Agri-transformation that occurred during 2004-05 to 2011-12 was certainly the most remarkable change that happened since the beginning of economic reforms in 1991, and perhaps even one of the best spells for agriculture since Independence! Consider the following facts: over the seven year period of 2004-05 to 2011-12, the real agri-GDP per worker engaged in agriculture increased by a whopping 51% compared to just stagnant, nay marginally lower (by -1.3%) agri-GDP per worker during the preceding five years, 1999-2000 to 2004-05, and only 21% during 1993-94 to 1999-00, as the accompanying
graph shows. Call it agri-growth with human face!
The big-bang 51% rise in agri-GDP per worker was presumably propelled by an even more impressive increase of 71.5% in net fixed capital stock per worker in agriculture during 2004-11. No wonder, with each worker better equipped with capital, growth in per worker agri-incomes has accelerated by leaps and bounds, which was never witnessed earlier. That had the most salutary impact on rural poverty ratio (estimated by Tendulkar’s poverty line), which decreased almost three times faster during 2004-05 to 2011-12 (by 2.3 percentage points per annum) than during 1993-94 to 2004-05 (declining by just 0.7 percentage points per annum). This pace of decline in poverty ratio is robust, and will broadly hold, no matter how one defines poverty levels. Isn’t faster poverty reduction one of the most important policy aims of any government in India? And if that is delivered, why don’t we give credit to the policy and stay its course even more rigorously? The problem is poor communication of complex policies and processes that triggered this capital accumulation in agriculture, propelling per worker agri-GDP growth, and fall in rural poverty. Let us try to decipher some of this complexity.
Investments and accumulation of capital in any sector lays down the foundation of growth and prosperity of that sector. Investments in Indian agriculture as a percentage of agri-GDP, have been fluctuating, but broadly hovered around 10-12% during 1980-81 to 2003-04. However, since 2004-05, it had a clear structural break, and by 2011-12, it is now hovering around 20% of agri-GDP. It is coupled with first time drop in absolute number of workforce engaged in agriculture (by about 31 million) during 2004-05 to 2011-12 (as per NSSO). Both are most fundamental, and welcome changes in Indian agriculture since decades, as they equip the agri-workers with more capital and thus raise labour and