The killing of entrepreneurial India and the story of the white economy

                           A tortous journey from socialism to FDI in retail

This white-paper is dedicated to one of the finest alternate economic philosophers of our time, Swaminathan Gurumurthy

Those were the pre-historic times, roughly around 6^th century BC, when the cattle count in the Gangetic belt of present day eastern UP and Bihar had gone down tremendously due to slaughter – Goyajna (cow-sacrifice) & Govikarta (cow-slaughter) had become the order of the day. The tipping point came when king Prasenajit of Koshala decided to perform a great Yajna which would require the sacrifice of 2000 animals. This is where the Buddha’s practical economics come into play, for a self-realized Atman is also capable of internalizing common sense for the common good of the society.

Buddha had already realized the fatal trajectory of unbridled cow slaughter and its adverse impact on the rural agronomy. Thus Gotama (Pali for Gautama) preached to the king of Koshala about the needlessness of an Asvamedha or a Vajpeya in order to elevate oneself and instead suggested charity as the true Yajna. Then, just like that, the slaughters stopped. Of course, it took a few decades to restore the balance of the agrarian cattle economy, but eventually, it was once again the proverbial land of milk and honey.

Indian rural socio-economy has always had a central theme, the milk. The lyrical beauty of Lord Krishna’s childhood in Nanda Gokula also gives us glimpses of a milk-based economy. When the excesses of sacrifice & dietary habits threatened to debase this economy, Jainisim & Buddhism were born as reactions to societal delinquencies. For many millennia now, cattle farming and milk economics have sustained India’s rural fabric. One of modern India’s greatest innovations has been community dairy farming; one can unequivocally state that community dairy farming is possibly independent India’s greatest economic intervention that has transformed the lives of millions and millions of Indians.

Nehru was the greatest Tughlaq India had seen

A milkman has been one of the central personalities of community life in India for many millennia, but attempts to organize dairy farming were essentially a British vestige. The defence department established military dairy farms to ensure supply of milk and butter to the colonial army; first in Allahabad in 1913, then followed by Bangalore, Ooty and Karnal. With increased urbanization of India, many cattle-sheds started cropping up in various cities and towns to meet increased demand for milk & milk based products.

In order to meet the ever increasing demand, milk vendors started to use focus systems to increase the lactation period, which in turn resulted in high yielding cattle developing sterility problems, thereby considerably reducing the number of calvings. Once the cattle became unproductive, they were sold to slaughterhouses. This practice systematically drained the country of its genetically superior breeds.

In the 1940’s private dairies sprung up in big cities like Delhi, Bombay, Calcutta and Madras. Polsons, Keventers and Express dairies were some of the well-known brands of that era which had modernized dairy processing units. But there was one catch though, these early attempts at modernized & urbanized dairy businesses were only interested in profit margins and contracted the actual milk supply through middlemen. Thus both milk producers as well as consumers were exploited. These businesses did not improve the breed of the milch animals and thus also did not bring about any significant shifts in milk production. Thus despite modernized processing facilities, dairying remained, essentially an unorganized, low-profit endeavour.

After independence, Pandit Jawaharlal Nehru, a quintessential socialist and a complete Brit at heart, continued the same policies of the British with a socialist twist. In the first five year plan, the same “modernization of dairy processing” path was followed (as had been practised by the English). Two namesake government implemented projects were announced with much fanfare; Integrated Cattle Development Project (ICDP) and Key Village Scheme (KVS). Both of these projects were utter flops, just like all the centralized schemes of the Nehruvian socialist era.

The reason for the failure of these schemes was pretty simple; the absence of a stable remunerative market for milk producers. Sadly, Nehru never had the capacity to understand such complexities and was obsessed with being a central ruler who gave away the goods to the unwashed masses. In subsequent years, the Nehruvian establishment continued to announce many such fancy schemes with no tangible results whatsoever. As a result, between 1950 and 1965, the growth rate of milk production was an abysmal 0.7% per annum! Worse still, per capita milk consumption was growing at a negative rate every year.

