Make free markets fair markets


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India’s recent elections showed the country’s economy still does not shine for many families. That is especially true for the 100 million people that rely solely or partly on collecting and marketing forest products.

Orissa is India’s poorest state and one of its’ most forested, and Orissa’s tribal forest dwellers are the poorest of the poor. Many of them, particularly the women, earn income by harvesting forest products used to wrap Indian cigarettes and to make plates, oils, mats, medicines, drinks, and handicrafts.

Past government policies made these people’s lives harder. Harvesters were forced to sell to the government or private companies the government signed contracts with, which gave them a monopoly. The government used forest products as a source of revenue. Parastatals often paid late and had high marketing costs due to corruption and inefficiency, which further reduced harvesters’ incomes. Meanwhile, companies with government sponsored trading monopolies paid low prices, bought products in advance at times of great distress, and tricked and cheated the harvesters.

Since this situation did not fit well with the federal government’s free market rhetoric, Orissa’s government came under pressure to reform. The non-governmental organizations (NGOs) also complained. Things came to a head after the government prosecuted a tribal women’s cooperative for selling brooms, rather than respecting the official monopolies. Soon after, in 2000, the state government devolved the authority to regulate the trade of 68 non-timber forest products to village councils. The government only retained control over a handful of the main products.

Reformers thought the new policy would greatly benefit poor harvesters, but that did not happen. A few things did improve, such as the price harvesters received for hill brooms, however, generally not much changed.

N.C. Saxena’s "From Monopoly to De-Regulation of NTFPs: Policy Shifts in Orissa (India)", published in the International Forestry Review, explains why. In it, Saxena shows how the harvesters’ poverty and limited information, policies that indirectly continue to favor existing traders and specific features of the forest products and their markets have kept real competition from emerging. Given that, he argues the government needs to move beyond a laissez faire approach and become more pro-active. In particular, state agencies and NGos should provide credit, market information and infrastructure, help harvesters organize themselves, and encourage villagers to get involved in processing and marketing. The government should also de-regulate even more. Making markets freer was good. Making them fairer would be even better.

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Further reading

Click here to download the free electronic copy of this paper in English.

To send comments or queries to the author, you can write N.C. Saxena at:

The full reference for the article is: Saxena, N.C. 2003. From monopoly to de-regulation of NTFPs: policy shifts in Orissa (India). International Forestry Review 5(2): 168-176.

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