1. Column: Elitist public policy and its perils

Column: Elitist public policy and its perils

Agriculture policy cannot be just tonnage-centric, it has to have a human face and be farmer-centric

By: | Published: August 3, 2015 12:18 AM

There would be seldom any Independence Day speech, when the prime minister, from the ramparts of the Red Fort, does not thank the jawans (soldiers) and kisans (farmers) for their heroic role in ensuring our territorial and food security, respectively. This year too, it is not likely to be different. Recall ‘Jai Jawan, Jai Kisan’, the famous slogan given by former prime minister Lal Bahadur Shastri, which was later expanded by Atal Bihari Vajpayee to include ‘Jai Vigyan’. Prime Minister Narendra Modi may put his own stamp with further twists, but the message is not going to change much.

The real question is: If we are really thankful to them, how far have we made our jawans and kisans happy about the job they have accomplished?

I will leave it to defence experts to comment on the condition of our jawans, but let me take up here the case of kisans with which I am reasonably familiar. Today, India’s granaries are overflowing. Wheat and rice stocks with the government in June were at 60 million metric tonnes (mmt), about 50% higher than even the augmented buffer stock norms. Poor storage conditions lead to fast quality deterioration. Despite the PM asking the food department to liquidate 15 mmt of these stocks last July, the actual liquidation has not exceeded even 4 mmt. The minimum support prices (MSP) have remained subdued, and profitability in wheat and rice has fallen sharply. The paddy cost (C2), for example, is likely to be R1,324/quintal for the FY16 season while the market prices of paddy hovered around R1,254/quintal in October-December of FY15, as per CACP’s latest report. This is despite BJP manifesto having promised 50% profit over cost. The situation in other crops is not very different.

The year ending stocks of sugar with sugar mills are likely to be at unprecedented levels of 10 mmt, and the government is not ready to create any buffer stock. The sugar industry, and thereby, sugarcane farmers, are in deep crisis. Cane arrears have touched R21,000 crore, and farmers are not likely to get either the Fair and Remunerative Prices (FRP) laid down by the Centre or the State Advised Prices (SAP) laid down by the states in the coming season. Cotton, corn, soya—you name a commodity, and you find a glut, and profit margins deeply squeezed. Is this how we salute our farmers for giving food security to the country?

The only exceptions may be pulses and edible oils, which are imported in large quantities. But in the last season, market prices of some pulses as well as groundnut were below their MSPs, thanks to their restrictive export policies, which are hidden instruments of taxing peasantry. Yet, in FY 2015, India’s agri-exports stood at $38 billion, vis-a-vis an import bill of about $20 billion, giving a net surplus in foreign exchange earnings.

Agri-GDP growth has been limping in the last three years, averaging 1.7% per annum. Policy making is blinking, and farmers are groaning, thanks to squeezed profit margins—in the negative, in many cases.

Where is the problem rooted? It is in the mind-set. Elitist biases in public policy want booming stock markets, dazzling manufacturing sector, rapid strides in urbanisation, with world-class infrastructure of bullet trains and the like. But the reality on the ground is that masses in rural areas are finding it hard to meet their basic ends. How can the tiger run with feet of clay?

Many policymakers often ask me, in private, of course, why should they focus on agriculture when its contribution to GDP is less than 15% (at factor cost)? Sure, the future of Indian economy lies in greater industrialisation, urbanisation, services, etc, provided these emerging sectors are globally-competitive and are able to absorb the lion’s share of the labour force. But currently, almost half of the work-force is engaged in agriculture, and unless they are schooled and skilled, they cannot move to high-productivity jobs in urban areas. And this process, when the agriculture work-force comes down to less than 25% of the overall, is going to take at least 15-20 years, or even longer. Till then, the big political economy question is: Is it acceptable to have 7-8% overall annual growth in GDP while agriculture registers a growth of less than 2%?

It may be worth noting what World Development Report (2008) pointed out: Global research on nature of growth in the last 25 years or so has revealed that one percentage growth in agriculture is at least 2 to 3 times more effective in reducing poverty than same growth coming from non-agri sectors. The reason is simple. Much of poor in rural areas in India are directly or indirectly dependent on agriculture. If India cannot ensure at least 4% growth in agri-GDP within a set up of 8% overall GDP growth, the question will keep surfacing: Growth for whom? And that is where lies the elitist bias in public policy. It is not just the level of growth per se, but the nature and composition of growth too, which is important for faster alleviation of poverty. If public policy falters in that, it will be at its own peril, both politically and economically. And in agriculture specifically, public policy cannot be just tonnage-centric, it has to have a human face and be farmer-centric.

The NDA government has perhaps realised this, though somewhat late in its first year when farmers suffered unseasonal rains in rabi after a drought in the kharif season. It is not too late to learn. It needs to focus on irrigation and water management, agri-insurance, national agri-markets, and rural infrastructure of roads and power supplies. This is a huge agenda for the next 5 years or so before it can deliver on sustainable basis. Till then, one has to remain focused and persevere. It needs a strong champion of agriculture in the government to keep the sector at the centre of public policy, lest the elitist biases hijack public policy for the already well-to-do sections of society.

The author is Infosys chair professor for agriculture, ICRIER

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