SUMMARY xix Major Findings


Reform of the Policies Governing Production and Pricing of Nitrogenous Fertilizers


Two approaches have been tried for reducing the subsidies paid out for urea by the national government. First, the government has attempted to alter the incentives for private and public domestic firms engaged in urea production. Second, it has tried to increase the price at which urea is made available to Indian farmers. Neither approach has been successful. This study identifies two main factors in this lack of success: interest-group politics and a clash of ideas. The government’s ability to raise farmgate prices has been con- strained by coalition politics and by political representatives of the owners of medium-sized and large farms. The government has not been able to direct the subsidies more narrowly toward small and marginal farmers because of opposition from owners of medium-sized and large farms and logistical problems. Reform of the policy framework for the production and distribu- tion of fertilizers was opposed by a strong coalition consisting of the fertil- izer industry, the Ministry of Chemicals and Fertilizers (MoCF), and the Min- istry of Agriculture (MoA), which has successfully argued that policy reform would reduce India’s self-sufficiency in fertilizer production and thereby its food security. The reform process has also been complicated by the inad- equate supply of natural gas in India. The advocates for policy change are fewer and have been unable to build a strong coalition that supports their position.


Interest-group politics alone, however, does not explain failure of reform. Agricultural policy discourse in India has been strongly shaped by the debate over links between food security and food self-sufficiency, and these dis- courses and ideas need to be taken into account. The debate involves the clash of two value and belief systems, or paradigms. One view (the market- oriented paradigm) holds that state intervention is no longer needed to guar- antee food security and that market forces, including international trade, will guarantee food security. The opposing view (the welfare-state-oriented paradigm) argues that market failures are inherent in agriculture and that state intervention remains essential to guarantee food security. In the wel- fare-state-oriented paradigm, subsidies to farmers are also seen as a means of redistributing income from the nonagricultural to the agricultural sector. A public discourse that highlights farmers’ suicides and agrarian distress increases the political motivation to pursue this policy goal. Even though the two positions represent “ideal types,” and individuals may hold views that lie between these two positions, distinguishing the two paradigms is important for understanding Indian politics.


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