Sowing Rs 25,000 crore

Updated: May 31 2007, 05:30am hrs
The prime ministers announcement of a Rs 25,000-crore investment plan for agriculture that calls for active participation by the states and will be spread over the next four years, marks a change in thinking. For one, it signals a break from earlier efforts to mechanically implement fragmented schemes in diverse crops, and focuses more on putting in place an integrated approach through district and state-level interventions. More importantly, it also homes in on the two major drawbacks that have plagued the sector in recent timesnamely, technology fatigue and the yield gap. Equally welcome is the proposal to tie central funding to resources raised by states, which should incentivise states to take the project seriously.

But there are issues that could well test the skills of the government as it seeks to revive Indias stagnant primary sector on which a majority of the population continues to depend for livelihood. Foremost among them is the task of actualising the full potential of the research and development work done in the countrys many agriculture research institutions and universities. These public sector organisations have failed miserably in delivering the intended on-the-ground results, as they do not have an incentive structure that motivates the effective transfer of technology from laboratories to fields. Such institutional lacunae are also visible in other important areas like credit, insurance, extension and marketing services. Given this scenario, it is unlikely that an increase in public sector investment alone will achieve the sectoral turnaround so desperately sought. So, the plans details, to be drawn up over the next two months, should ensure that the emphasis is on facilitating the free play of market forces and increasing private sector investment in areas crucial to stimulating and sustaining high agricultural growth. Government funds should be used mainly for the financing of viability gaps. The Centres own projections show that foodgrain production needs a major productivity jump. Global numbers also show that Indias share of cereal, fruit and vegetable output, which had steadily picked up in the 1980s and 1990s, has declined for the first time in recent years. Theres no question that agriculture needs investment. But it also needs a market for ideas.