Column : Before food security, talk agriculture

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: The past year was terrible for the global economy and indeed the Indian economy. But now, for agriculture the good news is that investment by the Union Government has been kept up. Public capital formation in agriculture as a percentage of total capital formation rose from 6.7% in 2001-02 to 8.2% in 06/07, and if the figures given in the budget speech are an indicator—a thirty percent hike in the Rashtriya Krishi Vikas Yojana and a thousand crores more for the AIBP—the trend will continue.

The idea of a nutrient based fertiliser subsidy suggested by the Alagh Commitee and with details worked out by the Abhijit Sen Committee has now been endorsed in the budget. That is good, but it will mean lowering potash and phosphatic prices, given the trends in global prices as the relative subsidy for domestically produced nitrogen is not there now. Alternately the market price of nitrogen will have to be raised. We still stick by our recommendation in the Fertiliser Pricing report that direct subsidy should be tried first in those districts where we have strong agricultural and fertiliser cooperatives and then expanded. Otherwise one scam will kill a great idea on the floors of another Parliamentary Committee.

On the flip side the hand that feeds also takes away. Private capital formation in agriculture, which had reached a respectable figure of 11.5% of gross capital formation has fallen to 6.6%. The farmer will not invest when he does not get returns. The logic of a market economy is merciless. The budget doesn’t recognise these statistics tucked away in the Survey. The sooner it makes amends, the better off we will all be. The Survey gives overwhelming evidence of the crisis in Indian agriculture deepening in spite of the valiant efforts made by the UPA government in pumping government money into it. If profitability in Indian agriculture does not improve, matters will get worse.

Take for example, the fall of 5.5% in oilseeds from 07/08, which was a year of average agricultural performance, of 10% in cotton production. That should have led to some alarm bells, but the blasé description of all this in the Survey and no discussion in the Budget is a cause of alarm.