For a good crop

The focus on agriculture and rural development in the new Budget may be part politics, but it is both good politics and good economics. A happier combination there cannot be. As much as the Budget proposes concrete measures for this sector, it sends out good signals as well: 8220;decentralisation8221; and 8220;empowerment8221; were the two words most used to describe what Yashwant Sinha has attempted to do. Indeed, a whole new approach to agricultural development is in evidence. Minds have no doubt been focused by the fact that robust agricultural growth that has saved the economy 8212; and this government 8212; from frankly dismal news.

The result is a fresh approach in several respects. The first is the attempt to decentralise funds and decision-making on agriculture development. This has been done in the correct belief that involving those who are directly affected is the best way to achieve results, quite apart from the merits of decentralisation for its own sake. The second most notable aspect is to link incentives inthe form of central assistance to the will to reform. Instead of mechanically handing down funds to reforming and non-reforming states alike, a sensible link has been forged several Budget schemes between states8217; willingness to reform and the Centre8217;s willingness to help. States which carry out reforms in water pricing will be entitled to special central assistance. Likewise, those that try to consolidate land holdings will be entitled to central funds. This is an entirely sensible idea: reward those who take initiative, and prompt others by example to follow suit.

While paying it meaningless lip service, successive governments have neglected agriculture in favour of industry because of the latter8217;s greater organisation and lobbying powers. This Budget marks a refreshing departure in the recognition that this is not a zero-sum game. Gains for agriculture will spill over in demand for industrial goods and services. The change has occurred partly because of the BJP8217;s ideological orientation, partly becausethe finance minister has shrewdly recognised the goodwill it will earn him, but particularly because the overarching significance of agriculture for the Indian economy has become even more apparent when languishing industry is no longer the engine of growth. Indian agriculture is recognised to be internationally competitive even with government-imposed handicaps and poor public investment. Even a little trade liberalisation has resulted in farm goods accounting for a tenth of all exports, with the promise of more. Much, of course, will depend on the way the promises are implemented. A chain of cold storages may sound good but it will depend on uninterrupted supply of power by state governments, hardly a guaranteed proposition. On the other hand, storage facilities for grains, so crucial to food security, have not caught Sinha8217;s attention. But looking for omissions will always yield a rich harvest. The point is that Sinha, much more than any of his recent predecessors, has tried to give the farm sector itsmuch belated due.