we have been cheated, I don't know what we would do or how we could show our face. You must help us.” The man was touched because he replied, “One thing is missing. You say many have contributed but I haven't been asked about what my contribution will be. I too will help with this purchase.”

So, we talked about prices and details and eventually Swamiji and the others came to see the house too. They liked it and we went forward with the purchase. This is how Swamiji came to live in Guru Kripa. Afterward, he said, “What's this about not knowing anything about houses. See how you bought this house for me."

Back in Gurgaon

Sadhana Devi and I shifted last month to Gurgaon from Pune after being away since 2008. In our absence, the Ananda center/ ashram went through significant changes, making our return like coming back to a different place. Even Delhi seems to have changed for the better but my guess is that these transformations are more an outward projection of what has happened within me. I’ve changed. Our time in Pune, living in our own apartment, finding our way in a strange new city, working in the village with all the attendant challenges and making a new set of friends gave both Sadhana Devi and me a broader understanding of India and, perhaps, of ourselves. For that, I’m grateful. I was a little sad to leave Pune but now that I’m in Gurgaon, I realize this is a better place for us to serve and I like it.

Over 25 Westerners were once part of our work in the Gurgaon when we left in 2008, Swamiji was in residence and the place was lively with projects. Now only five Westerners remain (Sadhana Devi, myself, Daya, Keshava and Dhyana). The monks and Swami’s staff shifted to Pune and the rest headed home, leaving those who remain with a bigger teaching and organizational load. Our duties include not only Gurgaon but also functions in the entire NCR (National Capitol Region) where we have a vibrant center in Noida on the other side of Delhi and ongoing classes in the capitol itself. Of the six houses once needed in our DLF Phase 1 neighborhood, only the ashram/center (B10/8) and Guru Kripa (Swamiji’s home) remain with talk now of Guru Kripa possibly being sold to further the project in Pune. With so much downsizing, you would be forgiven to think our work in the NCR has regressed, but surprisingly, it hasn’t. That's why we were called back. It's simply changed. In fact, in some ways things are better here than ever though the live-in ashram population is definitely smaller. In the absence of the Americans and Europeans, local devotees have stepped up, a sign a the natural maturation of our work in India.

When the Westerners were here, we had at our disposal a large crew of volunteers willing to do whatever was necessary to plant seeds of Ananda’s work in India. On top of volunteering, they also paid for room and board, giving a tremendous boost to the ashram. Small businesses and outreach programs were started, a legal and financial structure put into place and we learned the ropes of living in a foreign land, but it was always with an intention of one day turning the work over to local devotees, replacing foreigners with locals. Little by little, this has happened much in the same way as it did in Italy.

We now have an extended family of Indian devotees who participate regularly in the Gurgaon ashram with some leading classes and others helping with the day to day operations. Whereas the first Westerners were without family responsibilities, the same isn’t true for the Indians. Most are householders with children, so living in the ashram isn’t an option, but they treat Ananda as their spiritual home and come by for functions from the neighborhoods nearby.

The same is true for our group in Noida on the other side of Delhi, led by Mr. Gupta and his family. Since we left, they’ve grown into a strong Ananda Center with their own space in the basement of a residence in a quiet neighborhood, more central to where their members live than before. There, a solid core of devotees participates regularly with only occasional teaching help from those of us in Gurgaon. Most of the programs are presented by local teachers who have graduated from our Teacher Training Course. In central Delhi, Daya and Keshava lead weekly satsangs and classes in rented classroom space.

One of the most practical measures of commitment is financial. Are people willing to support a work that serves them? For Gurgaon, the answer has been "Yes!" The change over the last year has been revolutionary. In the first half of 2010, eight ashram members departed for homes in America and Europe, leaving a void in the Ananda Gurgaon’s aura and some questioning about whether we should move elsewhere because of our financial state. Up until then, the center had been running a significant monthly deficit and the gap between income and expenses seemed impossible to bridge. We had few local, consistent contributors and our efforts to establish a steady fundraising effort always seemed to stall. Perhaps locals didn't feel connected enough to contribute or perhaps they didn't perceive a need. Or, maybe they simply weren't asked in the right way. Whatever the case, something needed to change because with Swamiji shifting his focus to Los Angeles, donations from overseas dried up and it became essential for the Gurgaon Center to meet its monthly expenses without outside subsidies. The Gurgaon leadership took the following steps.

