Much has been heard lately from many ministers of the Modi Sarkar (and, regrettably, from some of its loony fringe supporters as well). But some are notably tongue-tied. The leader of this pack is Radha Mohan Singh, the agriculture minister. He was last mentioned in the despatches in July regarding drought contingency plans; otherwise, most people would be hard put to identify him. Others dealing with related subjects - Ramvilas Paswan (food and civil supplies), Ananthkumar (chemicals and fertilisers), Uma Bharati (water resources), Harsimrat Kaur Badal (food processing) and Chaudhary Birender Singh (rural development) - have not exactly been forthcoming either about their charges. If actions speak louder than words, silence, far from being golden, indicates their absence, if not inertia.
That would not be an unmitigated disaster if the sector they addressed was not so crucial. Agriculture may account for only a seventh of India's gross domestic product (GDP), but it provides livelihood to every second Indian. It is also the last wholly unreformed activity. Almost all development emanates from government initiatives, but the policy mindset has changed little in the seven decades of Independence, leaving farmers shackled hand and foot. This has gone on so long that the farmer has probably forgotten how to exercise free choice.
Agriculture has grown in fits and starts in the last several decades, especially in the present century. Weather vagaries are normally blamed for it. While the 2002 drought caused a five per cent drop in agricultural GDP, that in 2009, the worst in 50 years, showed a growth of 0.4 per cent. This year started out being just as bad as 2009, but plentiful late rains created the hope that the kharif downturn would be modest and rabi could be normal. That optimism is now fading, suggesting that policy fog is as much responsible for agricultural volatility as are capricious monsoons.
Three major areas require attention, as they always have:
Costs and prices
All governments have expressed their concern for sustaining agriculturists through subsidising key inputs - fertilisers and irrigation - and guaranteeing cost-plus minimum support prices (MSPs). Laudable though this objective is, piecemeal upward adjustments of subsidies and MSPs have in effect caused grave imbalances in agriculture. Outright subsidy for urea while subjecting other nutrients essentially to market forces has caused an overuse of the former and affected output, as Ashok Gulati has recently pointed out. His suggestion of a thorough reworking of subsidies and prices is in order. But who or what prevented him from doing so when he was the government's chief advisor on the subject?
Other distortions have arisen due to a mismatch of prices and resource scarcity. Outputs of rice and sugarcane, both copious guzzlers of scarce water, have grown, even as pulses, perennially in short supply but cultivated mostly without irrigation, have stagnated. The new government stoutly defended its MSP position at the World Trade Organization negotiations, but that could backfire in the form of mounting stocks and uncontrolled expenses.
Markets and infrastructure
A perennial refrain in the debate on agricultural marketing is the absence of a modern supply chain for perishables and the antiquated produce marketing Act. The high inflation of the recent past is blamed on these. But the perishables market behaved very well until about 10 years ago under these very conditions. Government agencies are at a loss to reconcile the wild swings in vegetable prices of the last several years and their relative stability this year (notwithstanding some early alarms), despite sustained growth of vegetable production. The answer is evident: manipulators are at work. How else can we explain why the one produce with a modicum of cold storage, potatoes, still commands the highest ever retail prices even as others, more perishable ones, have returned to their normal seasonal levels, as reflected in last month's unusually low three per cent food inflation?
The real task is breaking the stranglehold oligarchs with strong political connections exercise in crucial markets, as also identifying and building essential market structures and storage facilities. Advocates of wholesale but unaffordable modernisation should reflect on why fresh vegetables are invariably cheaper in mandis than in supermarkets.
Technology and investment
For years, net capital formation in agriculture as a percentage of its GDP has been in single digits. The bulk of it is private, in irrigation and labour-saving devices. Public expenditure is largely on subsidies, squeezing out the already declining investment in technology and support systems. This alarming trend must first be arrested and then reversed to restore vitality to agriculture.
Two concerns merit immediate attention: water conservation and new crop varieties. The prime minister often used the catchy slogan "more crop per drop" in the election campaign. That now needs to be matched by action. The central government must also take a resolute stand against the Luddite opposition to transgenic varieties, now spearheaded by Swadeshi Jagran Manch and unfortunately accommodated by some Bharatiya Janata Party state governments.
For far too long, agriculture and those dependent on it have suffered neglect, benign or otherwise, causing their increasing alienation from the economic mainstream. They need smart initiatives of the kind that resulted in the greening of Modi-led Gujarat in the last decade, not the sound of one hand clapping of the last six months.
The writer taught at Indian Institute of Management, Ahmedabad, and helped set up Institute of Rural Management, Anand
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