1. Column: Agriculture in doldrums

Column: Agriculture in doldrums

Govt must work towards achieving 4% growth in agriculture. Else, India stares at growing inequality

By: | Published: October 12, 2015 12:22 AM

Policymakers in the corridors of power in Delhi are feeling upbeat. There is recovery and resurgence in India’s stock markets, the ‘Make in India’ campaign is getting more publicity and is being noticed by foreign investors, FDI inflows are improving, and India’s ranking in the ‘ease of doing business’ seems to be improving, as per some selective ratings.

But its agriculture, where almost half of its workforce is engaged, is deeper in the doldrums, and no one seems to be perturbed by that. That is pathetic and tragic.

During 2004-11, domestic agri-prices rose following global price increases, which incentivised farmers to invest in agriculture. That, in turn, resulted in higher growth of agriculture, higher wages for farm labour, and the fastest decline in poverty since reforms began in 1991. The decline in poverty during 2004-11 was almost three times faster than during 1993-2004. But that dream-run seems to be over. Since 2012-13, agriculture is limping, partly due to droughts and partly due to collapse in commodity prices. The government officials vie with RBI in taking all the credit on taming inflation, especially food inflation. But, if their policy instruments are so powerful, how come they feel helpless in taming prices of onions and pulses, which have gone up by more than 50% in a single year? ICRIER analysis shows that almost two-thirds of the drop in food inflation is resulting from drop in global prices, which is leading to decline in agri-exports, rising imports, and lowering food inflation at home. This amounts to sheer good luck for the Narendra Modi-led government, not any major policy success.

It is the Indian farmer’s bad luck that two droughts have struck in a row. Last year’s monsoon rainfall (June 1-Sept 30) was deficient by 12% compared of the long period average (LPA), leading to a drought and agri-GDP growth collapsed to 1.1%. This year, the rain deficit is bigger, at 14% of LPA, and water storage in 91 reservoirs is also lower than last year. Unless a miracle happens, or the stats are cooked, all reports from the ground suggest that agri-growth is going to be even lower than last year’s. That would mean that the average growth of agriculture during the first 4 years of 12th Five year Plan is going to be around 1.5%, against a target of 4%. That’s a massive failure for a sector that engages the largest number of people, especially those at the bottom of economic pyramid.

So, the big political question is: What is the role of public policy in remedying the situation? Should it work for the aspirations of those who are already way above the poverty line, whichever the way it is defined, or should it first focus on alleviating poverty? Don’t forget that India still has the largest number of poor and malnourished people in the world.

There is ample research that shows one percentage growth in agriculture is at least 2 to 3 times more important in reducing poverty than same growth coming from industry or services. So, even if India secures 7-8% growth in overall GDP, but agriculture grows at 1.5% or lesser, will that be the right strategy to follow? Can the lion (the Make-in-India icon) run with feet of clay? It will take decades to eliminate poverty; in fact, such low agri-growth will only accentuate inequality. I will not recommend sacrificing growth to attain equality, but the nature of growth must be tweaked to get at least 4% growth in agriculture, else it is a massive failure of public policy, which seems to have been hijacked by elitist elements in the system.

Farmers are losing patience with each passing day. They are being driven to the wall. Punjab farmers are already up in arms, blocking trains as their cotton crop is heavily damaged and basmati prices have collapsed by more than 50%. Soon, farmers from Maharashtra, North interior Karnataka, Uttar Pradesh are likely to rise in protest as they have suffered steep losses due to back-to-back drought and tumbling prices. Does anyone in the Centre have his or her ear to the ground? Can’t the Centre hear the rumblings? It is a wake-up call. Only the deaf will ignore.

From the ramparts of the Red Fort, on August 15 this year, prime minister Narendra Modi announced that the ministry of agriculture was being renamed to include farmer welfare. But, so far, there is no sign of any welfare measures for the farmers. We heard only of the OROP for jawans, but kisans have been left in the lurch, to nurse their wounds and submit to their fate.

What can the PM do to improve the economic situation of those engaged in farming, so that poverty can be eliminated in the next 10-15 years? A number of things can be done to achieve this.

First, the PM must have a true champion of agriculture in his Cabinet, one with a clear vision, and the requisite commitment and passion to tap the full potential of Indian agriculture with the latest technologies and with farmer-centric policies. She/he may be bitter, but the PM must know the truth, and not remained surrounded by Yes-men.

Second, given the back-to-back drought in the country, the fourth such in the last 115 years, his champion should be traveling to drought-hit states and regions of Maharashtra, Karnataka, Madhya Pradesh, Gujarat, Uttar Pradesh, Bihar, Haryana and Punjab. It is high time the Centre declared a drought, and asked states to assess damages in a course of two weeks of the announcement. The existing practice of the Centre keeping quiet and throwing the ball in the states’ court is damaging the PM’s own reputation. Further, drought assessments today are more political than scientific. This needs to change. The ‘Make in India’ campaign can start from here itself. And based on the degree of damage, the compensation package must be frontloaded. Crop insurance needs to be resurrected, as also mainstreaming farmers for life insurance, Atal pension schemes, etc. to show that the country cares for their welfare.

Restructuring of loans over the next 2-3 years, waiving interests—a whole list of measures can be prepared. That will reveal PM Modi’s concern and compassion for farming community. It is good economics and good politics.

Simply raising ‘jai jawan, jai kisan’ slogans and renaming ministries will not work. These must be matched with commensurate action and policies. Only then, Indian development will be truly inclusive, and only then one can say ‘sab ka saath, sabka vikas’.

The author is Infosys chair professor for agriculture, ICRIER

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