Economic
Highlights
New Delhi, 19 September 2009
TNCs Role In Third
World
WILL INDIA
FOLLOW LATIN AMERICA?
By Shivaji Sarkar
The
world’s worst fears have come true. There is no food shortage. Transnational
corporations through manipulations and speculative activities are jacking up
the prices world-over and affecting food security and safety. This is the finding
of two successive reports of the United Nations Conference on Trade and
Development (UNCTAD) – Trade and Development and World Investment Report -TNCs,
Agricultural Production and Development 2009.
The
US
had been debating the role of the transnational corporations (TNC) since the 60s. These are large corporates working across the
world and unflinchingly flout sovereign norms of any country. Their argument
being that as they work across the globe, transcending national boundaries they
cannot be subjected to national laws. This is somewhat still sober. But they have
steadily become smarter, bolder and aggressive. They decide the fate of nations
controlling and coercing political parties and luring bureaucracy. Surveillance
on them suffers. It is the TNCs which decide national policies or change them
to suit their profit goals.
The
financial shockwave of 2008, submerged equity (stock) and bond markets in many
countries, exchange rates of some emerging market currencies and primary
commodity market all at the same time. Worse, the financial and agriculture
sectors are being subjected to continuous new games being played by them. Many
discerning citizens have been warning governments that the growth of the financial
sector was fraught with risk.
Now
the United Nations confirms it, saying when the financial sector is allowed to
grow too much, a country lands in trouble. Many financial institutions have no
social utility. The UN wants strong regulations to prevent damage to economies.
It wants new capital management techniques.
Developing
countries now have become the TNCs favourite destinations. And, they were
extremely active in Latin American countries. Many governments were overthrown.
It led to legislation of strong anti-trust (anti-monopoly) laws in the US to protect
their own system. One such company AT&T was forced to split into at least
three companies to restrict its malevolent powers.
The
TNCs through their votaries have been campaigning that foreign direct
investment (FDI) in agriculture would lead to greater productivity and price
stability. Even some Indian economists had lobbied for this view through the 90s
liberalization process.
The
UN Secretary-General, Ban Ki-moon, in the preface to WIR writes that greater
involvement of TNCs will not automatically lead to greater productivity in
agriculture, rural development or the alleviation of poverty and hunger. Clearly,
he is giving a grim warning to the world and virtually calls for curbing their
powers. He means, though he does not say, that the TNCs are not acting for the
benefit of the world population, which would rise to nine billion by 2050.
These
corporations have been investing in agriculture through direct and indirect
methods and the FDI in agriculture is on the rise, tripling to $ 3 billion
annually between 1989 and 2007, when it touched $ 32 billion. This participation
in agriculture “can have negative impacts. It can result in job losses, in
restrictive business practices or in excessive dependence among farmers on TNCs
to supply inputs or buy produce. There are concerns about “land grabbing”, UN
reports warn. It is a tendency that has separately been described as building
up of corporate zamindars (land
lords) in this country.
A
devious method of intervention is to skirt the laws. Many countries, including India, do not
allow direct investment in all sectors of agriculture by these corporations. They
resort to contract farming through agents or exhibit FDI in some other areas such
as consumer products. But it has the same deleterious effect, say the UN
experts and admit it is a difficult area to contain.
A
major cause of concern is the involvement of the TNCs in the production of cash
crops. Their participation in staple food crops – whose harvests are vital for
feeding developing country populations – is also significant. They control the
commodity market and farm practices. “This implies that there is no simple equation
between food security and TNC participation in a host country’s agriculture”,
the UN warns. India
has seen it in many ways leading to mass suicides by farmers.
In
reality, the TNCs and supermarket chains work against the basic food safety
concerns. This is an anathema, as they would need to compromise with profit as
welfare is clearly not their aim. The national governments need to take a
serious note of the UN’s concern and curb pursuit of FDI in agriculture and
free financial sector operations.
Countries
such as India
need to be extremely cautious as the TNCs are now eyeing them because western
destinations have become less lucrative. India must be concerned as the FDI
inflow has more than doubled in two years. It rose from $ 20336 in 2006 to $
41554 in 2008. Being a favourable economic destination might sound politically
fashionable but opening doors ajar without regulation has its inherent dangers.
Leaders across the political spectrum must debate and discuss. Any inflow is
not benign they have to understand.
The
Union Government has involved the TNCs in agriculture--seed imports, and
foreign ownership of seed companies since 1991. The UN is concerned at the lack
of guard by New Delhi.
A number of seed companies in the name of R&D have entered the country and
the UN indirectly indicts India
for the plight of farmers raising cash crop like Bt cotton and other seedless
crops.
The
corporations are more active in food processing sectors and names four of these
specifically engaged in it. The TNCs are also active in floriculture,
horticulture, animal husbandry, pisciculture and cultivation of vegetables. In many
cases they are also involved in food crops. The UN confirms the fears of some
experts. The recent commodity price rise is thanks to the TNCs involvement.
The
Government must look into the branding of food products by the TNCs and the supermarket
chains. Branding increases their profits and raises the prices of commodities.
The so-called value addition only adds to the price but also causes problems
for the small farmers and small trade, who are being edged out. All this
increases the number of people living below the poverty line.
Indeed,
eliminating TNCs is not going to be easy but if the Government does not rise to
the occasion, it might be disastrous for this “great” nation. Instead of being
a new power, India
might eclipse like many Latin American nations, which were hyped, exploited and
impoverished by the corporations. Time we be on our guard. ---INFA
(Copyright, India
News and Feature Alliance)
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