1. India’s unfinished agricultural and rural revolution

India’s unfinished agricultural and rural revolution

The ministry of agriculture or the new planning unit must focus on the reform of the entire gamut of public policies towards agriculture.

By: | Updated: March 27, 2015 1:00 AM

The BJP’s resounding Lok Sabha victory after years of policy paralysis raised a widely-shared hope that the government, led by PM Narendra Modi, will put India back on track by resuming inclusive growth. And that agriculture and rural development would be at the centre of the agenda. Half the employment still comes from agriculture, though it contributes just 14% to the GDP. India contains the largest number of undernourished people in the world—221 million—with high infant and child mortality rates of 41.4 and 51 per 1,000, respectively. Malnutrition prevalence, measured as weight for age, for a certain percentage of children, is even higher than in sub-Saharan Africa. In women’s advancement, India’s progress has been slow even when compared with Bangladesh, granting for variation among the states.

China and Indonesia started out with worse initial conditions than India’s in the 1960s, when India was the cradle of the Green Revolution—India adopted extensive public intervention under the duress of aid conditionality to generate the Green Revolution. For decades, these policies have not been abandoned, but instead reinforced. Indian planners have seen agriculture as a ‘declining sector’, undeserving of strategic attention as part of economic modernisation. China and Indonesia have undergone frequent reforms. China’s share of the global agricultural research expenditures stood at 13% compared to India’s 7%, with an impressive record of agricultural patents. Despite the impressive achievements in science and research of the Indian diaspora, India’s domestic agricultural research is lacklustre—our roads, rail and power are holding back the IT industry and the private sector in taking the information revolution and value-chains to the countryside. Faster growth in total factor productivity in agriculture in China and Indonesia than India has led to faster drop in employment shares in agriculture with growing employment opportunities in the manufacturing sector. With growing male migration to urban areas, Indian women have become stewards of their farms too, and those with high school education are entering agricultural colleges in large numbers. But India has been slow to expand the quality of education and women’s access to it.

The reforms the BJP government is in the process of adopting include:

n Devolution of funding to states, as per Finance Commission recommendations. States have constitutional responsibility for agriculture, water and forests. Much needs to be done to strengthen their capacity for planning, implementation, monitoring and evaluation. The Centre’s allocations need to be made conditional on their evidence of performance in these sectors.

n Willingness to take on the reform of foodgrain marketing. While FCI reforms do not yet go far enough, a beginning has been made.

n Willingness to carefully consider the $50-billion agricultural subsidy regime. A portion of those subsidies need to be converted into well-targeted cash transfers such that they do not distort the market and direct incentives for allocation of land and other resources to specific crops. Some portion needs to be spent on infrastructure, accompanied by deregulation, to create an all-India market for seeds, fertilisers and other inputs, with a larger role for the private sector in value-chains to reduce wastage, improve consumer access to quality foods and improve employment in SME and large enterprises.

n Willingness to confront land legislation. This is essential to invest in infrastructure while doing justice to rural populations. Again, China is ahead. It has resettled 19 million people—Australia’s total population is just as much—since 1949 with careful planning, implementation and compensation to settlers, assuring higher standard of living after resettlement.

n Addressing the issues of water quality and quantity through the Clean Ganga and Swachh Bharat initiatives and through the announcement of the scheme to connect rivers. India, the top borrower, stands at the bottom of the ratings for completed World Bank-funded irrigation and drainage projects, in a list of the top seven borrowers. Scientific advice is that the so-called ‘water saving’ drip irrigation technologies can have rebound effects. To manage growing scarcity of surface- and ground-water calls for a combination of sophisticated community management, inter-locking multilevel public regulation, strict enforcement, monitoring and publishing of information on water accounts and water tables using remote sensing and ground level information.

n Allowing the testing of GMO varieties, on which the department of biotechnology and ICAR have been working for years. Their efforts have been thwarted by fear-mongering. It has held India back scientifically for years.

n Promoting bank accounts to help create assets (including better health and education) for the poor rather than expecting them to simply live on hand-outs. Evidence indicates the poor do not receive most of these subsidies. Much is needed to make rural finance and targeting work better for the poor.

For the first time, India has a Prime Minister with a demonstrated record of achievements as a chief minister. He is a doer and understands the roles and responsibilities of state governments as well as their limitations. By giving them greater responsibility and resources, the Modi government has moved in the right direction. But a far larger reform agenda awaits him and his administration to revolutionise the food and agricultural sectors. The ministry of agriculture or the new planning unit must focus on the reform of the entire gamut of public policies towards agriculture, foster more public and private investment, partner with civil society, make independent monitoring and evaluation of central and state policies a hallmark to instil a learning and adaptive management approach and a culture of accountability for results.

With such changes, Indian agriculture will make its legitimate contribution to India’s modernisation.

The author is former senior advisor, the World Bank. Her book, Food for All: International Organizations and the Transformation of Agriculture, is forthcoming from the Oxford University Press.

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