Give agriculture its due

Updated: Jan 21 2002, 05:30am hrs
In an India-type economy, no turnaround in industrial and GDP growth is possible without a strong foundation in agriculture. Towards this end, there is a need for higher public investment, a shift from revenue to capital spending and consolidation of fragmented land holdings to unleash productive forces. Evolving a comprehensive agricultural policy is imperative in this connection. In fact, the July 2000 National Agriculture Policy emphasised structural, institutional, agronomic and tax reforms for the attainment of an annual 4 per cent rate of agricultural growth by 2005. However, not much has taken place at the implementation level. Agricultural growth continues to be erratic: fluctuations continue to dog its performance as in the nineties, the growth rates have ranged from a low of minus 0.9 per cent to a high of 9.6 per cent. A competitive, commercially viable sector — facilitated through rationalisation of land laws to ensure greater private sector participation — does indeed provide a strong base for higher growth in the Indian economy.

The correlation between agriculture and GDP growth is a close one. India’s GDP growth slowed to 4.9 per cent in the first half to September 2001 down from 6.1 per cent in the earlier year. At a time when both industry and services have failed to click as feared, it is agriculture that has held the economy together with a growth of 2.8 per cent up from 0.6 per cent in the same period last year. Buoyed up by a good show, the rabi season has seen an expansion in acreage under most crops. That may spur GDP growth at above 5 per cent in the current year, which is certainly impressive in a flagging global economy. Going back in time, during 1994-95 and 1996-97, agriculture grew by 5 per cent and 9.6 per cent respectively to push up GDP growth to 7 per cent plus. In the next three years, agriculture did not do well — as a result, GDP growth suffered. Yet Indian agriculture continues to receive a raw deal, despite a lot of rhetoric on second generation reforms. Thanks to the neglect of agriculture, the government seems helpless in stemming the distress movement of people from rural to urban areas in search of jobs. The point is that such problems cannot be meaningfully addressed without a comprehensive policy.