Cultivating Agriculture

Alagh emphasises the need for improvements in agricultural productivity through higher capital investment, in order to move the workforce out of agriculture.

Written by Neelkanth Mishra | Published:April 12, 2014 2:22 am

Book: The Future of Indian Agriculture
Author: Yoginder K. Alagh
Publisher: National Book Trust
Rs 90

Agriculture is far more important for the Indian economy and policymaking than its share of GDP suggests. It employs the largest proportion of the workforce and food has been the largest contributor to inflation for several years, preventing the Reserve Bank of India from cutting interest rates even as growth elsewhere has collapsed. The policy response to this problem has been muted thus far, and one wonders if it is because of a lack of understanding of what is needed. Therefore, a book by one of the foremost agricultural economists in India on the future of Indian agriculture becomes essential reading for the policy wonk and the student of the Indian economy alike.

Alagh first estimates the future demand for agricultural output, mainly food, then assesses and addresses the supply-side constraints of labour, land, water, capital and technology. He offers some prescriptions but mostly focuses on framing the problem, reviewing the research on it and evaluating the success or failure of government policy so far. The discussion is wide-ranging, from patterns of urbanisation to the justification for affirmative action (while discussing food subsidies), and even the interlinking of rivers.

Alagh emphasises the need for improvements in agricultural productivity through higher capital investment, in order to move the workforce out of agriculture. He laments the lack of infrastructure spending on agriculture from the early 1980s onwards, though he is encouraged by more recent trends. Alagh debunks some of the popular theories that project high growth in the demand for foodgrain and cereals, focusing instead on the diversification of the consumption basket as income levels increase. He also demonstrates that India is urbanising faster than official data suggests. This means that the count of non-agricultural workers in areas classed as rural is under-reported by the tens of millions, and this population is ignored by official policies.

With decades of policymaking and research experience, Alagh throws up some fascinating insights. For example, they reveal how ideas around the poverty line have evolved, and how experiments in the late 1980s around “favoured crop, favoured region” fared (not well). That estimates of per capita expenditure by different government departments were divergent even 45 years back was comforting in a perverse way for this reviewer!

Like a good teacher, Alagh sets the framework for each step and then surveys relevant approaches and the available literature. This process, while frustratingly detailed in places, and referencing the author’s prior work perhaps too often, enlightens the reader on the issues that matter, and also the widely different views that exist. Some researchers, for example, estimate Indian grain demand in 2020 at 200 million tons, while others estimate close to 300 million tons! As the author says “…there is no one predetermined future”. A fascinating factoid suggests that if viewed purely in terms of population density, India’s urbanisation would be 91 per cent, while 31 per cent is reported.

There are a few flaws, though, in addition to some editing issues. The analysis of labour supply in agriculture focuses on the decline in the percentage of workforce in agriculture over the decades, whereas what matters is the number of people, incorporating population growth. Similarly, despite the book’s recent date of publication, the last used data on arable area is for 2002-03, and the author laments its decline: more recent data (2011-12) is available, and shows a steady recovery in arable area since then.

One also notices a certain rigidity of ideas, for example when arguing that the aggregate elasticity of employment in relation to output in India can be positive, i.e. if agricultural output grows more people get employed in it. A discussion of how the availability of alternative employment and rising wages affects this correlation would have made the analysis more contemporary.

One also missed a discussion on the difficulty of policymaking in a sector that is almost completely informal: this creates a lack of quality data, and also reduces the extent of control policymakers can exercise, given the fragmentation in the sector.

But all in all, this is an enlightening and thorough book, throwing light on a remarkably diverse set of issues that impacts agriculture, and which must be considered by the policymakers of the next government.

The writer is the India Equity Strategist for Credit Suisse

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