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Journalism of Courage
Grain output is set at last to breach the magic mark of 200 million tonnes. The weather gods are mostly to thank, alongside higher area under wheat cultivation. This happened both as a result of winter rains and, perhaps as a corollary, of the declining area in the last few years under oilseeds after the abandoning of the oilseed technology missions.
The record output is cheering news for a lumbering economy where industrial growth decelerated further in the last quarter. Not only will the agricultural performance stimulate consumer demand by putting more purchasing power in farmers’ hands; the nearly 4 per cent growth in farm output strengthens the prospects for sustained agricultural growth each year of 4.3 per cent, which the draft agriculture policy aims for. This year’s forecast is good news also against the worrying backdrop of average food output growth in the last five years falling to 1.6 per cent, below the population growth rate of 1.9 per cent.
Yet as much as the new record is cause forcelebration, it poses challenges which it is not at all clear that the government is equipped to cope with. For one thing, the record output is a gift largely of favourable weather. To be sustained in the longer term the pressing need for stepped-up public investment in agriculture remains, so that average yields can be raised.
It is not for nothing that Agriculture Minister Som Pal has complained about the Budget allocation for the farm sector. While there was a marked nominal increase in it, it seemed so high only because the previous year’s allocation was under-utilised and the base on which the increase was made was low.
The hope must be that the government will give full recognition to the fact that agriculture, aside from services, is emerging as the real engine of economic growth in a time of near-recessionary conditions in manufacturing, and sharply step up real rather than nominal outlays for agriculture in successive budgets.
Immediately, the government is faced with a headache even asfarmers’ prospects have become promising. India’s average buffer stocks of cereals in the past half decade have exceeded by about 50 per cent what they were required to be to assure food security in bad years. Procurement levels this year are bound to be high given that market prices for wheat are likely to be lower than procurement prices. Now high buffers carry a high cost: the FCI’s inefficient storage involves high costs which translates into a high subsidy.
This in turn takes a toll on government finances. The ways to deal with this are two. First, lower the procurement price. Second, introduce a futures market in grains as has been done for oilseeds and let farmers hedge some of their risks themselves rather than leave it all to the government.
Exports are not really an option in a year when world wheat prices are way lower than the procurement price. Indian agriculture is competitive even in the face of debilitating restrictions. Genuine deregulation could really set it free. Many-sided efforts areneeded, such as making storage much more efficient, scrapping the draconian Essential Commodities Act which prevents traders from holding large stocks, removing all and not just the Centre’s restrictions on inter-state food movements, and freeing up both internal and external trade in food.
