We are now writing prologues to the mid-term review of the 11th Plan. This piece is on agriculture where there is a fascinating story of diversification and policy shortcomings.
To begin with, the foodgrain sector has collapsed. Growth in the 10th Plan was 0.5% annually. With area rising by 0.3% in response to the UPA?s MSPs, productivity took the back seat. With 6.1% growth in 2007-08, a decline of 4.6% in 2008-09 and uncertainty this year, the first three years will end up in growth rates between 0% and 1%. It is commercial crops and non-grain foods like sugar that are leading the growth phalanx in the crop sector. Area under these crops where the underlying trend was 1.02% from the 1990s went up by 2.3% annually in the period 2002-06. It is not unlikely that this growth is maintained in a somewhat dampened manner in the first three years of the 11th Plan with oilseeds taking a big knock from perverse policies. Output growth in this sector in the 10th Plan at 6.1% was twice that of the 1990s and 4-5% growth rate in the 11th Plan is a distant possibility. Crop production growth will probably be around 2.5%. It is animal husbandry and fishing that made the difference and left us to 3% growth. Underlying all this are serious problems and programmatic deficiencies.
The agricultural part of the 11th Plan was perhaps its best, and yet what is implemented is more of the same. The mid-term review of the 10th Plan and the 11th Plan recognised that short run difficulties were nested in the more basic challenge of limits to growth imposed by scarcity of land and water resources. Agricultural capital formation rose and progress was made in agricultural growth, but real resource scarcities remained. The cropped area, earlier a constant, was falling whilst the area under irrigation was a matter of concern. There was recognition that faster diversification of the sector was required to achieve growth objectives, and this required policies relating to market reform and infrastructure in the context of the rural-urban continuum. Since widespread growth was required, a policy of ?walking on two legs? was needed with improved productivity of cereal-producing areas allowing land to be released for high-value crops. In the short run, technology and input intensification were seen as the source of growth as policies of land and water management take effect. The institutional reform of markets, empowerment of small farmers to leverage their assets for strategic partnerships with corporates, new technology, market linkages, and the establishment of farmer groups and local institutions to build up the support bases for emerging Indian agriculture were all planned.
An important innovation during the 11th Plan was the new Rashtriya Krishi Vikas Yojana (RKVY) designed to give more flexibility to states and provide incentives for them to spend more on agriculture and to do so on the basis of properly designed district and state plans. The RKVY provides a framework to achieve this objective. It required that every district draw up a district plan that fully utilises an initial resource envelope available from all existing schemes, state or Central. The Plan stated: ?The district agricultural plan should include livestock and fishing and be integrated with minor irrigation projects, rural development works and other schemes for water harvesting and conservation. The state agricultural plan should be based on these initial district plans, subject to reasonable resources from its own plan and adding those available from the Centre, aimed at achieving the state?s agricultural growth objective, keeping in view the sustainable management of natural resources and technological possibilities in each agro-climatic region. This plan should then determine each district?s final resource envelope, its production plan and the associated input plan. Annual targets at the start of the fiscal year should be fixed and funds for relevant schemes ensured, with implementation reviewed every quarter both at district and state levels.?
This has not happened at all. The Central schemes are in a departmental mould. There is no understanding of the resource conserving strategies of the plan and their centrality in achieving growth targets. In fact the actual growth of agriculture is resource wasting. We looked for the largest increase in area in paddy. It was in Gujarat, which is very water scarce. Sugar area is going up in the driest areas in the Deccan and so is dairy farming, which is a very water-intensive activity. Neither the technology extension, nor the economic policies underlying the agricultural plan has made any progress. Dryland crops like oilseeds are crippled by cheap imports. No reform in pricing of inputs hits resource use. The mid-term review has to show the practical steps of the steep climb-up.
?The author is a former Union minister