6.2 Allocation and Access: Analyzing Institutional Performance
133
elite capture has characterized India’s recent development, more so than in China and
differently from some other emerging economies, such as Brazil, where inequality has
mostly decreased in this century (UNDP 2019). This trend is particularly worrisome
as India is already significantly divided in non-economic terms, such as gender or
caste. To an extent, economic inequality has increased due to widening divides among
more affluent and poorer states, and between rural and urban areas. As much as 21%
of the population still lives on less than USD 1.90 a day in purchasing power parity
terms, most of them in rural areas (UNDP 2019). There is a historical exclusion of
the rural poor from most of India’s development (Pal and Ghosh 2007).
Biofuel expansion has so far either maintained or aggravated these trends, despite
its rural development rhetoric. For one, sugarcane-ethanol production makes no
changes in the sector’s highly skewed ownership and control structures, in which
millions of smallholders remain poor. Private sugarcane mills keep hold of all valueadded while enjoying access to tax breaks, regulatory incentives, and a new emerging
market of high demand. Meanwhile, low-income sugarcane smallholders—often
working under exhausting conditions—have remained marginalized. Working conditions of rural workers in India’s sugarcane sector have been described as “arduous
and inhuman” (Ashwani and Brahm 2011). The industry argues that further government benefits would trickle down to its sugarcane suppliers, but this argument is
questionable (see Bisht 2012). Sugarcane growers’ income seems to have improved
more because of statutory Fair and Remunerative Prices (with states occasionally
providing higher indicatory indexes than the Union) than because of the industry’s
supposed willingness to pass forward its increasing economic benefits and opportunities. Rather, the sugarcane industry has opposed that price policy and supported
deregulation.
1 As various consulted Indian analysts have observed, such a move
would allow mills to “squeeze” smallholder suppliers even further.
If sugarcane-ethanol policies have maintained smallholders’ socioeconomic situation without necessarily making it worse, the same cannot be said about the biodiesel
policy focused on cultivating “wastelands.” What the government regards as 11 or
26 million hectares of wastelands land is hardly “unused” as the policy claims. These
lands often are essential to smallholder subsistence, informal economies, and rural
livelihoods. With such top-down initiatives, the government effectively reallocates
the de facto control over those state- or community-owned lands from the rural poor to
public agencies and private companies. In other cases, they are held privately but are
shared by the community based on informal arrangements, with and local rules and
institutions. The push of jatropha and other non-food feedstocks onto smallholders
have resulted in further exclusion in rural India, particularly of weaker actors such
as Dalits
2 and low castes (Lahiri 2009).
1 The Indian government, pushed by the industry, subsequently created a Sugar Deregulation
Committee to assess the proposal (Bisht 2012).
2 Dalits are out-caste, historically discriminated social groups in India. They include many of those
once known as “untouchables”, today termed Scheduled Castes.
133
elite capture has characterized India’s recent development, more so than in China and
differently from some other emerging economies, such as Brazil, where inequality has
mostly decreased in this century (UNDP 2019). This trend is particularly worrisome
as India is already significantly divided in non-economic terms, such as gender or
caste. To an extent, economic inequality has increased due to widening divides among
more affluent and poorer states, and between rural and urban areas. As much as 21%
of the population still lives on less than USD 1.90 a day in purchasing power parity
terms, most of them in rural areas (UNDP 2019). There is a historical exclusion of
the rural poor from most of India’s development (Pal and Ghosh 2007).
Biofuel expansion has so far either maintained or aggravated these trends, despite
its rural development rhetoric. For one, sugarcane-ethanol production makes no
changes in the sector’s highly skewed ownership and control structures, in which
millions of smallholders remain poor. Private sugarcane mills keep hold of all valueadded while enjoying access to tax breaks, regulatory incentives, and a new emerging
market of high demand. Meanwhile, low-income sugarcane smallholders—often
working under exhausting conditions—have remained marginalized. Working conditions of rural workers in India’s sugarcane sector have been described as “arduous
and inhuman” (Ashwani and Brahm 2011). The industry argues that further government benefits would trickle down to its sugarcane suppliers, but this argument is
questionable (see Bisht 2012). Sugarcane growers’ income seems to have improved
more because of statutory Fair and Remunerative Prices (with states occasionally
providing higher indicatory indexes than the Union) than because of the industry’s
supposed willingness to pass forward its increasing economic benefits and opportunities. Rather, the sugarcane industry has opposed that price policy and supported
deregulation.
1 As various consulted Indian analysts have observed, such a move
would allow mills to “squeeze” smallholder suppliers even further.
If sugarcane-ethanol policies have maintained smallholders’ socioeconomic situation without necessarily making it worse, the same cannot be said about the biodiesel
policy focused on cultivating “wastelands.” What the government regards as 11 or
26 million hectares of wastelands land is hardly “unused” as the policy claims. These
lands often are essential to smallholder subsistence, informal economies, and rural
livelihoods. With such top-down initiatives, the government effectively reallocates
the de facto control over those state- or community-owned lands from the rural poor to
public agencies and private companies. In other cases, they are held privately but are
shared by the community based on informal arrangements, with and local rules and
institutions. The push of jatropha and other non-food feedstocks onto smallholders
have resulted in further exclusion in rural India, particularly of weaker actors such
as Dalits
2 and low castes (Lahiri 2009).
1 The Indian government, pushed by the industry, subsequently created a Sugar Deregulation
Committee to assess the proposal (Bisht 2012).
2 Dalits are out-caste, historically discriminated social groups in India. They include many of those
once known as “untouchables”, today termed Scheduled Castes.