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Resource centre on India's rural distress
 
 

Policy with a farmer’s face -Ashok Gulati
-The Indian Express

It is necessary to rescue public policy from its elitist bias, bring agriculture to its centre

There is seldom any Independence Day speech where the prime minister, from the ramparts of the Red Fort, does not thank the jawans and kisans for their heroic role in securing our borders and ensuring food security. This year is unlikely to be different. Recall Lal Bahadur Shastri’s famous slogan, “Jai Jawan, Jai Kisan”, which was later extended to include “Jai Vigyan” by Atal Bihari Vajpayee. Prime Minister Narendra Modi may put his own stamp with another twist, but the message is not going to change too much.

The real question is: If we are really thankful to them, how far have we made our jawans and kisans really happy for the job they have accomplished?

I will leave it to defence experts to comment on the condition of our jawans, but let me take up the case of our kisans, with which I am reasonably familiar. Today, India’s granaries are overflowing. Wheat and rice stocks with the government in June were at 60 million metric tonnes (mmt) — about 50 per cent higher than even the augmented buffer stock norms. Poor storage conditions lead to rapid deterioration in quality. Despite the prime minister asking the food department to liquidate 15 mmt of these stocks last July, the actual liquidation did not exceed 4 mmt. Minimum support prices (MSP) have remained subdued, and profitability in wheat and rice has fallen sharply. The paddy cost, for example, is likely to be Rs 1,324 per mt for the 2015-16 season, while the market prices of paddy hovered around Rs 1,254 per mt in October-December of 2014-15, as per the Commission for Agricultural Costs and Prices’ latest report. This is despite the BJP manifesto promising 50 per cent profit over cost. The situation with other crops is not very different.

The year-ending stocks of sugar with sugar mills are likely to be at an unprecedented level of 10 mmt, and the government is not ready to create buffer stocks on the government account. The sugar industry, and therefore sugarcane farmers, are in deep crisis. The cane arrears had touched Rs 21,000 crore, and farmers are not likely to get either fair and remunerative prices (FRP) or state advised prices (SAP) in the coming season. Cotton, corn, soya and so on — you name a commodity and you find a glut, with profit margins deeply squeezed. Is this how we salute our farmers for giving food security to the country?

The only exceptions may be pulses and edible oils, which are imported in large quantities. But last season, market prices of some pulses, as well as groundnut, were below their MSPs, thanks to their restrictive export policies, which are hidden instruments with which to tax peasantry. Yet, in FY15, India’s agri-exports stood at $38 billion vis-a-vis an import bill of about $20 billion, giving a net surplus in foreign exchange earnings.

Agri-GDP growth has been limping in the last three years, averaging 1.7 per cent per annum. Policymakers are blinking and farmers are whining, with tight or negative profit margins.

What is the root of the problem? It is in the mindset. Elitist biases in public policy mean booming stock markets, a dazzling manufacturing sector, rapid strides in urbanisation, with world-class infrastructure of bullet trains and the like, are prioritised. But the reality is that the masses in rural areas are finding it hard to make basic ends meet. How can the lion run if it has feet of clay?

Many policymakers often ask me in private why they should focus on agriculture when its contribution to GDP has decreased to less than 15 per cent (at factor cost)? Sure, the future of the Indian economy lies in greater industrialisation, urbanisation, service industry growth, etc, provided these emerging sectors are globally competitive and able to absorb an increasing share of the labour force. But currently, almost half the workforce is engaged in agriculture, and unless it is schooled and skilled, it cannot move to high productivity jobs in urban areas. And this process is going to take at least 15-20 years, or even longer, when the proportion of the workforce engaged in agriculture will come down to, say, less than 25 per cent of overall labour. Till then, the big political economy question is: Is it acceptable to have 7 to 8 per cent overall annual growth in GDP while agriculture registers growth of less than 2 per cent?

It may be worth noting what the World Development Report (2008) has pointed out: Global research on the nature of growth in the last 25 years or so has revealed that one percentage of growth in agriculture is at least two to three times more effective in reducing poverty than the same growth in non-agri sectors. The reason is simple. Most of the poor in rural areas in India are directly or indirectly dependent on agriculture. If India cannot ensure at least 4 per cent growth in agri-GDP within an overall GDP growth rate of 8 per cent, the question will keep surfacing — growth for whom? And therein lies the elitist bias in public policy. It is not just the level of growth per se but the nature and composition of growth, too, that is important to alleviate poverty faster. If public policy falters in this, it will be at its own peril, both politically and economically. And in agriculture specifically, public policy cannot be just tonnage-centric. It has to have a human face and be farmer-centric.

The NDA government has perhaps realised this, though somewhat late in its first year when farmers suffered unseasonal rains in the rabi season after a drought in the kharif season. It is not too late to learn. It needs to focus on irrigation and water management, agri-insurance, national agri-markets, and rural infrastructure of roads and power supplies. This is a huge agenda for the next five years or so, before it can start to sustain itself. Till then, one has to remain focused and persevere. Agriculture needs a strong champion in the government to keep it at the centre of public policy, lest the elitist biases hijack public policy for the already well-to-do sections of society.

The writer is Infosys Chair professor for Agriculture at Icrier