focus of the media and political parties on suicides and
the short-term relief to the families tends to mask a growing,
long-term crisis. Gross capital formation (GCF) in agriculture,
which stood at 24% of total GCF in the First plan year 1952-53,
has steadily declined to reach a low 6.3% in 1995-96. Over
the past seven years, there has been a modest rise, reaching
9.4% in 2001-02. GCF in public sector slipped from 14% in
1968-69 to 9.6% by 75-76. Janata government's emphasis on
agriculture increased it to 15.5% in 1977-78, but since
1990-91, it has been averaging 6.8%. In absolute terms at
fixed cost, GCF in public sector has actually fallen over
time. These cold numbers mean that pitifully small investments
were made in agriculture making farming unproductive and
crisis is further compounded by irrational, and anti-farmer
policies of governments. The compulsory procurement at below-market
prices and trade barriers imposed during the heyday of license-permit
raj meant that in some cases 80% of the market value was
stolen from farmers, making agriculture unremunerative.
At the same time, public distribution system reeked in corruption.
While public good was not promoted, untold misery was heaped
on farmers and agricultural workers. Storage, transport
and sale of agricultural commodities was in the vicious
grip of the corrupt state machinery and politicians.
after the liberalization of trade, farming continues to
suffer grievously. The 1980 election was famously won by
Mrs. Gandhi based on high onion prices. The story was repeated
in 1998 in Northern states, when onion prices again helped
Congress win. A sudden flurry of activity - ban of exports,
trading restrictions, and imports at high prices - led to
crash of prices within weeks. Three months after the elections,
farmers were in deep distress, and no one bothered to take
steps to enhance demand and improve prices for farmers.
and again, whenever cotton prices were showing upward trend,
exports were banned, and imports were allowed even when
the international price was higher than domestic prices.
Millions of farmers were pauperized by insane policies and
callous neglect of the interests of agriculture. And now,
even a mature politician like Mr Sharad Pawar announces
a strange policy of not allowing export of food grains!
Liberalization and markets are good for industry, but farmers
must suffer permit-raj! And then, our politicians and bureaucrats
feign surprise at the decline of agriculture, and shed crocodile
tears when farmers commit suicide.
infrastructure, complete neglect of villages, inadequate
storage, and failure to promote processing industries meant
that there is no value-addition in agriculture. Kellog's
corn and wheat flakes are sold at exorbitant prices, but
no processing facilities exist to process our produce. The
distress of producers of perishable commodities has to be
seen to be believed. In early May, tomato in AP sold at
25 paise/kg on farm. As the price could not recover the
cost of plucking, many farmers destroyed the crop. A month
later, tomato sells at Rs. 5 or 6 on farm, and consumers,
paying Rs.10/kg cry foul! If only agro-processing units
could buy tomato at Rs.2/kg when prices crash, and storage
facilities exist, things would have been radically different
for both farmers and consumers.
can we do to restore health to agriculture? There are four
critical issues we need to address. First, productivity
must improve. India's production of crops like rice, sugarcane,
maize, cotton, banana, pulses and many others is much lower
than that of Egypt, Peru, Kuwait and Israel. Large investments
in irrigation are obviously needed. But we need to focus
on other factors of productivity. There is overuse of Urea,
as it is subsidized, and Phosporous and Potassium are underutilized.
Even worse, our soils are very deficient in micronutrients
like Zinc. Application of Zinc Sulphate and other micronutrients
is still rare. Our soils are not even mapped for these micronutrient
deficiencies. Research in new high-yielding, disease-resistant
varieties is flagging. In spite of impressive infrastructure,
research is under-funded and poorly directed. Our extension
machinery is inept and generally ignored by farmers. All
these need to be set right to enhance productivity and make
our agriculture competitive.
a proper and healthy credit system is the necessary prerequisite
for sustainable agriculture. Whenever credit institutions
are doing an outstanding job, farmers' distress is minimal.
Take for instance Mulkanoor Cooperative Bank in Karimnagar
district of AP, the excellent thrift societies promoted
by Cooperative Development Foundation in Warangal-Karimnagar
belt of AP - in none of these villages is there acute distress
despite severe droughts. In their eagerness to get short-term
accolades, politicians should not destroy the credit institutions
through misplaced sympathy, adhocism and tokenism. Devi
Lal's indiscriminate debt relief scheme, and omnibus moratoria
did incalculable, long-term damage. Our credit cooperatives
must be freed from government control, and nursed back to
proper marketing facilities are the key to agricultural
prosperity. Horticulture farmers in many states, fish farmers
in Bengal and Northeast, and other producers are fleeced
by mafias controlling local markets. The Mandi Act enacted
in Punjab under the leadership of Pratap Singh Kairon and
Choutu Lal made a signal contribution to agriculture. New
marketing mechanisms, removal of all internal and external
trading restrictions, freedom to establish alternative markets,
proper storage facilities, and promotion of contract farming
with market tie-ups - all these are critical for the future
value addition needs to be promoted assiduously. This is
particularly vital in respect of perishable commodities.
Infrastructure building, research and development, technology
transfer, promotion of processing industry through special
incentives, new mechanisms to ensure input supply, proper
storage and transport facilities and easy credit for agro-industry
are all necessary to transform medieval agriculture into
modern, vibrant economic activity.
short-term sops, and populism are not substitutes to sensible
policies, efforts and well-considered actions. Huge investments
are needed to boost agriculture along with non-monetary
inputs which can help farmers dramatically. Parties and
policy-makers must focus on these practical, long-term solutions
and implement them with sustained focus. That is the much-needed
corrective in our economic decision-making.