Walk the talk

Updated: Nov 16 2005, 05:30am hrs
Agriculture minister Sharad Pawars comment (Walk the Talk, FE Nov 15) that Indian farmers dont need subsidies is plainspeak. But will correction come easily to a government that has its hands tied behind its back in dealing with such a politically contentious issue Or will realism (read sensitivities, convenience and inertia) continue to rule the day, while attempts are made only at the peripheries of a sector that gives livelihood to as much as 60% of our population Misdirected public spending, coupled with myopic policy, has stunted the sector for far too long.

Subsidies, both overt and covert, in the farm sector on both frontsoutput and inputshave skewed cropping patterns (wheat and rice surpluses) and farming processes (fertiliser use), as well as led to misappropriation of public services (water, electricity). Food subsidy alone accounts for 5% of all government expenditure and simply covers price support, distribution and storage of wheat and rice! Roughly 10% of bank credit is tied up in government borrowing for the storage. The trade-off; our subsidy bill far exceeds both public and private investment in agriculture. And the failure of the PDS has meant malnutrition for millions. Policies and performance in other crops are mixed. For pulses, an important protein source in Indian diet, theres been little success in boosting output. High protection levels in oilseeds have not delivered.

Indian agriculture remains shackled in pathetically low coverage of irrigation, outdated market restrictions and poor infrastructure, food processing and logistics support. As Mr Pawar points out, total harvesting losses are nearly 30% (Rs 55-65,000 crore)! Despite faster economic growth and a more diverse demand for food, farm output growth has been sluggish, driven mainly by monsoon vagaries. Given the highly protectionist global trade environment, domestic distortions must be corrected to bring in competitiveness in production and supply linkages. APMC reforms are just a beginning. For the rest, political consensus is a slow process; the government must redouble its efforts to arrive at an agreement on agriculture reform.