1. It was imperative to trim costs, scrutinize all items and eliminate waste. The most significant decision was to give up Shanti House, our guest facility. This was painful and much debated but it was draining us.
2. The Center increased its monthly income through raised rents, businesses paying for space and services previously provided free, and by the staff offering many more classes at higher rates. None of these were painless.

3. While some thought it time to contract, Nayaswami Dhyana decided to do the opposite and initiated a remodeling of the entire basement into a new, magnetic Ananda Center to attract new energy. Whereas before half the basement was used for book and material storage, it is now a beautiful temple, an income producing boutique and a Sangha Office space. Books are now stored off-site in another neighborhood.
4. Finally and most importantly, a new, energetic program of “Supporting Membership” was initiated to attract local devotees willing to support the Center. From a base of zero in early 2010, we now have over 30 Gurgaon Supporters who make significant monthly donations to keep the Center functioning. An important element of this campaign was greater personal contact with members and the establishment of a sense that the Ananda Center is now theirs.

The changes had a dramatic effect upon the energy at the Center and our finances. The entire basement is now in use, open for devotees at all times. A new altar and murti (statue) of Babaji was installed and whereas before we had one class each weekend, we sometimes now have three or four, often led by local teachers, a weekly Gita Study Group on Thursday evenings and a Kriyaban Discussion Group on Fridays. If we could to attract students on weeknights, we’d do even more, but Indians rarely attend weeknight classes as they do in America. By God's Grace, we are now paying all our bills and beginning to tithe to the larger work of Ananda India.

Ananda's work in the NCR still has a long way to go and we recognize our ability to reach people beyond the NCR has declined. We simply don’t have the teachers, time or funds to travel and host programs beyond our local area. The disciples in Pune do a good job in their city and travel to Mumbai and Bangalore, but there is much, much more we could do had we the necessary resources. For the moment, our focus in the NCR is to stablize our foundation by building a larger core of Supporting Members. In time, this should allow us to hire one or two local staff to free up

energy for us to reach out in a larger way. An Ananda Centers Department may be the next step in this direction, perhaps followed by new outreach programs in selected cities like we did in 2007/08.

As I mentioned, the possibility of Swamiji selling Guru Kripa is in the air. He is scheduled to return to India after the monsoon and I expect he'll make a final decision then. It’s a very nice house and has the blessings of Swamiji’s years there, so some would like to see it preserved in the Ananda work. On the other hand, it represents a considerable asset that might be put to better use elsewhere. The house serves the Gurgaon group as an extra classroom, a meeting venue and as a place for guests. Of course, it also is where Swamiji, his staff and Nayaswamis Dharmadas and Nirmala stay when they are here. If it is sold, we'll be sad but at the same time, it may open the door for us to relocate to a building of our own rather than continuing to rent the present ashram house. With Guru Kripa in our possession, it’s difficult to consider moving but once those ties are broken, we might be able to do something “more and better” if we can rally our local support to help us. When one door closes, another opens.

We’d love to have you visit. The ashram has guest spaces available for those who might be passing through Delhi, so please come to see us if you can. I’d especially like to remind you of the short pilgrimages from Gurgaon to spots of interest in north India led by Daya and Keshava Taylor. They regularly visit Babaji’s cave and Rishikesh. In addition, groups go to Yogananda shrines in Kolkata and have recently visited Amritsar, Ladakh, and Badrinath. Most of the pilgrimages are of less than a week, making them easy to fit into local devotees schedules. Once you sign up, of course, you can then spend time with us in Gurgaon. Check out their nice webpage at www.anandapilgrimages.org.