Nehruvian sham economics had such debilitating impact on India, that a nation of cows and cattle was a net importer of milk for close to 2 decades after independence. In the 1950’s and 60’s, India used to import an average of 55000 tonnes of milk powder every year. This was a classic socialist crime that Nehru got away with, for no intellectual/economist/thinker has ever questioned our first prime minister on this account. History has been extremely kind to Nehru.

In the 1960’s, in order to solve the milk import problems of India, the Nehruvian establishment came up with another hilarious idea. State governments were asked to set up separate dairy departments, which essentially set up huge processing plants in big cities like Bombay & Madras, instead of setting them up close by to villages where the cattle actually existed – these great government babus totally forgot that milk is a perishable product! In order to solve the problem of supplying raw material to these processing plants, large cattle colonies were then set up as an afterthought in the urban areas.

None of these planning commission idiots ever thought of organizing milk procurement in the rural areas. The urban orientation of milk production created large numbers of middlemen and contractors who took advantage of the prevailing system and leveraged huge profits in supplying milk to the urban processing facilities created by the government. Furthermore, these middlemen set up their own cattle farms in the rural hinterland to procure cheap milk from the village folk. This establishment of rural cattle colonies by middlemen resulted in a major genetic drain in the rural milch animal population – due to organized focus on increasing lactation which made them sterile. On the other hand, the urban cattle colonies created big environment issues.

By mid-60’s, these huge urban processing plants had become white elephants, because milk procured through middlemen was too expensive, they had to import cheaper milk powder from abroad to keep these units running. Thus instead of solving the problem of milk imports, Nehru had managed to aggravate it further!

The problem became so acute that the per capita availability of milk dropped to 107g per day. The white elephant government dairies were able to meet only 1/3^rd of the urban demand, thus the queues of consumers wanting to procure milk grew longer every day, while the actual milk producer in the village was left to die in the control of middlemen and money lenders.

It was a strange situation, the milk was there, the cattle were there, yet we had to drain our scarce resources in trying to import milk powder! For two decades the Nehruvian planning commission mandarins couldn’t fathom how to connect just the two dots of a milk producer and a milk consumer.

The dawn of the white revolution

Much before Nehru started his disastrous socialist experiment with India’s milk economy, his deputy, Sardar Patel had discovered a solution for India’s milk problems. Polson, that infamous British era dairy processing company used to exploit milk farmers everywhere. One day a group of farmers in Kaira district of Gujarat approached Sardar Patel for a solution to their woes. It was indeed Mr Patel who suggested the formation of India’s first milk co-operative. Furthermore, he took affirmative action by assigning Morarji Desai to the task of organizing the farmers in the villages for this new co-operative endeavour.

The Kaira district co-operative milk producers union Ltd was established on December 1^st 1946. By one stroke of genius, Sardar Patel had decentralized milk collection. Unfortunately, after Patel’s death, this successful model was looked down upon by the socialist establishment of Nehru. For many years this remained the solitary working milk procurement model but the government was blinded by its own grandiose schemes that were destroying India’s ancient milk economy from within.

This co-operative model was of course further developed and managed by Verghese Kurien along with T.K. Patel and H.M. Dalaya. Together they even established the first co-operative dairy processing unit in Anand, thus solving the inherent problem of milk perishing in the summers as it was to be carried to faraway Bombay. Amul was thus born.

This successful Amul model started spreading across Gujarat, despite government apathy, and many more co-operatives sprung up in Mehsana, Banaskanta, Surat etc. In order to combine forces and expand the market while saving on advertising and avoid competing against each other, the GCMMF, an apex marketing body of these district cooperatives was set up in 1973. The Kaira Union, which had the brand name of Amul with it since 1955, transferred it to GCMMF.

