Getting agro

Agriculture could get some renewed focus in the forthcoming budget if we are to go by the hints dropped by Finance Minister P. Chidambaram in a recent television interview. This reflects the concern that low and falling productivity in the sector is adversely affecting the India growth story. But if growth in agriculture has to be raised to 4 per cent it would demand significant policy changes.

Four major areas of focus present themselves: improved infrastructure, crop diversification, new technology and market participation. The fall in investments in agriculture has taken a toll most significantly on public irrigation facilities. Not only have there been very few new irrigation projects, the decline in spending on maintenance has led to even the existing facilities being run to the ground. Road connectivity is another huge area of neglect. Roads plus Irrigation would allow farmers to reap the benefits of crop diversification, another must for agricultural reform. Studies have shown that vegetable and fruit cultivation are five to eight times more profitable than cereals, and Indian farmers clearly need to be rescued from being bound to cereal production, which has impoverished them over the years. But vegetable and fruit production would need better roads, irrigation, cultivation technologies and cold storage chains throughout the country. One approach, which India has already tried without much success, is to commit extra spending to horticulture — in other words, subsidise the cultivation of non-cereals. The far better way to ensure a shift towards non-cereals would be to take away price incentives for both the outputs and inputs of cereal production. If the UPA can put in place this seemingly unpopular measure, and manage the political fallout of the move, it will have done a great service to Indian agriculture.

The development of markets as well as credit and input support have long plagued agriculture in this country. Addressing them will take ground level work. It would mean sorting out differences across various ministries — like rural development, agriculture and panchayati raj — and fighting entrenched bureaucracies in the state governments and at the Centre. Reforming agriculture so that the population dependent on agriculture is productively employed requires a comprehensive policy framework. The budget could be the first step.