Just as it was slightly premature to think that the slowdown could be avoided by reliance on agriculture in any appreciable measure, it is excessively pessimistic to talk of agricultural stagnation. There is no question that the UPA policymakers have placed the agricultural economy on the historical growth path of around 3% rather than the 1% growth rate of the nineties and the NDA period. Investment, better prices and credit and technology support have made the difference, apart from the demand inducement of a fast growing economy. The difficulty is in resting our oars, thinking that a 4% growth is achieved and that rural demand will see us through. The trend is definitely positive but short run agricultural growth rates are treacherous business in India. Most serious economists argue that the underlying trend at present is around 3% and only vastly improved performance on water, newer seeds and much higher exports of value added products will push the agricultural economy further. There is little evidence of this, at least on the scale needed. Another feature to note is that some of the easy pickings have already been made of the low hanging fruit and to expect fresh sources of growth on a large scale for a year of average weather?the last few years having been exceptionally good?is premature. Some of our ?travelling correspondents? have been reporting ?from the fields? as the ?grain of truth? that this year the commodity meltdown is already showing up in crops like cotton, lowered exports prospects, falling potato prices and so on.
The negative growth rate in agriculture of a somewhat mild kind, around 2%, should not to be considered unusual. Krishi Bhavan generally tends to be bullish on the going season crop prospects and ?Preliminary Estimates? that come later get invariably reduced. The CSO must have gone by the trade forecast of cotton, which has been the big growth source earlier and is low this time.
The new farmer is savvy. He may wear western clothes. He follows prices either through the vernacular newspaper or through the media. In many villages a few farmers will also read an English newspaper. This farmer knows the importance of import policies and the news of the export incentive for cotton spread very fast. Of course the point is made that this move should have come much earlier since cotton prices have been falling for some time, and if it had come earlier farmers would have put more money in pesticides and reaped higher yields. But Chengal Reddy?s Consortium of Farmers Organisations, following the old Rabi Ray-Chokha Rao tradition, decided to make a political issue out of the government not accepting the Alagh Committee?s recommendations on price policies. I have talked of the friendly ghost of the Alagh Committee returning again and again. It seems that a not so friendly Banquo is already there. At a more serious level, there is the point a number of us?including Abhijit Sen and Vijay Vyas?made at the DS Tyagi Memorial Lecture, that the Alagh Committee?s recommendation of giving medium term price signals to back the costs of ?competitive farming? needs thought if growth is to be pushed further for all classes of farmers in India.
All classes of farmers invariably don?t grow high value crops, newer ones or with new technologies like the hybrids and GMCs. The switchover from cereals or conventional oilseeds to a high value crop now costs money. First there is the seed, which is expensive, even if pirated. The crop has specific water needs in a stress period, which if left unfulfilled lead to a high loss in yield. But the small farmer?s risk-taking capacity is still low and the idea that banks give him loans prospers only in policy documents. So, if you have the cash, preferably from your bapu, you grow cash crops on a part of your land and get more cash. If not, too bad. Of course, newfound prosperity has ripple effects and middle peasants cultivate two-fifths of the land. Also, the others get wage income both in cultivation and first stage processing and marketing. Then there is the NREGA making waves. And yet it would be unwise to ignore the fact that widespread agricultural growth is designed but needs implementation.
-The author is a former union minister. Email: yalagh@gmail.com