varnam

In the Indian state of Andhra Pradesh debt-ridden farmers were committing suicides. Then came the elections and the IT savy Chief Minister Chandra Babu Naidu was voted out of power. His defeat was attributed to the fact that he did not take care of the non-IT population of his state. While the Chief Minister spent lot of time and energy in globalizing Hyderabad, his fault was in not bringing the wealth creating benefits of globalization to rest of the population.

One of the first acts of the new Govt. was to make electricity available for free. This did not stop the suicides. Free electricity did not bring people out of debt. The plight of the farmers have been blamed on globalization because government investment into agriculture fell as a result of Washington Consensus.

But the truth is that the plight of these farmers had little to do with a government bent on sending signals to investors. Rather, the indebtedness that was prompting such misery was a product of several vicious cycles. Many farmers have to rely on informal networks and oppressive moneylenders for their financing needs. And the government itself partly produced the crisis it was responding to. Sops in the form of free electricity had led to indiscriminate use of water pumps, producing a grave water crisis. Most of the indebtedness came from the need for inordinate expenditures to drill further for water. And cooperative banks, set up to provide cheap credit, made themselves insolvent by lending indiscriminately.[India balances needs of poor and investors]