Yet, this whole experiment would have remained unheralded in the Nehruvian socialist republic of India, had fate not intervened. Fortunately for India, Nehru’s death brought a genial old man to power in Delhi, albeit briefly. Lal Bahdur Shastri quickly realized Nehruvian follies and set about changing the debilitating socialist systems. One of the best decisions he took as a prime minister was to appoint Verghese Kurien as the chairman of NDDB (National Dairy Development Board). This decision directly resulted in the creation of “operation flood”, and the rest, as they say so often, was history.

From being a milk deficient country to becoming the world’s largest milk producer that accounts for close to 18% of all the world’s milk output, India has indeed come a long way from the Tughlaq days of Nehruvian socialism. In the process, by the dawn of the new millennium, dairy farming had become India’s largest self-sustainable rural employment generator. In fact, this Amul model of co-operative milk production is probably the greatest systemic intervention to alleviate poverty in the history of human civilization. Another significant aspect of this revolutionary movement was the involvement of women as dairy entrepreneurs, which was absolutely vital for alleviation of poverty in India.

Data Source: NDDB

Amul, the metaphor of change for three decades

Operation flood has been divided into three distinct phases; phase 1 was from 1968-69 to 1980-81, followed by phase 2 in the 80’s and finally phase 3, from 1990-91 to 2000-01. During the first two phases, operation flood’s achievements were remarkable, but it had started to peter off by the beginning of the new millennium.

Milk production before the launch of “operation flood” was only 21.2 million metric tonnes per annum. This increased to 31.6 million metric tonnes by 1980-81 (phase 1), then to 53.9 million metric tonne by 1990-91 (phase 2) and finally to 84.6 million metric tonnes by 2000-01 (phase 3). In 2005-06, milk production stood at 97.1 million metric tonnes per annum. [Data source: NDDB]

Thus, the growth pattern had started to plateau in the 21^st century. There was a school of thought, around this time, that had started advocating a shift from dairy farming to other more lucrative agricultural practices as a means to earn better livelihoods. This was a time of churning in the rural economic life, wherein cattle raring had started becoming an unviable economic activity once again, because the input costs were rising but remunerations had stagnated. In fact, by 2005, the situation had worsened to an acute problem of rural folk giving up on cattle rearing altogether.

Data Source: NDDB

The big wake-up call came in 2002-03, when India suffered one of its worst droughts in almost 2 decades. All those dairy entrepreneurs who had recently shifted to other agrarian activities due to the unviability of milk economics were in for a rude shock. These so called “shifters” were the first casualties of that drought. There were mass farmer suicides, huge rural to urban migration, massive socio-political changes all over the rural landscape of India. These 2-3 years caused such turmoil in the rural society of India that probably even today, after a decade, life has not yet fully recovered in those parts of India.

Strangely, there has been very little scholarly work or editorial output on such a large churning in the vast rural hinterland of India. This actually gives us an idea of how superfluous our intellectual-media ecosystem is. This massive rural churning led to a great political upheaval too, the much vaunted NDA government of Vajpayee was shown the door and a down-and-out Congress party led by Sonia Gandhi was revived. BJP has not yet fully recovered from that drought blow of the last decade.

The impact of this drought on policy makers and economists was also quite significant. Unfortunately, the inherent socialist tendencies of India’s policy planners overpowered the “out-of-the-box” thinkers, which have led to massive rural welfare programs like MNREGS. But, thankfully, history had repeated once again, as the real new directional change came from the land of Amul.

A new direction under new leadership

The primary impact analysis of any debilitating drought in India should be ideally concentrated on non-availability of alternate economic activity in the rural agrarian environment. Instead, most of our economists and planners concentrate on fighting the drought through socialist dole-schemes, which are at best partially successful (due to the usual leakages) or at worst create long term dependencies. This vicious drought cycle had to be broken in order to achieve real breakthrough.

