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Untie the farmer

To leave farmers on land and not give them skills for urban and industrial lives is equal to trapping them in misery.

Written by Ashutosh Varshney | Updated: April 29, 2015 12:43 am
farmer suicide, farmers, land acquisition, nda, upa, land bill, narendra modi, bjp, aap, congress, rahul gandhi, arvind kejriwal, gajender singh, indian express columns, columns, the ideas page, indian express Price incentives are certainly a way to help farmers, but agricultural policy always needs a balance between price and non-price measures. (Illustration: C R Sasikumar)

The debate on the land acquisition bill and the tragic suicide of a farmer in Delhi compel us to reflect on a theme of enduring significance: the role of agriculture and farmers in development. What has the historical experience all over the world been? How is India’s agrarian narrative different — or identical? What can India learn from international experience?

Many years ago, I wrote a book, Democracy, Development and the Countryside: Urban-Rural Struggles in India. A great deal has changed since then. India has experienced its highest economic growth rate since Independence and an urban acceleration has set in. During 2001-11, for the first time since 1947, the absolute increase in the urban population was greater than the absolute increase in the rural population. Still, two-thirds of the nation continues to live in the countryside. It is impossible to conceptualise the nation’s welfare without rural wellbeing. How should rural welfare be imagined at this stage of Indian development? What policies would be critical?

We should first note that agriculture declines as economic development takes place. All over Europe and North America, agriculture produces less than 5 per cent of the nation’s GDP. Asia has not escaped this law of development either. In 1990, agriculture accounted for 27 per cent of GDP in China, 19 per cent in Indonesia and 15 per cent in Malaysia. By 2009-10, these shares were down to 11 per cent in China, 13 per cent in Indonesia, 7 per cent in Malaysia. In India, 31 per cent of the nation’s GDP came from agriculture in 1990, declining to 14 per cent by 2011-12.

Whereas annual growth rates of 7-8 per cent in industry are common, agriculture rarely grows at more than 4-5 per cent annually in the medium to long run in developing countries. Over time, this means a steadily declining share of agriculture in GDP. The locus of economic activity shifts towards cities, industries and services. This, of course, does not mean that agriculture can be neglected. Agriculture remains the producer of food, not industry. Moreover, to populate the workforce in industry and services, labour also comes primarily from the countryside. As Nobel laureate W. Arthur Lewis argued, stagnant agriculture can neither produce enough food nor release enough workers, whereas dynamic agriculture can do both. That is why a nation can’t normally durably prosper if agriculture does not do well. Large food imports are not a reliable option.

However, since agriculture cannot generate enough opportunities for rural citizens, it is better to link the countryside to industry and urban services. Cities do have their share of problems: indeed, governance challenges in Indian cities are formidable. But despite such problems, Bangalore and Mysore will grow faster than Karnataka villages, Delhi and Meerut more rapidly than the Uttar Pradesh countryside.

No society has been able to help farmers by keeping them tethered to land. To leave farmers on land and not give them skills for urban and industrial lives is equal to trapping them in misery. Nor do younger rural folk wish to remain in farming.

This leads to two questions. How is politics connected to rural welfare? And how do we make agriculture dynamic in such a way that farmers produce enough as well as get more productively linked to the urban economy?

The first question is easier to answer. India’s democracy has a rural thrust. More voters still live in villages and, of late, villagers have also tended to vote more than the urban folk. As a result, even though India’s urbanisation has gathered speed, its governments are still by and large made or unmade in the countryside. Cities may dominate the economic landscape, but villages are the primary locus of political power. Political parties hurt themselves if they neglect villages.

The second question is more complicated. Rahul Gandhi recently argued in Parliament that the previous government had raised the minimum support prices (MSP) for farmers at a significantly higher rate than the current government, and that is why agriculture did better under the UPA government but is currently suffering. As is well known, the MSP is the guaranteed price at which the government buys foodgrains and some other commodities from farmers.

Gandhi’s argument was right for an earlier era, but is flawed for the present times. Price incentives are certainly a way to help farmers, but agricultural policy always needs a balance between price and non-price measures. The more a government provides price incentives to farmers, the less it has for investments in upgrading the technological base of agriculture (irrigation, agricultural research, electricity), for infrastructure connecting villages to cities (roads, transport) and for rural health and education (which would prepare rural citizens for opportunities in industry and services).