The Price of Onions

The price of onions doubled in December to over Rs.50/kg, causing an agony of hand wringing and finger pointing in the press. What started as a minor price fluctuation became over the course of a month the focus of a national debate. What was going on? Why so much talk about onions?

On the surface, it might appear to be simply about onions but like many things in India, it’s complicated. Onions came to represent deeper issues troubling a rapidly changing society-- inflation, the plight of India’s farmers and a need for agricultural reform. The proximate cause for the onion problem was a lingering monsoon that flooded fields and destroyed much of the crop. The result; prices went up. A variation of this scenario plays itself out every year with differing crops but this time the situation caught everyone’s attention and a host of issues entered the debate.

The first response of government ministers was, a la Captain Renault in Casablanca, to “round up the usual suspects.” In this case, that meant catigating “hoarders,” “middlemen” and “market manipulators.” That always plays well and it may even be true, but no one really believed much would come of it. This was followed by photos of the police confiscating bags of onions from wholesalers’ warehouses. No one clarified exactly who these manipulators were and I'm not the only one who wonders what happened to those bags. A few small voices mentioned how onions can’t be hoarded very well because they dry and lose value within one week, but nobody wanted to hear it.

Vying for the lead with response #1 was the old standby; blame the “incompetent, inept, short-sighted, and foolish” policies of the government in power. “It should have been anticipated!” “Why isn’t more being done?” “The aam aadmi (common man) once again suffers at the hands of the capitalists.” Under verbal assault, the Agriculture Minister gave assurances, deflected blame, and called for reform. The Prime Minister met with his Cabinet and initiated “investigations”. Local administrators ducked for cover.

When outrage showed no signs of abating and prices kept rising, the government put into motion Standard Response #3. It banned exportation of onions (or potatoes, rice, wheat, kerosene, steel or whatever happens to be the shortage of the month). A governmental spokesman said something along the lines of, “If rapacious, conspiring traders are prohibited from selling their onions to greedy foreigners (read: Pakistanis? Americans?), we’ll show them our resolve. Mother India will stand up! We’ll force the traders to sell cheap to the home market.” Traders, faced with a loss, liquidated what they could, spoilage took the rest, and then they simply suspended business until further notice. Shortages ensued. Prices rose.

Finally, things returned to normal when farmers began harvesting the next onion crop. This sequence will be repeated when the next shortage comes, but this time I found it refreshing to see more attention paid to serious, underlying issues. I don’t expect much to be done, but one of these days, enough momentum will be generated to initiate change.

The cost of food has been rising at a 20%+ annual rate for the last few years, far above the national inflation rate in other sectors. Tellingly, prices have not inflated above average for grain. Why? India’s diet is changing as it becomes more prosperous. A rapidly expanding, urban middle class is no longer content with only dhal, rice and chapattis now that it has money to buy a broader array of fruits, vegetables, dairy products and meat. Demand for dairy products, eggs and poultry is fast on the rise in all parts of the country. Indians are growing bigger with each generation as more protein is consumed. Although pockets of malnutrition remain, the general improvement in national health can be attributed largely to an improved diet. When the demand for a commodity rises and the supply is static, prices go up.

The logical response to increased demand, if you want price stability, is to increase supply, but this takes time, investment, planning and incentives to those who grow the food. India immediate need is not to grow more food but to better utilize what it has. Indian farmers produce abundantly but it’s said that 40% is lost before it reaches the consumer, mostly due to poor storage, bad transportation, lack of infrastructure and inefficient distribution networks. Whatever the real number, the percentage is huge and government is unable to address it effectively.

Caught in the middle is the vulnerable Indian farmer. Without proper storage and faced with his crop going to waste, he is at the mercy of middlemen who dictate prices. Since most Indian farms are small, the farmer is usually too poor to invest in his own storage and the government seems unable, or refuses, to step in and build proper facilities. Vast amounts of food sit unprotected from the elements and rot. Most farmers are tenants, paying rent to landlords, and cannot borrow from banks to make their own improvements even if they had the will to do so. Most must borrow for seed and fertilizer and are forced to deal with private money lenders charging usury rates of up to 35% interest. It’s little wonder that farmer suicide is a national epidemic when crops fail.

