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George Iype | May 27, 2005

Andhra Pradesh is one of India's preferred destinations for global tech firms and home to IT giants like Microsoft, Google and Oracle. It is also home to an enormous tragedy.

The contrast between splendour and squalor was never so stark as it is in this southern Indian state. Cheek-by-jowl with pristine glass-and-steel edifices are thousands of poverty-stricken farmers, many of whom have been forced to commit suicide.

Last year, 2,115 of the state's nearly 11 million farmers committed suicide. That is, more than 40 farmers a week -- or nearly six a day!

What is driving the sons of the soil to suicide in such large numbers in Andhra Pradesh?

Dying crops, harmful pesticides, falling prices for their produce?

These may seem obvious reasons, but a new, in-depth study on the continuing suicides in Andhra Pradesh reveals that farmers in the state have been dragged to personal debt and misery because of the policies implemented by Britain's Department for International Development.

DFID is the British government's department that manages the country's aid to poor countries.

The study -- The Damage Done: Aid, Death and Dogma -- conducted by Christian Aid, one of the largest aid agencies in the world, says that farmers in Andhra Pradesh have been forced to pay more for their seeds, fertilisers, pesticides, water and power because of flawed public policy and economic strategy implemented at the DFID's behest.

'Unfettered free trade policies backed by the British government have led to a crisis in Indian agriculture, spiralling rural debt and an epidemic of suicide among poor farmers,' says the study.

The survey says the Indian subcontinent has been the biggest beneficiary of DFID's money by far, receiving some �764.4 million (Rs 6,061 crore) in the last five years, almost three times more than any other country.

Among all the Indian states, Andhra Pradesh tops DFID's list. In the last five years, Andhra Pradesh received some �248 million (Rs 1,968 crore), almost a third of the British donor department's total Indian budget.

In its Andhra Pradesh state strategy paper, DFID says its aim is to work with Indian partners towards ending poverty and realising rights for all.

The Christian Aid study lauds some of the commendable work that the DFID has done in Andhra Pradesh: like the �20.6 million (Rs 163.5 crore) it provided to improve tuberculosis treatment for the poor, and the �45 million (Rs 357.2 crore) for an ambitious programme aimed at raising the number of children participating in primary education.

Schemes like the AP Rural Livelihoods Programme and the AP Urban Services for the Poor work in the same way, getting to grips with some of the main problems that beset poor people.

But the study says a significant amount of DFID's work in the state has proved far more controversial and appears to be several steps removed from its main task of straightforward poverty alleviation.

What are the controversial steps that the British agency took that has resulted in increasing suicides among Andhra farmers?

  • In 2001, DFID donated �5.9 million (Rs 46.8 crore) towards the setting-up of Andhra Pradesh's Centre for Good Governance, a kind of think-tank on poverty issues with a special brief on tackling corruption. DFID also provided overt financial support for then chief minister N Chandrababu Naidu's privatisation programme.
  • A grant of $3.1 million (�1.65 million or Rs 15 crore) was used to help set up a body called the Implementation Secretariat whose task was to assess the state's assets, decide which were worth keeping, and either sell, close down or restructure the rest.
  • The Implementation Secretariat was positioned within Andhra Pradesh's Public Enterprises Department and answered to the most senior civil servant in the department, an Indian principal secretary.
  • DFID did not operate the Implementation Secretariat itself. Instead, it awarded the contract for running the secretariat to the right-wing, free-market fundamentalists from the Britain-based Adam Smith Institute.
  • The Adam Smith Institute provided a number of its privatisation experts to work at the Implementation Secretariat on a consultancy basis at the same time as managing the contracts of the Indian secretariat. These British experts included a lawyer, an IT specialist, a finance person and various other management types.
  • The Adam Smith Institute hired dozens more consultants to carry out the most detailed work required to assess, sell and restructure Andhra Pradesh's state-run assets. Christian Aid has a list of over 80 of these sub-contracted consultants. Most of them are locally based, one- or two-person operations. These consultants would jet in for a few days -- sometimes a couple of weeks -- at a time to oversee the privatisation process.
  • The British consultancy's influence in Andhra Pradesh secretariat was so great that, 'the Adam Smith Institute could see Chief Minister Naidu at any time: it was phenomenal access. Every day there was a foreigner in the premier's office.'
  • When these programmes were in full swing, there were one or two persons from (the Adam Smith Institute in Andhra Pradesh) every day. They stayed for about ten days. And as Adam Smith's influence grew, a number of state-run enterprises went under.
  • In phase one, 19 state-run enterprises went down. The Small Scale Industries Development Corporation and the State Textile Development Corporation closed down, while the State Irrigation Development Corporation had to be restructured.
  • The list went on. By the end of it, 43 state-run enterprises had bitten dust, either closed, restructured or sold off to the private sector.

According to the study, the benefit to Andhra Pradesh is impossible to tally -- but the cost to the workers in the state enterprises affected by DFID's consultants Adam Smith has been immense.

'The process cost around 45,000 workers their jobs. Around 22,000 had taken voluntary redundancy, which means that around 23,000 were sacked,' the study points out.

It says the number of farmers taking their lives in Andhra Pradesh is shocking and indicates that something has gone terribly wrong with the agricultural sector.

It says personal debt and misery among farmers, caused by the wrong policies dictated by DFID is the primary reason behind the agricultural crisis that has hit Andhra Pradesh.

What prompted Christian Aid to focus on the death of farmers in Andhra Pradesh?

"What prompted us to look at the issue of suicides in Andhra was the fact that we are the British NGO who takes the lead on trade-related issues and how they relate to poverty in developing countries," Dr Daleep Mukarji, director of Christian Aid told in an e-mail interview.

He said the NGO's report exposes the devastating impact of unrestricted 'free' trade on poor people in India.

"The suicides seemed to us to be a prime example of what can go wrong -- with terrible human consequences -- when 'free' trade liberalisation and privatisation are used as the major economic tools to alleviate poverty," he said.

What is the DFID response to the Christian Aid study?

The British agency says DFID's support for economic reform in Andhra Pradesh, including the privatisation of state-owned enterprises, has helped safeguard the livelihoods of around two million people.

"Without reform, the state government would have continued to spend hundreds of millions of pounds subsidising loss-making enterprises. That money can now be used for more productive expenditure, including in the social sectors, such as health and education," DFID wrote back to in response to a query.

It said the British government does not support unfettered free trade or forced liberalisation.

"The British government is committed to fairer trade rules and removing barriers to trade. As a long-term objective the removal of trade barriers will benefit poor and rich countries," it added.

Design: Uday Kuckian

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