This year there was another drought in certain parts of India including the semi-arid state of Gujarat, which is home to Amul. This year we were able to see a path-breaking approach to liberate the hapless farmer from the vicious drought cycle of suicide and migration. This could be the model for future generation of policy planners to steer away from dependencies. This refreshing new approach from the land of Amul addresses the core issue of creating sustainable alternate economic activity for the drought-hit farmer.

3.1 million farmers of Gujarat (covering a total population of 12 million) are part of GCMMF – Gujarat Co-operative Milk Marketing Federation – which is spread over 16000 villages across the state and is the apex body of the Amul brand. A vast majority of these farmers fall under the small and marginal categories, who are the most vulnerable groups in a drought year. This year, all these farmers took to aggressive dairy farming in order to escape from the debilitating impact of drought and they were rewarded with record prices by GCMMF for their hard work. These 31 lakh Amul farmers were paid 500 Rs per kilo fat – 1 kilo fat = 8-10 litres of buffalo milk. Getting hard cash every day in the morning, especially in a season of drought, was a lifeline that spared thousands of farmers from both suicide as well as unnecessary migration to urban centres.

This extraordinary revolution did not happen overnight; the changes were systemic and had been implemented in phases over the last 6 odd years. It all started after the 2004 parliamentary elections, when the chief minister of Gujarat, Narendra Modi, tried to analyse people’s anger against his government, for they had largely voted against his party in the state. The 2004 elections had come in the backdrop of the 2002-03 drought and also at a time when dairy farming in India was largely becoming unviable. The reasons were not far to seek, input costs for dairy farming were too high and the price that a milk farmer got was barely able to meet the input costs.

Surprisingly, one of the major reasons for the almost static milk prices in many decades, despite inflationary dynamics in all other walks of life, was the Amul model itself. The entire milk supply model of India was a vestige of socialism. The focus in Indian milk supply model was the urban consumer not the rural producer. The idea was to somehow produce enough milk to meet the increasing demands of urban India and supply it at the cheapest possible prices. This model was being followed even in 2004-05, when the per capita availability of milk had more than doubled to 233 grams per day (from a low of 107 g/day during the Nehru era, when this model was first conceived). This figure was almost meeting the recommendations of Indian Council for Medical Research (ICMR), which had suggested 250 g/day, yet the pricing policy was not being altered.

The urban middle class of India was sensitive to milk pricing and the political class was apathetic to the farmer’s cause. As a result, while average prices of other commodities increased by 400% to 900% over a 15 year inflationary period, that of milk had hardly doubled in the same time period.

Average Prices Data Sources: Reuters, NDDB, Mumbai77

In 2005, the average cost of milk production was about 12 Rs per litre and the average selling price was about Rs 14, thus the maximum margin was 2 Rs/litre which had made dairy farming unviable for small and medium farmer. This skewed pricing mechanism had to be changed. The change had to come from the top, from the market leader, Amul, but there was resistance from within. Verghese Kurien has always been hailed as the father of India’s milk co-operative revolution, he is given a great deal of credit for operation flood and he definitely deserves most of it. The media needs its heroes and Mr Kurien is their bona fide hero.

Unfortunately, Kurien was an old man who had built his co-operative milk business model to meet the demands of urban milk consumers and was in no mood to adjust to new realities. He strongly believed in his socialistic cause of providing cheap milk to the poor urban consumers, but in the process, also resisting any plans by GCMMF to have a flexible milk pricing regime.

Narendra Modi as a true inheritor of Sardar Patel’s legacy (who was the original progenitor of the milk co-operative model in India) quickly realized the gravity of the situation and decided to take corrective measures. Modi’s mission was to make dairy farming a viable rural business proposition once again. He went about his mission with clinical precision and ruthless practicality. In the process, the eternally anti-Modi media hounded him for his tactics, which included a forced resignation of Kurien from his post as a permanent invitee to the Amul board. Then GCMMF was made more answerable to its various district co-operatives and a new pricing mechanism was evolved, which would be more conducive to dairy farming.

