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LATEST NEWS UPDATES | They don’t go to the field -Harish Damodaran

They don’t go to the field -Harish Damodaran

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published Published on Nov 4, 2015   modified Modified on Nov 4, 2015
-The Indian Express

There is a worrying dearth of Indian economists working on agriculture today.

In his classic Money: Whence It Came, Where It Went, John Kenneth Galbraith observed how the economics profession had a well-defined order of precedence. At the top were the economic theorists and specialists in banking and finance. At the bottom of the hierarchy were agricultural economists.

George F. Warren from Cornell University was even worse — a professor of farm management, who, during the Great Depression, mooted raising the price at which the United States government bought gold at the mint. The dollar was, then, on the gold standard, redeemable against the yellow metal at a fixed parity. A higher price basically lowered the gold value of the dollar, allowing more currency to be issued and helping to fight deflation. Although a brilliant idea that worked, it was eventually discarded. Warren’s moment of glory had to end. A farm management professor after all, as Galbraith put it.

We see a similar situation in India today, where ignorance of agriculture is hardly disqualification to be an economist. Even the handful working in the field — Ashok Gulati, Ramesh Chand, Abhijit Sen or S. Mahendra Dev — largely plough lonely furrows. Contrast this to the multitudes — in government and the RBI, research institutions, banks, brokerages, rating agencies and even newspapers — well-versed in monetary and fiscal policy, foreign trade and investment matters, or the intricacies of infrastructure finance and currency, bond and stock markets.

It wasn’t always like this. In the past, agriculture attracted the best economic minds. In a remarkably prescient essay published in the Journal of the Indian Economic Society in 1918, B.R. Ambedkar wrote on the problem of small and fragmented landholdings — how they contributed to inefficiency in farming by rendering impractical “the watching of crops, sinking of wells and the use of labour-saving implements”. Even more farsighted was the solution he gave: Reduce pressure on land by creating employment opportunities in “non-agricultural channels of production”. Thus, “strange though it may seem, industrialisation of India is the soundest remedy for the agricultural problems of India”.

But clarity and present-day relevance apart, Ambedkar’s analysis also revealed deep curiosity and concern over “the most ancient and abiding of all industries, primary or secondary”. The economists who followed him — Babasaheb was, of course, much more than that — showed the same inquisitiveness and rigour while examining growth and imbalances in Indian agriculture.

From the 1950s through the ‘80s, there were many outstanding scholars like Raj Krishna (of “Hindu rate of growth” fame), Dharm Narain, M.L. Dantwala, B.S. Minhas, V.M. Dandekar, C.H. Hanumantha Rao, A. Vaidyanathan and Y.K. Alagh, who delved into issues of agricultural price policy and government operations in foodgrains, rural poverty, land reforms, farm productivity, mechanisation, credit, crop insurance and irrigation. Some like K.N. Raj even ventured into evaluating the economic worth of livestock holdings and whether “sacred cows” (religious taboos on slaughter) had engendered a problem of “surplus cattle”.

Moreover, the economists belonged to diverse ideological streams. A Chicago school product, Raj Krishna resigned from the Agricultural Prices Commission, protesting against zonal restrictions on movement of foodgrains. At the other end, Ashok Mitra, Utsa Patnaik, Ashok Rudra, Amit Bhaduri and Krishna Bharadwaj emphasised class differentiation within the peasantry, while engaging in a lively debate on the emergence of a new class of capitalist farmers in the post-Green Revolution era. There were others who did extensive work on Punjab’s agriculture: G.S. Bhalla, G.K. Chadha, A.S. Kahlon, D.S. Tyagi and S.S. Johl.

Such economists — people having knowledge of agriculture, grounded in theory, data and empirical studies — are a rarity today; they can be counted on the fingers of one hand. One explanation for this could be agriculture’s share in the GDP diminishing to 15 per cent, from 25 per cent at the start of economic reforms.

But this is misleading on at least three counts: First, the 15 per cent share is of primary produce (wheat, sugarcane, cotton, rubber, etc). The figure could well double if derived products (flour, biscuits, sugar, alcohol, textiles or tyres) and the farm sector’s linkages, both forward and backward, with the rest of the economy are taken into account: You need only ask Mahindra, Hero and Hindustan Unilever what weak agricultural incomes are doing to their businesses.

Second, about 49 per cent of the country’s workforce is still employed in agriculture. Studies show that 1 per cent growth in farm GDP is equivalent to 2-3 per cent growth in other sectors, in terms of the effect on poverty reduction. Any growth or poverty alleviation strategy that ignores agriculture deserves to be thrown out of the window.

Third, even if agriculture is no longer viewed as a driver of growth, it matters for inflation. Food constitutes over 50 per cent of an average rural Indian family’s consumption spending, and 40 per cent for urban households. The prices of dal and pyaaz continue to shape electoral outcomes and also the public’s inflation expectations. It is mainly food prices that have prevented the RBI from effecting the steep interest rate cuts that the economy desperately needs today.

But this only deepens the mystery of the shortage of economic expertise in agriculture. Why aren’t our learned economists, including from the RBI, able to offer anything better than inanities like “protein inflation” and the importance of “supply-side management”? Pulses prices, we are informed, are high because of low crop yields and production not keeping pace with demand. But why are yields low and what stops farmers even in irrigated areas from taking advantage of high prices to grow more pulses? Few are asking these questions.

The ignorance about agriculture is equally striking when seen against the transformations the sector has undergone in the last two decades, which aren’t ordinary or reducible to simplistic “crisis” narratives. Between 2004-05 and 2011-12, the size of India’s agri-workforce fell by 31 million, the first time in recorded history. Ambedkar had underlined the significance of this almost a century ago. For all the farmer suicides that have happened, the country’s milk output has increased nearly 2.5 times since 1990-91, even as it has also become the world’s largest cotton producer and exporter of rice and beef. The effects of these changes on farm management practices, factor markets, land tenure systems or rural-urban dynamics would most definitely have excited a Raj Krishna or the old left economists.

It is interesting that some of the best work in recent times on land and labour, commodity mandis or the impact of Bt cotton and other new cropping systems has come not from economists, but geographers, sociologists and anthropologists: Sanjoy Chakravorty, Mekhala Krishnamurthy, Richa Kumar and Aniket Aga, among others. It is they who are also asking the larger political economy questions. If our economists want to stay relevant, they must once again start going to the fields — literally.

The Indian Express, 4 November, 2015, http://indianexpress.com/article/opinion/columns/they-dont-go-to-the-field/


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