Here we go again. It is time for all sectors to make their pitch for public money, as the government gets down to its annual Budget formulation exercise. While the industrial and financial sectors have habitually made the most noise, the agricultural sector has muscled its way into New Delhi?s budgetary consciousness, of late. This augurs well for the economy. As the industrial and services base expands to reach overwhelming proportions, the Indian economy?s growth rises to converge with the pace at which these two ?modern sectors? grow. But agriculture, which still supports a majority of the population, must not get left behind so badly. Agriculture would be best served if it is treated as just another economic activity, the prosperity of which is a function of private initiative, rather than a sector dependent on State support for survival. To economists, this is common sense. But to a State accustomed to treating the sector as its own kitchen garden, this is not so obvious.
It is, therefore, time to reassess agricultural possibilities in the context of the Budget. The usual Budget looks at the sector as a sum of subsidies and sops. This needs to change. Government figures show that in 2007-08, the Centre would have spent Rs 8,558 crore on the direct development of this sector and just Rs 507 crore on irrigation. Of course, the bulk of the spending for these two comes from state budgets, but the Centre also forks out Rs 26,000 crore for food subsidies and Rs 19,000 crore for fertiliser subsidies. Most of this is wasted. Surely, at a time that banks, venture capital firms and micro-insurance ventures are keen to mine the ?bottom of the pyramid?, the Budget can focus on creating an enabling environment for farms to flourish without artificial props. Studies have indicated that there is no lack of enterprise in rural India, and that output responds to incentives just as in any other sector of the economy. While agriculture is expected to grow at 4% annually during the Eleventh Plan, thanks to various measures taken, including the advent of contract farming, shouldn?t more attention be paid to ensuring that information signals?prices, for example?pervade the rural sector more comprehensively? It is time to administer a New Deal for farms. This means market mechanisms. And accessible all-India markets.
