Asked to write on the monsoon failure in July, I have a sense of d?j? vu. In a CII report on the monsoon that I chaired and in a recent piece in the Planning Commission?s house journal, I argued that an agricultural drought is different from a meteorological drought and so don?t get hyper if the long period average is tweaked a bit. Monsoon failure has important welfare implications for a majority of the rural population and then there is the drinking water problem, but it does not have that much of macro consequences. India is no longer a monsoon economy. Until the mid-1970s, growth was negative in half the year and the economy grew between 3-6% in the other half, giving us the average Hindu growth rate. But since then, we have had only 2 years with a growth of less than 3%. It has been argued by Arvind Panagariya that volatility is higher now. Even that is not the complete picture. If you compare the 1960s with the post mid-1970s period, volatility is less now. So, for macro outcomes, what Dr Manmohan Singh is configuring as macro policy will be more important than the MET data. Having said that, I am totally foxed with cavalier comments from Delhi on June?s rainfall failure, from experts I respect.
One senior expert told us that if average rainfall is restored we will be alright: agricultural output grew marginally in 2009-10 with a 78% average. But there was a massive seed replacement programme that year after the early rain failure. Average rainfall does not determine output; its spread through regions and time does. To dismiss the June failure is absurd. In 2009-10 and this year, rainfall failure in the Northwest is not a big issue because Punjab, Haryana and Western UP are almost fully irrigated. Also the East has excess rain. But the scanty rain in MP, Rajasthan, Gujarat and Maharashtra is bad news. As is the deficient rain in the Deccan plateau.
This rainfall failure will not make or break us but it?s definitely worrisome. Delayed rains mean delayed sowing. In some regions, this delay will mean a less preferred crop being sown and that means a loss. At the minimum, this delay means that even if there is a revival and the preferred crop is grown, yield will be less. No amount of average rainfall improvement now will take away this effect at the margin.
There was a massive seed replacement programme by Krishi Bhavan in 2009-10 when the June rain failed. I know this because I was tracking the pulses programme for an expert committee I chaired. I would be highly surprised if this is not there this time. If not, we have to push it. But the contingency plan drill is well laid out and Krishi Bhavan has good resources at its beck and call because the Rashtriya Krishi Vikas Yojana has led to seed reserves in many agricultural universities and other seed centres.
This is the year also to push water conservation and optimal use plans laid out in the Approach to the Twelfth Plan. Knowledge-based, farmer-managed, groundwater conservation and development plans are very much desired and in a rainfall failure regime the farmer takes to them like a duck to water. As we have done since the drought in 1987, as grain prices get under pressure, we should release grain from the stocks which we have in plenty. The deflationary macro effect of that should help us to invest more in water both under the ground and in completing the last mile in canal distribution systems. Drips and other water-saving measures need support. In some cases, this could actually help the rabi crop.
The price support systems we have for dryland and rainfed crops are hardly effective as the CACP points out. This is the year to support the farmer while he is growing inferior cereals, pulses and oilseeds. We should also tell him so. It will actually keep agflation down in the medium term.
Not recognising variability in agro-climatic regimes and effects of rainfall through time and space has another unfortunate consequence. The welfare consequences of output loss, input cost increases and drinking water problems are swept under the carpet. The macro consequences of rainfall failure are not so severe now and my Presidential Address to the Indian Society of Labour Economics gave a statistical and econometric profile of that. But a lot of people still depend on the rains and agriculture, and to average out their fate is bad statistics. A TV discussion on farmer suicides was silly since we have not reached that stage of concern and a lot will depend on the rains up to September 15. Still, I was truly saddened to hear a genuinely concerned economist averaging out suicides by saying that the average rate is lower in the farming population. We know that the average rate of suicides is a constant. The worrying begins, as Srijit Misra?s very careful work on Western Maharashtra at the Indira Gandhi Institute of Economic Research shows, when suicides rise from 10/20 per lakh to 150 and above in a short time and stay there for many years. Then we have to worry. For the 100-odd families who lose their breadwinner, the global constancy of the suicide rate is not a comfort. Bt cotton technology was great for output growth. But in the odd case when it failed and the farmer had borrowed heavily to pay for the seeds, he was in trouble. He had no one to go to for in the early years there was a regulatory failure and his seeds were ?illegal?. We need to be careful of what we average and the variability we isolate as a problem to solve.
The author is a former Union minister