In India, middlemen dominate, each taking a cut and leaving the farmer with a pittance. Private industry is stepping in some districts to create grocery chains similar to those found in the West, contracting directly with farmers and building their own distribution networks. This eliminates many of the middlemen and raises the prices paid to farmers while at the same time lowering them for consumers. You might think the government would encourage this but it doesn’t. In fact, it restricts it and in some states, grocery chains are banned altogether because of fears about their impact on mom and pop stores and middlemen. These groups are politically connected, belong to the rising urban class and have the ear of politicians, whereas the farmer always comes second. The peasants’ plight is seen as something to be accepted, an unfortunate, eternal fact of nature.

The Indian farmer desperately needs efficient distribution networks, cold storage, warehouses and the many things that can be provided by private industry yet government attitudes continue to inhibit such investment in the agricultural sector to protect entrenched interests. It seems as if even the rural politicians don’t really want change because it might rock the boat and upset their power base.

When a farmer harvests his crop, he is unable to sell it to the highest bidder. Usually his only option is to sell to a small handful of licensed wholesalers who control the vegetable mandis (markets), a legacy of the “License Raj” I’ve written about before. Because they are scarce and give those who possess them control of the food markets through monopolistic practices, the licenses are valuable and awarded to those with political influence. It goes without saying that bribes are paid and those who benefit prefer the status quo. Calls for ending this system go nowhere but at least the latest “onion crisis” has begun to make the public aware of what’s going on.

The future of India points to a huge expansion of its cities, much like what we see now in China. This is where capital is flowing and political influence resides, yet most Indians still live in villages. As cities expand, land prices increase on their peripheries, farmland is diverted to other uses, and food production is pushed further away from nearby, city markets. Every day, thousands leave their village to build the glass towers of Gurgaon, Hyderabad or Bangalore and clean the homes of the those who live in them. Onion prices are pushed higher but even that could be a good thing if the money actually flowed into the hands of farmers, but it doesn’t. Farmers will continue to struggle and India will stumble from one food “crisis” to the next until something changes.

Do I believe such change will come? Actually, I do because the coming generation will demand it and forces are at play that will make it happen in spite of government. Here’s a short story. Our community in the countryside outside of Pune is not far from a good, two lane highway built within the last fifteen years to serve a privately funded, multi-billion project in the hills beyond. The local sarpanch tells stories of when he was a young man and how he would drive his bullock cart along the old road to take his crop to market. At each stream, he would unload his sacks of grain and carry them across the water to the other side where he would reload them onto his cart. In this manner, he reached Pune in five days whereas today, it takes only one hour by truck. All because of a road and transportation. Before, our area was poor but I wouldn’t call it that now. It has been fortunate. Farmers now grow a variety of crops and I’m even seeing flora-culture coming up here and there, made possible because of good roads, education and better technology. Kids all go to school whereas before only a few did. India’s integration into the modern world and the natural dynamism of its people are pushing these changes.

In the days of the Mughals, the policy of the empire was to extract as much wealth as possible from the peasants, leaving them just enough to survive to produce next year’s crop. The British followed much the same policy but realized it would be wiser, and better long-term business practice, to reinvest a little of the wealth into the country’s roads and railways, thereby increasing production and improving their ability to control a vast country. Since those days, India has come a long way but the farmer still gets the short end of the stick.

Gandhi foresaw a modern India that concentrated first upon improving the lot of its farmers and villages. As they prospered, he believed the entire country would rise. Nehru had an alternate vision of a modern India driven by industry, guided wisely by the government. He noted that all modern economies had passed through a phase of industrialization to escape poverty and felt Gandhi’s course to be impractical. Once India had assumed its rank among modern industrialized nations, it could turn its attention back to the land and help those left behind. Who was right? Nehru had a point but now that industrialization has come, I see rural India still waiting.