We have been great admirers of Gujarat’s “agrarian miracle” when Narendra Modi was the state’s chief minister from October 7, 2001 to May 22, 2014. Gujarat’s agri-GDP registered an unprecedented growth of 8 per cent per annum during 2002-03 to 2013-14, way more than the all-India figure of 3.3 per cent per annum (Graph 1). Gujarat’s agri-growth was even higher than that achieved by Punjab during the Green Revolution’s heydays (5.7 per cent per annum during 1971-85). This gave Modi a big political dividend and he was returned to the CM’s office thrice. It was good economics and good politics.
So, when Modi became the prime minister in May 2014, one was expecting that the “Gujarat model” would be extended to many states — of course with the fine-tuning to suit each state’s requirements. But the growth of all-India agri-GDP in the first three years of NDA rule has come down to 1.8 per cent. This is less than half of what was achieved during the last three years of the UPA’s rule (Graph 2). Deficient rain in 2014-15 and 2015-16 is of course one factor behind this poor performance. But there were bumper harvests in 2016-17, yet farmers suffered due to a collapse in agri-prices. The advance estimates of 2017-18 do not indicate much recovery, and the agri-growth in the first four years under the Modi government may turn out to be around 2 per cent per annum.
Here we focus on how to get Indian agriculture on a path where it can have a growth rate of least 4 per cent — although it has the potential to grow at 5 per cent or even a little more; the productivity levels of Indian agriculture are very low by international standards. The promise of doubling farmers’ income by 2022 cannot be fulfilled if agri-growth remains subdued at 2 per cent per annum. So, what can the prime minister do at this juncture? Should he set up another expert committee or just look back at the agrarian miracle achieved under his leadership in Gujarat, learn some important lessons, and fine tune them at the all-India level?
In order to answer these questions, one needs better diagnosis of Gujarat’s excellent agri-performance when Modi was the state’s chief minister. Our research at ICRIER shows that the state’s agri-growth was driven by four factors. First, the Atal Bihari Vajpayee government’s bold decision to allow the commercial use of Bt cotton became a catalyst for change, from which Gujarat benefited the most. From nowhere in 2002, Bt cotton spread to more than 90 per cent of the area under cotton in Gujarat by 2014. Production at the all-India level increased from 14 million bales in 2002-03 to 39.8 million bales by 2013-14, as per the Cotton Corporation of India. India’s raw cotton export increased from a meagre $10 million to $4,258 million by 2011-12, making the country the world’s second largest cotton producer and exporter (Graph 3). A forthcoming study, of which Ashok Gulati is a co-author, shows that the cumulative gain from import saving, extra raw cotton export and extra yarn export — compared to the business-as-usual scenario — between 2003-04 and 2016-17 is estimated to be $67.4 billion at the all-India level. Cotton from Gujarat had a big share in these exports. If cotton export had been banned, this revolution would not have fructified. Access to the best markets is, therefore, as important as access to the best seeds.
Second, it may be worth recalling that the Bt cotton seeds came from a global seed company — Monsanto — in association with an Indian partner Mahyco, and then multiplied by several licensees. In this context, it is interesting to see that while China is taking over Syngenta for $43 billion to access the best technologies for its farmers, the Centre is creating conditions that may force companies like Monsanto to quit. This government is literally reversing the benefits that the Atal Bihari Vajpayee government bestowed to farmers.
The third key lesson from the Gujarat story relates to providing basic infrastructure to farmers — irrigation, power and roads enabled the easy adoption of Bt cotton, and benefited other crops and the livestock sector as well. Check dams, bori bandh and khet talavadi provided life-saving irrigation, while the Jyotigram Yojana helped improve rural electrification. Another crucial infrastructure for agri-growth is all-weather roads. Currently, Gujarat has one of the best road-network in the country, with 930 km of roads per 1,000 sq km, of which 89 per cent are pucca/surfaced roads.
Fourth, good marketing institutions propelled Gujarat agriculture, especially its dairy industry. The AMUL model of directly buying milk from farmers’ cooperatives and processing and distributing it through millions of outlets ensures that farmers receive 75-80 per cent of the consumers’ price. This model is worth extending to other commodities, especially fruits and vegetables, bypassing the mandi system. It is time to launch “Operation Veggies TOP (Tomatoes, Onions and Potatoes)” on the lines of “Operation Flood”.
What are the key lessons, then, from CM Modi to PM Modi? First, enable farmers to access best technologies and best markets at home or abroad; second, invest in basic infrastructure that can give access to water for irrigation, power and rural roads; and third, create AMUL type institutions for other commodities to enable farmers to access high share of consumers’ price. Export bans or high minimum export prices for agri-products are anti-farmer. The government should use satellites and drones to identify places appropriate for building check dams across the country and use the MGNREGA workforce to build such dams. It should ensure farmers get power either through the grid or solar panels, and supplement this with micro-irrigation (drips and sprinklers) to get more crop, per drop.