The UPA’s agricultural policy was excessively price-led, both for outputs (crops) and inputs (water, electricity, fertiliser). Wheat and rice were bought from farmers in large quantities at high prices, even though the country did not have enough warehouse capacity for storage, leading to a considerable proportion of the procured wheat and rice rotting. Public investment in agriculture rose inadequately. During 2012-13, more than 85 per cent of investment in agriculture was private. It is well known that most of what lifts the technological base of agriculture and connects it productively to urban opportunities requires public investment — in irrigation, research, seeds, power, transport, schools, skills, etc.

Price incentives were absolutely necessary to raise farm production at the time of the Green Revolution in the 1960s, when India’s food production dropped abysmally. India does not have a national crisis in food production today, as the high public stocks show. But it has agrarian distress, for agricultural productivity is low and skills for the exploitation of non-agrarian opportunities have not been created. That can only come through a better balancing of price and non-price interventions.

Unless agricultural strategy today is married to a 21st century vision of expansion of opportunities, which requires linking, in a more integrated way, the village to the city and agriculture to industry and services, we will only enhance the misfortune and misery of India’s rural citizens.

The writer is Sol Goldman Professor of International Studies and the Social Sciences at Brown University, where he also directs the India Initiative at the Watson Institute. He is a contributing editor for ‘The Indian Express’.

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  1. O
    Apr 29, 2015 at 11:46 am
    Author is partly right. India's farmers are the poorest sections of society, and price support is essential, to make him have a decent living. WE cant always want our farmers to remain poor. Author is correct in saying that rural Infrastructure support is critical, and needs investments from Govt. That is in addition t higher MSP, not as an alternative. Indian govts, spend on social and rural infrastructure has hugely lacked the requirements. Does it not make sense to have rural roads, schools, health centres, rather than splurge on bullet trains? Every thing needs a balance. Forcible Land acquisition and pushing farmers from eastern UP to Slums of Delhi is hardly an answer
    1. M
      Apr 29, 2015 at 2:08 pm
      Agreeing with the author's view, on the improving facility rather than only concentrating on MSP, here are the steps (i believe as a person from rural background) would help to improve the conditions of people living in rural India: 1. improve the road/rail connectivity to villages. even today many of the villages does not have proper road facility to reach nearby towns. 2. Provide good education/ hospital facilities to the reach of villagers at reasonable cost. 3. improve the market facility for the agricultural products. good transport facility would certainly induce the farmer to travel an extra mile or two to get good price for his product. 4. provide the farmer with latest technology relating to agricultural at reachable prices. 5. provide irrigation facility , 6. Financial facilities and insurance for his crop / cows
      1. M
        Madhava rao
        Apr 30, 2015 at 12:23 pm
        It is a beautifully written article. The author appears to have a deep knowledge of the subject and has summarised the problems India is facing in the Agrarian sector,comprehensively in a language everybody can understand and appreciate. I feel that we should have a policy of starting small scale industries near these agricultural settlements. They will not only provide jobs but will also introduce and improve the technical skills of the farmer. At least one member of the agriculturist's family could find employment in these small scale industries. This could improve the family income and also come in handy in times of distress .One of the things that I could suggest is production of solar power with solar panels which could be used by the villagers for lighting their homes and provide power for irrigation pumps and the small scale industry.
        1. Gopikrishna Deshpande
          Apr 30, 2015 at 12:39 am
          Your logic is right, but too complicated for Rahul hi to understand
          1. H
            Apr 29, 2015 at 10:23 pm
            There is no need of any skill or city-village linkage, just give the cost to the farmer of their produce on the basis of industrial costing and see actually whose misery start. But certainly intelligent people of world will not allow to do that and if anybody asks then they will make him/her Saddam Husain. They will pour so much ammunition without bothering about any carbon emission so; people will never ask any hike for their products. In case of India, we are the people who even could not hold democratic, socialist and secular India for even fifty years, which has given us the green revolution and food security. We are basically habitual slave and our slavery will be ensured onwards by EVM democracy. Now onwards, whatever law or policy you adapt the prosperity will be with rich and powerful only and it will never trickled down as we have closed that door.
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