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Confusion about agriculture in Survey

If one reads the agriculture chapters of Economic Survey,one is apt to be confused.

Written by Bibek Debroy | New Delhi |
February 26, 2011 11:28:55 am

If one reads the agriculture chapters of Economic Survey,one is apt to be confused. Perhaps authors of Survey are themselves confused.

Chapter 8 states,there was a target of 4% growth for agriculture and allied activities during Eleventh Plan (2007-12). In first four years,we did 2.87%. So to attain target,we need growth of 8.5% in 2011-12. This is a factual statement and Survey doesn’t say this is possible. Agriculture and allied also includes forestry and fishing.

In 2010-11,Survey tells us agriculture and allied accounted for 14.2% of GDP and Survey wants this to be higher. There can be no quarrel with this,or with the proposition that we need a second Green Revolution,by increasing productivity rather than acreage.

“Agriculture is a State subject. Hence the primary responsibility for increasing agricultural production,enhancing productivity,and exploring the vast untapped potential of the sector rests with the State Governments. Central Government supplements the efforts of the State Governments through a number of centrally sponsored and Central sector schemes.”

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Fair enough,but does not Survey tell us whether these Central schemes are successful? Does it have a clear position on policy? Take APMC Acts as an example.

Chapter 8 tells us,“The advent of regulated markets has helped mitigate the market handicaps of producers/ sellers at wholesale ssembling level. Internet connectivity is being provided to important agricultural markets in the country to establish a nationwide information network for speedy collection of prices and market-related information.… But rural periodic markets in general and tribal markets in particular have remained outside the ambit of the APMC Act.”

There are 7,157 markets regulated through APMC and 21,221 periodic and rural markets. If one understands Chapter 8 right,APMC is a good thing and rural periodic markets should also be brought under APMC purview.

However,if you read Chapter 2,you will find “It is arguable that our Agricultural Produce Market Committees (APMC) Act,by restricting the traders permitted to trade through the main mandis,facilitates collusive pricing. Also the various tolls and checks that a trader faces in bringing supplies into a city make it difficult for small,new traders and farmers to bring their products to retail outlets. It is also believed that new traders are deterred by incumbent traders.”

So APMCs are a bad idea. There are other instances too. Chapter 2 is partly critical of procurement,Chapter 8 has unqualified praise. Ditto for forward markets and input subsidies. If a single government document can be confused,what can you expect of government policy?

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