Consequences of a complete lack of strategic policymaking for agriculture in the 1990s reform period
What will India?s contribution be to the Los Cabos meeting of the G20? The recent G8 saw leaders address the major challenges in economic development, in the food and agricultural sectors. More importantly, what have been India?s takeaways from the G20 from the Seoul Development Consensus onwards, on avoiding the slowdown?
From Seoul onwards, India follows the G20 with persistence. It moved out of the fixed exchange rate in 1975 and did not have East Asia?s mercantilist fixation. That, with a conservative banking system and strong regulatory central banking traditions, meant that Y Venugopal Reddy, Rakesh Mohan and their successors were recognised names in the global search for financial transparency. Moreover, having used the market increasingly in the country?s larger economic policies, the Indians took like ducks to water in the consensus on pushing the Mutual Assessment Process to country-specific commitments, leading to the Cannes Action Plan. At the measurement and operational levels, India argues that commitments emerge from domestic policies and the necessary global push in not there. I have argued that India has a somewhat realistic approach to the Rebalancing Doctrine, recognising the scale of the US and German economy but asking for creative institutional experimentation for larger trade in the faster-growing economies. This is needed to avert global crises. However, the Indians argue that uncoordinated rebalancing may make things worse.
Given the focus of the G8, I was asked to write on India and the food security issue. Jeffrey Sachs said recently that Sahelian Africa has a lot to learn from the Indian strategy of a widespread policy architecture for spreading irrigation across small farmers, in the mid-seventies of the last century. But orthodoxy in the world then was that India could not feed itself. The Indian story of agricultural and broad-based rural growth is a tortured one, and largely unknown in the world. Its successes and tribulations in feeding itself, attempting to reduce hunger and sustain the food demands of a billion-plus population, which is now growing at one of the fastest rates anywhere but with limited land and water?all these are, mildly speaking, interesting. In a world of dominating knowledge, you get the story of private consultants, development bankers, big corporations but not the India story, which may have some relevance. It is not for nothing that India pushes the Doha agenda, for it is willing to give in on the subsidies for its parastatals in return for a fairer trading regime and the freedom to follow the livelihood objective.
The World Bank, and in fact even the Indian finance ministry, felt that India would not achieve its target of 125 million tonnes of grain by 1978-79; estimates ranged between 118 and 120 million tonnes. It was at this time that policymaking in India focused on resource allocation and policy support to agriculture. Indira Gandhi saw food security as a central issue. And once a plan was ready, she forced through the resources for it, even after the budget was passed. Resource allocation for agriculture, particularly irrigation, got high priority in the investment budget. Interestingly, public-sector capital formation of R5,566 crore at 1993-94 prices in 1976-77 was not reached in any year in the 1990s, reflecting the lack of strategic policymaking for agriculture in the reform period.
By 1978-79, India was producing 127 million tonnes and was a net exporter of grains. Having succeeded, the Indians soon realised that producing grains was not enough. And agriculture in a ?semi-continental? country meant that each of its 144 agro-climatic regions should be growing crops for which they were best endowed. Rajiv Gandhi was to push this. This time, as a member of his Planning Commission, I saw the second plateau in 1989. The decade of the nineties was a lost decade for agriculture in India, with growth rates halving, investment falling and lectures on reform and globalisation substituting policy. The present UPA government has put the sector back on its historical growth path since 2004. But India faces the demands of high growth on agriculture. It struggles with diversification and expansion of food demand.
Large countries like India, as I argued in the original L20 volume the Canadians produced, will sup effectively at the High Table only if their concerns in water, energy and sustainable development are accommodated. This needs an understanding of the language of the other. This needs replacing a dialogue of the deaf with an experience-based debate around real alternatives. Of course talk has to be followed by give and take. We all agree that the poor world needs more take than give, but the magnitudes will remain debatable. The disappointing part is that when Juha Jokela looks at the G20 a decade later in the April 2011 Chaillot Papers of the EU?s Institute of Security Studies, change from the position the Indians and the South Africans spelt out in 2002 is slow. Actually it?s very, very slow. And we need to stress this when the G8 focuses on the issue whenever the world is in trouble.
The author is a former Union minister