State and Shrimp Culture in India

Government support to coastal shrimp aquaculture has been substantial. One of the important factors behind this appears to be the stronger compulsions for earning quick foreign exchange in the post-1991 liberalisation era following the large borrowings made from the International Monetary Fund. These efforts really began to hasten after 1991 following the wider exposure of the Indian economy to the global markets. This opening up provided the

opportunity for international industrial interests, who were keen to push corporate investors within India, to take up shrimp culture. In this pursuit they were often backed by international financial institutions like the World Bank. With the exception of a handful, the majority of these new corporate investors had no earlier experience with the fishery or aquaculture business. They were attracted to shrimp aquaculture solely for the quick and large profits it

promised.

As per the Government of India, by 1993, as many as 61 corporate firms had registered as 100 per cent Export Oriented Units (EOU)for shrimp farming, accounting for an area of 6027 hectares. Apart from the facility of quick issual of licenses for establishing shrimp aquaculture units, the state fostered the industry in a variety of other ways. Liberal lease arrangement of government lands on the coast, technical support, financial incentives, credit support and customs duty exemptions were the most important of these.

The lease policy for government lands, for example, was highly supportive of corporate investment. While the lease amount of Rs.10 per hectare (ha)per year for individual fishermen and their co-operatives was justifiably low, the lease amounts stipulated for other categories of lessors were not very much larger. In Andhra Pradesh, the state leading in corporate shrimp aquaculture, the lease amount was Rs.20 per hectare per year for the small-scale entrepreneur subject to a maximum of 4 ha, and a mere Rs.50 per hectare per year subject to a maximum of 40 ha per year for larger entrepreneurs, including corporates.

A complete and comprehensive assessment of the total amount of financial incentives and credit support given to the industry is yet to be undertaken. One estimate is that the bank finance involved is of the order of Rs.200 million. Other estimates quote higher figures.

Such unqualified support by the state resulted in a quick `pink gold’ rush for a while. The area under shrimp aquaculture doubled between 1990 and 1997. While production more than doubled between 1990 and 1994, it then fell sharply leaving the productivity level in 1997 below the 1990 level. This fall in production was a consequence of a virus attack, which affected all states irrespective of whether they were largely into extensive or semi-intensive culture operations. India was experiencing the historical `boom and bust’ of shrimp

aquaculture which has been documented in Ecuador, Taiwan, China and Indonesia.

In the context of this ecological debacle there was considerable debate on the role of the state. Should not the state have acted as a regulator of industrial activity, which brings harm to itself and to others? The facts reveal, however, that the state was unable to bring defaulters to book, despite the wide ranging legislative and organisational support it could have mustered for this purpose if the bureaucratic and political will was forthcoming.

It is in such a context that a public interest litigation filed by a social activist in 1994 was placed for hearing before the Supreme Court of India. The Court, in its judgement of December 1996, ordered the demolition of all aquaculture farms set up in the coastal zone, as defined by an earlier notification of 1991. The order was based on extensive evidence of the negative social, ecological and economic consequences of the shrimp culture being practised in the fragile and ecologically sensitive coastal areas of the country. However, based on a fresh

batch of review petitions from the Central and state governments, among others, the Supreme Court has given an interim stay on its earlier order.