In the last 7 years since 2005, 16 price revisions have been affected by Amul, which has forced other milk producers also to increase the prices. As of today, liquid Amul milk price in India is between 28 to 40 Rs for various categories and brands. This has made dairying a lucrative rural entrepreneurial alternative once again, so much so that Gujarat was able to successfully fight drought this year and Narendra Modi’s BJP government became almost the first one to be ever re-elected in a drought year election in India’s electoral history.

The future of white economy

All the naysayers (including Mr Kurien) who had argued that increasing milk prices would prove to be a death-knell for the co-operative model have been proven wrong. Annual milk production has gone up substantially from 97.1 million tonnes in 2005-06 to 127.3 million tonnes in 2011-12. Even the concerns that milk’s per capita availability would be adversely affected by high pricing has been proven to be wrong, as it has increased by a massive 50 grams in the last 7 years to touch 281 g/per day, easily surpassing the ICMR recommendations of per capita 250 g/day (all data source is NDDB).

This should have been the business model for improving rural economy and to augment the income levels of rural farmers, but sadly, our central planners are doing everything in their power to squeeze out this successful model. Ironically, the two governance interventions from the opposite sides of the spectrum of economic philosophy could be the twin detriments for the future of milk co-operative model of India. It is as if socialism and (crony) economic liberalization will together hit a death blow to this great self-sustainable rural entrepreneurial endeavour of modern day India. From the socialism staple, it is the MNREGS of UPA part 1 that is already having a devastating impact on milk entrepreneurship. On the other hand this devastating impact could be further exacerbated by the FDI in retail decision of UPA part 2. Let us try and analyse the interactions of both these measures with the “white economy” of India.

A) Impact of MNREGS

Data Source: Estimates based on NSSO 1997, 2006, 2011a & 2011b (all figures in millions)

Yes, you have read the above chart correctly and there is no printing error either. It is true that in the last 6 odd years, unbridled state welfarism has managed to devastate the inherent Indian entrepreneurial spirit. Instead of creating new avenues for self-employment, UPA has managed to remove 26 million people from the self-employed status to push them into either casual labour market or into long term dependencies on state doles. State interventions through welfare schemes have achieved the exact opposite of what they should have ideally achieved.

Welfare schemes like MNREGS were supposedly targeted at rural poor who were working as casual labourers due to lack of any other source of income. Instead, these schemes have managed to attract self-employed rural entrepreneurs into the death-trap of long term dependency. On the other hand, the number of casual workers has only increased by many folds.

Further analysis of the labour market in the field of agriculture and allied activities enlightens us about the grim situation prevalent in the rural agronomy. The pattern is quite straightforward, a large number of female entrepreneurs in rural India – many in dairy farming and related activities – have now chosen to become jobless in the last 5 to 6 years. It is more than likely that most of these formerly self-employed women have shifted to government sponsored dole schemes like MNREGS. It is easier for a woman to get a 200 Rs daily dole from the government for doing nothing than selling milk and earning a livelihood.

Data Source: Estimates based on NSSO 2006 and 2011b (all figures in millions)

An estimated 19 million self-employed rural women have stopped working in the last 5 years. At the micro-level, long term dependencies that rural welfare schemes have created will probably take at least 2 generations to rectify. At the macro-level, successful rural business models like milk co-operatives will be destroyed in the span of just 1 generation. Women milk entrepreneurs are at the core of the milk revolution of India, if they stop selling milk then imagine the plight of the likes of Amul.

If not rectified soon enough, this rural shift away from self-employment could be the biggest challenge that the Amul model faces in India in this decade. Although Amul and GCMMF have made dairy farming an attractive proposition once again, by a series of price hikes and corrections, these measures cannot fight free doles by a welfare state. If one adds the DCT dimension to MNREGS, then the white revolution in India could face dark days in the coming years.

