The Political Economy of Agricultural Policy Reform in India

110 CHAPTER 9

the authority of the central government to suspend state governments but finally reinstated him in the face of an angry but peaceful mass agitation. This was, in fact, the only such instance in Indian history of a state government’s being reinstated after the central government had suspended it (Suri 2004). During Rama Rao’s rule from 1983 to 1989, TDP implemented its election prom- ise of electricity subsidies, along with a range of social policies such as midday meals for schoolchildren and construction of pucca (decent quality) houses for poor communities (Suri 2004). Most notably, TDP introduced the famous Rs 2 per kilo of rice scheme, which subsidized rice for consumers. Although these policies have been widely referred to as populist, the use of this term is problematic (see “Core Beliefs (Paradigms)” in Chapter 6, and the distinction between “legitimate” and “distorted” populism drawn by Lal [2006], discussed in “The Political Economy of Power-Sector Reforms” in Chapter 2). The emergence of electricity subsidies in Andhra Pradesh and other states in the late 1970s has to be seen in the context of the Green Revolution, which started in the mid-1960s, and the debate about declining terms of trade that emerged in the 1970s. The provision of surface-water irrigation and electricity for groundwater irrigation was an essential condition for the Green Revolu- tion. When electricity connections for pump sets were first introduced, they were metered, and farmers had to pay a volumetric price. To what extent the electricity supply to agriculture was subsidized from the beginning is difficult to reconstruct because of various measurement challenges (for example, the problem of correctly valuing off-peak power supply). In any case, subsidies in support of the Green Revolution were initially part of a strategy to achieve the national goal of food self-sufficiency. They gained prominence again in the 1970s as a political strategy to win farmers’ votes. As studies showed at the time (for example, Tyagi 1987), the net barter terms of trade for agriculture declined during the 1970s, as the prices paid by the agricultural sector increased faster than the prices received. This factor contributed to the emergence of a farmers’ movement that demanded subsidies as compensation, especially in regions that had initially benefited from the Green Revolution (see, for example, Srinivasulu 1999; Gill 2000). In Andhra Pradesh, various crop-specific farmers’ organizations were established in the 1970s. For example, the Andhra Pradesh Sugarcane Grower Association was founded in 1973/74 and the Andhra Pradesh Cotton Growers Association in 1976/78. Led mostly by educated rural youth from farm families, these organizations focused on economic issues, especially more remunerative prices (Baba, Naidi, and Rao 1994, 49–50). The developments in neighboring Tamil Nadu in the late 1970s are par- ticularly relevant for understanding the introduction of electricity subsidies in Andhra Pradesh. In Tamil Nadu, electricity subsidies were at the center of a large and violent agitation by the Tamil Nadu Agriculturists Association.

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