Agri business

Low farm growth and its consequences on poverty reduction, employment and inter-regional equity (drylands suffer more) are well-established facts. Reason, not emotion, should guide correctives — that should be a well established fact as well, but isn’t. Farmer suicides evoke emotional responses, suicides among small businessmen don’t. Farmers are more in number. More than a year back the PM had announced a Rs 17,000 crore relief package in 31 districts (Vidarbha, Andhra, Karnataka, Kerala) where farmer suicides are concentrated. The task force established to review the implementation of this package, with a focus on rural indebtedness, has come up with findings — reported in this newspaper on Friday — that reinforce one’s sense of déjà vu. There is no co-ordination across ministries and departments, not to speak of Centre-state co-ordination.

There is no monitoring and nothing to link improvements in physical indicators with expenditure. A standardised package was introduced, ignoring location specific features. There are problems with credit delivery. There has been little improvement on water (like watershed development). Not one finding is new; therein lies the tragedy. Had centrally sponsored schemes and rural development programmes worked efficiently, the farm sector wouldn’t have been in distress. Nor scepticism about the PM’s package, Backward Regions Grant Fund or Bharat Nirman.

The solutions are simple. First, revive public extension services and regulation (seeds, fertilisers, insecticides). Second, stimulate

research (public and private) in dry-land crops. Third, allow evolution of risk-mitigating instruments, with credit and insurance treated together. Fourth, divert public expenditure from input subsidies to rural infrastructure (roads, water, power) and eliminate perverse price signals through procurement. Fifth, decentralise decisions about content of public expenditure, eliminating dysfunctional layers at the Centre, the rural development ministry being a case in point. Sixth, allow disintermediation of distribution chains and free up controls on production, marketing and distribution. Seventh, free land markets by scrapping tenancy controls, if not those on ownership. This would allow farm entrepreneurship to flourish. It also allows recovery if entrepreneurs are exposed to exogenous shocks, unlike the present system, where any shock becomes terminal. But this is the agenda of the brain. The UPA and its CMP think with their heart. That’s the tragedy.