Unrestricted free trade policies supported by the British government are partly to blame for a crisis of increasing debt for Indian farmers leading to many suicides, said Christian Aid in its newest report. The government responded by saying that it has helped increase jobs and safeguarded livelihoods.
Over 4,000 farmers killed themselves since the western Indian state of Andhra Pradesh undertook liberalizing reforms, partly paid for by the UK Department of International Development (DFID), said Christian Aid. It also says that privatization efforts have caused a loss of 45,000 jobs.
This report shows in stark detail the damage that is done to poor people when the dogma of so-called free trade is pursued in the name of poverty relief, said Dr. Daleep Mukarji, director of Christian Aid in a statement.
In 1995, India became a full member of the liberalizing World Trade Organization. The World Bank soon thereafter called for devaluation of the nations currency, cuts in social sector spending to reduce fiscal deficit, and tax reforms leading to greater share of indirect taxes, among others, according to the Christian Aid report.
The report states that since 1998, 4,378 farmers have committed suicide.
One factor which some say may have contributed to the high rate of suicide was drought in many areas of Andhra Pradesh state. The authors of the report however, find it hard to accept that drought is the overriding reason for the deaths.
The Christian Aid report says that new farming methods foisted on them by liberalization have forced them to rely on cash crops like chili and cotton, leaving them vulnerable to crop failure.
Christian Aid says that in traditional farming, farmers rarely had to deal with total crop failure because they grew a variety of traditional crops often up to 30 different crops on a couple of acres of soil, protecting them from reliance on one source.
The report alleges that the although the policies behind the DFID, and the Africa Commission - which was set up by Prime Minister Tony Blair to combat poverty dont require countries to liberalize and privatize in order to receive aid, the report shows that there are still problems with liberalization and privatization.
A DFID spokesperson said that many of those working small plots could not yield sufficient food for farmers and their families, according to the BBC.
"This is why we've encouraged them to work in other areas and given them practical support to do so."
The spokesperson added that the DFID has not imposed privatization on Andhra Pradesh.
"Our program in the state has been developed in consultation with the government and civil society organizations. We believe countries should be able to decide for themselves sector by sector which industries they need to protect and which should be liberalized."
In a separate report by the Press Trust of India, The Deputy Head of DFDI India, Howard Taylor, said that the department does not support unrestricted free trade or forced liberalization. Instead, he says it has helped jobs.
"The department's support for economic reform in Andhra Pradesh, including privatization of state-owned enterprises, has helped safeguard the livelihoods of around two million people, Taylor said.
Taylor says that without privatization of state-owned enterprises, the local government in India would be forced to subsidize losing enterprises. He says the money can now be better used from health and education.
The report adds that because of trade liberalization, farmers have been forced to pay more for seeds, fertilizers, pesticides, water, and power. All this occurring as the prices for their crops at market rates have swung wildly and even fallen. In addition, farmers are not able to get loans easily, according to Christian Aid.
Christian Aid urged the UK to use its position as chair of the G8 summit in July and its presidency in the EU this year to push for real reform in bodies like the World Bank, and International Monetary Fund.
The report, titled The Damage Done: Aid, Death, and Dogma, also said that democratic institutions in Ghana had been subverted by free market policies, while liberalization policies in Jamaica, had wrecked employment opportunities for women, driving them to prostitution and drug smuggling.
The report specifically called on the UK, European Union, World Bank and International Monetary Fund to take specific action to minimize adverse impact to poor nations.
It urged the UK remove restrictions tying aid to liberalization and privatization policies.
It also asked the EU that when doing away with preferential trade, it do so in a way that minimizes harm to poor countries by giving them time to adjust.
In addition, it called on the World Bank and IMF to not tie aid to their economic policies, but respect a nations democratically developed policies.