B) Impact of FDI in retail

If MNREGS is affecting the raw material procurement side of the milk supply chain, then the retail policy of the current UPA government can potentially destabilize the end product selling side of the supply chain. Of course nobody really cares to analyse these impacts, not the policy planners and the editorial class at least. The last 6 months of FDI-in-retail-debate has been all about corner shops and Kirana stores, how much noise have we heard about its impact on agriculture, or specifically on milk co-operatives?

For a moment let us forget all the adverse/positive effects of FDI in retail. Let us simply look at the FDI policy of this government. Is India really getting any FDI? Are any decisions of this government really above board? Is UPA government only here to cater to crony-capitalists needs? Take a look at the foreign fund flows of the last few years; in both directions; and we will be able to answer many of these questions.

Data Source: RBI BOP; All figures in Billion American Dollars

Actual direct investment (be it Foreign Direct Investment in India – inflow – or, Indian Direct Investment Abroad – outflow) is the real annual investment minus re-invested earnings. This is the correct measure of actual flow of funds annually and not the fudged figures released by RBI which include re-investment of earnings. One look at the above chart indicates that Indian investment abroad is a lot more stable when compared to FDI – which has seen a great deal of fluctuation. In fact, last year, India invested more money abroad than there was FDI! This totally busts the myth of the FDI policy of the current regime in New Delhi.

Furthermore, if one takes into account the Hawala route of Indian black money travelling abroad and then returning back into India through the tax-haven routes like Mauritius and Cayman Islands, the FDI myth simply gets busted in totality. As per conservative World Bank estimates, the parallel black economy accounts for almost 50% of all Indian money flow. Thus half of all the FDI that comes to India (mostly through P notes in Indian stock markets) is Indian black money getting re-invested! So the recent decision of UPA 2 government to allow FDI in retail is just another avenue to invest India’s black money in India itself, albeit more lucratively!

Allowing such unbridled crony capitalism without adequate measures to protect indigenous business models like milk co-operatives could potentially prove to be a death knell for rural entrepreneurial initiatives. Amul and other major milk co-operatives of India (like, say, Mother Dairy) pay 70% of the selling price to dairy farmers, which in itself is a world record. Milk co-operatives in India have now become intrinsically farmer centric initiatives; therefore farmer’s interests are paramount to this business model. Organized retail, especially multi-national organized retail, is all about increasing profit margins. One of the first steps that big box retail would want to do is to take control of milk and milk products supply chain in order to maximize profits, for currently milk product selling is a low margin business for the retailers because of the co-operative model in India.

Data Sources: Reuters, GRAIN, Robobank (all figures are approximate averages)

From the above chart it is quite clear that as retailing gets standardized, margins of milk producers (farmers) start to decrease. Indian farmers are by far the luckiest of the lot because 85% of milk and milk products are handled by small retailers, vendors, milk co-operatives and by direct selling by farmers. Corporate control over the world’s milk supply has been accelerating in recent years alongside the globalisation of the industry. The twenty largest dairy companies now control over half the global dairy market and process about a quarter of global milk production.

Global giants like Nestlé and Danone (the top 2 dairy product companies of the world) are not milk producers themselves, yet together they control about 9% of the global dairy market. One of their favourite ways of expanding has been by acquiring stakes in milk co-operatives across the globe. The policy planners in India have absolutely no idea how to control such takeovers and yet they have given access to Indian dairy markets to foreign retailers by allowing FDI in retail, can there be anything dumber that the Indian government could have done?

A small real-time experiment with organized retailing: “The test of curds”

It is not as if all the evils of big box retailing will be unleashed by FDI alone, for the first signs of change are already happening. Yes, organized retailing has been a reality in urban India for some time now and the effects of this on dairy marketing are already visible. Let us do a small “curd test” to understand the effects of organized retailing on the milk economy of India.

Dahi has been a staple item in the Indian kitchen for centuries. And preserving some curd as starter culture for the next batch to be set had been a customary practice in nearly every Indian home. A friendly neighbourhood halwai has been selling ‘loose dahi’ for many decades now. Packaged curds business is a relatively new domain in the Indian dairy products stable. More than a decade ago, Amul was the first big mover in this market when it started selling masti dahi as a set curd in cups and packets.

