Charting growth

Experts hope that the increase in government expenditure in agriculture will continue. It would not be unreasonable to expect a growth rate of 3 per cent in the next couple of years.

There have been a lot of interesting ideas on agricultural policies in recent weeks. Firstly, there is a recognition that not only is agricultural growth poor, but given the reasons, some of the earlier strategies can8217;t be implemented, at least in the next year or so. This means that we need to look for strategies that work.

One, we need to do something about the cropped area, which is not only constant, but has fallen. The experts who have been advising policy-makers say that this has a huge implication for growth. The negative aspect will have to be made up by other incentives and ways of making agriculture grow faster.

The other strategy, which was important till recently but no longer works, is the fast growth of irrigation and cropping intensity. The canal irrigated area is falling and some young experts feel that it is not possible to expect the agriculturists to start paying for electricity or for them to take to a more viable and sustainable use of groundwater8212;at least not in the immediate future.

In the 1980s, the electricity consumed in agriculture was growing at 14 per cent annually, and grew negatively by around 0.8 per cent annually from 1996-97 to 2003-04, or was roughly constant. I like the National Commission on Farmers, which wants all this changed. Though this column has been highlighting the seriousness of land scarcity and water distress, I am realistic enough to accept that only a beginning can be made immediately.

But then what do we do for immdiate growth? The first solution is technology. Ramesh Chand has done a very interesting exercise. He has taken more than 3,000 seeds released in the past and tried to work out their impact on growth. He uses the orders of magnitudes to get more growth from a better seed policy. This will mean a much better policy to encourage seed producers8212;private, in the agricultural universities and research establishments8212;more support, a new delivery mechanism and regulatory framework such that the Cotton Bt kind of disaster is not repeated. Whle Chand is realistic enough to recognise that the past performance can8217;t be repeated, he expects a much larger contribution to growth than in the recent past.

Another potential source of growth is diversification. In the 1980s, the cropped area, which shifted from traditional crops, was growing at 5.6 per cent annually. This fell to 4.8 per cent from 1996-97 to 2003-04. With the economy growing faster, this decline needs to be reversed and could contribute to at least a third of the regeneration of agricultural growth, if not more. This means that markets will have to be strengthened and more alert policies will be needed to ensure that economic incentives reach the farmers.

Also in the 1980s, the fertiliser usage grew at 8 per cent annually and fell to 2.45 per cent from 1990-91 to 1996-97, and to 1.3 per cent between 1997-2003. This growth has improved in the past three years and is expected to continue. The increase in fertiliser demand and the improvement in public expenditure on agriculture is probably making an impact on its growth and we are probably on a growth path of over 2 per cent annually. It is also not unlikely that the canal irrigated area is increasing on account of the large amount of money spent on them in the recent past.

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Experts are hoping that the recent increase in government investment in agriculture will continue, as also the encouraging growth in the farmers8217; investment. It would not be unreasonable to expect a growth rate of around 3 per cent in the next couple of years, and if we keep up the efforts, even better later.