Farming out prosperity

Second, the targets are quite low where improvements in the food grain sector are concerned, and perhaps what we need to do is to scale them up. The high yields in Punjab can be replicated in many other parts of India 8212; Bengal, AP, UP, Bihar are only some of the states well-endowed with the right soil and water to produce much higher yields. What is more, the poorest farmer tends to be the one growing food grain. In other words, if the objective is growth plus equity, then the emphasis within the agri sector should be on food grain. And here again the possibilities are enormous.

Third, it is well known now that sustained agri growth will come about not through a few improvements but a whole package: credit availability, technology improvements, changes in practices, marketing improvements, changes in the various laws limiting trade and greater rural infrastructure investment. Most important, there is little argument on this; and politicians across the spectrum acknowledge the importance of ensuring greater farmer access to credit, inputs, technology and markets. In other words, the country is finally ready for a second green revolution.

Conditions now are far better than they were on the eve of the first green revolution. Over-dependence on government for delivery of services is no longer required. A large private sector exists that can take on the various tasks required; information technology has spread; the average farmer is now literate and, if not, has at least someone in his household who is; the transport infrastructure has penetrated far into the hinterland; and economic growth is increasing market sizes like never before.

But do these enabling conditions necessarily ensure that targets will be met? The answer is no. The problem in the past has not been in setting targets and creating enabling conditions at the Central level. Whenever trade-offs were required, agriculture suffered. Hence when political trade-offs are required, agri trade reform takes a back seat; when fiscal control was required, public infrastructure investments take a back seat. Over time the extension system has more or less become defunct, public sector banks have not been able to establish sustainable agri credit mechanisms on a wide enough scale, and somehow technical improvements have just not been able to spread as rapidly.

Given this, what we need is ownership and responsibility at the highest level. The PMO is of course the only centre that would be able to coordinate the various actions. The PM8217;s statements should be taken in this light; and with the political backing of the first family and their friends in the Left, it may just be possible to re-invigorate this sector.

Many argue that agriculture is at the core of sustained equitable growth. And therefore economic reforms should first be seen through that lens. I would argue otherwise. Barely one-fifth of our output is accounted for by agriculture. By that metric, agriculture is one small part of the economy. Of course there is that oft-cited number 8212; 8220;65 per cent of our population relies on agriculture8221; 8212; but this claim does not present a true picture of reliance in that this 65 per cent does not solely rely upon agriculture. One member of a rural household may be predominantly in agriculture, another may have a small shop, a third would be making masala at home, a fourth would be a migrant to a city, and so on. Thus the old picture where households only relied on one occupation is changing rapidly.

Even individuals have multiple occupations. A woman may, for instance, take care of her children, help on the farm, roll beedis, help deliver a neighbour8217;s child, collect firewood, and for three months in a year migrate temporarily to take part in a construction project. One contributory factor behind varied income sources has been the inability of agriculture to throw up significant opportunities for all in the recent past; rational households are therefore increasingly diversifying their sources of incomes.

The point is that agriculture is only one element in India8217;s economy; and it is only one element in the income source for an increasing number of households. The dependence on agriculture is less now both for the economy, as well as for households. This should, of course, be seen as another opportunity, and not a reason for de-prioritising the agriculture sector. Re-invigorating India8217;s agriculture sector would be easier in an environment where the other sectors are growing rapidly, rather than one where agriculture with its low surpluses is the predominant income generating activity. Technologies, infrastructure, surplus generation, markets are all being created outside this sector but that could benefit it 8212; both from the economy-wide and household perspectives. Given this, couldn8217;t we aim higher than 4 per cent?

The writer heads Indicus Analytics