As urban nuclear families found lesser time for even setting curds at home, the packaged curds market expanded into big business. Today the market for curds in India is estimated at 45000 tonnes per day. Apart from Amul, there are at least 3 major pan-India players in the packaged curds market and dozens of other smaller regional players. Nestlé entered the market soon after Amul (in 2004), but Danone & Britannia have been late entrants, yet all three have captured sizable market shares despite Amul’s first mover advantage. For our test, let us consider only these 4 big brands – Mother Dairy still does not have pan-India presence in packaged curds market and is limited to north (mainly Delhi) and east India.

Data Source: Author’s survey

• Amul curds is by far the best of the lot, it is thick, cut-with-a-knife variety and absolutely non-gluey
• Amul masti dahi is as good as homemade curds
• Amul curds is 10 Rs cheaper than its closest competitors!
• All other curds are of inferior quality, the biggest problem with other curds is that due to added probiotic preservatives, the curd acquires a gluey nature.
• Packaging-wise, all four brands are almost evenly placed, but apart from Amul, the other three offer a diet variant (unverified diet claims)

Now we come to the actual testing;

• We carried out a survey over three weeks among the 4 big pan-India retail outlets; Big Bazaar, Reliance Fresh, More and Star Bazaar.
• Except for the More Megastore, Amul curds was absent from the shelves of all other big retail chains most of the times, despite being the cheapest and the best product in its category.
• When enquired, the managers’ reasons for Amul curds’ absence was usually about supply constraints
• The real reason is that other brands like Nestlé have tied up with big retail chains to offer better margins for stocking their products, which is possible because of 3 reasons;
  • Priced 10 Rs higher than Amul
  • Nestlé and others pay lesser to the dairy farmers (about 50 to 70%), whereas Amul pays 70%+ to the farmers
  • Other brands are of lower quality so they are cheaper to produce
• This test can be conducted in any city/town and the results would be along similar lines (except in Gujarat where Amul rules the roost)
• Across India, Amul curds is more likely to be found in corner shops and Kirana stores rather than in organized retail chains

Even before FDI has made its entry into retail, dairy farmers are at a disadvantage due to deal making between big corporates; imagine the plight of a small farmer once retailing gets organized further under big MNCs. As a rule, organized retailing will always eat into small farmers’ margins. In a country like India where we do not even have proper competition laws, allowing FDI in retail could be disastrous for small and marginal farmers.

Conclusion: It cannot be a mere coincidence that Indian entrepreneurial ability has almost always shined when the Nehru-Gandhis have been out of power. The Nehru-Gandhis are probably a curse upon India; whenever in power they have systematically destroyed the inherent entrepreneurial spirit of India, either through state welfarism or through crony capitalism. Vallabhai Patel started the milk co-operative movement in India, while Lal Bahadur Shastri initiated operation flood. If P.V. Narasimha Rao was the father of economic liberalization, then A.B. Vajpayee was the father of telecom revolution. On the other hand, Nehru gave us socialism, Indira nationalized poverty, Rajiv institutionalized corruption & communalism and Sonia has gifted us MNREGS and an unsustainable welfare state.

Today, the milk revolution of India is at the crossroads; if MNREGS will try to kill it from within, then FDI in retail will probably murder it from without. At stake are not just millions of rural micro-entrepreneurs, but also the inherent entrepreneurial spirit of India. Narendra Modi has shown the way forward by adapting change in the Anand pattern of milk co-operatives. By aggressively increasing prices to meet inflationary demands, dairy farming has been made viable once again. But as usual, the central planners are trying to kill this extraordinary human endeavour which has almost singlehandedly contributed to the alleviation of rural poverty. Unless fate intervenes once again decisively, his granddaughter-in-law will succeed in the job that Nehru had failed in – the killing of entrepreneurial India.