Second, the restrictive trade and pricing policies of agricultural
commodities had caused immense damage to farm sector for
decades until the 90's, and weakened rural economy and farmers'
capacity to withstand shocks. Belated efforts to restore
balance in the terms of trade coincided with accelerated
shift to services, leading to neglect and decline of agriculture.
Third, the share of agriculture in the gross capital formation
(GCF) fell dramatically over two decades from 15.4% in 1980-81
to 8% in 2001-02. As a share of GDP, GCF in agriculture
fell from 3.5% to 1.6% during this period.
crisis has been aggravated by distorted priorities and irrational
policies of governments over the years. Three examples will
suffice. Free power or un-metered power at fixed slab rates
promoted excessive investment and over exploitation of ground
water, and eventually led to water depletion, failed tube
wells, indebtedness and impoverishment. Stultifying state
control and consequent corruption and cronyism in cooperatives
undermined a potentially vibrant support system, denying
farmers credit, quality inputs, market access, processing
facilities, technology and management. Undemocratic and
unaccountable control of markets in most states denied farmers
market intelligence and bargaining power, and made them
vulnerable to money lenders, extortionists and mafias.
misery of rural populace has been compounded by the criminal
neglect and failure of state in education and healthcare.
Even poor farmers and labourers are forced to spend huge
sums out-of-pocket for indifferent private schooling and
hospital costs. A high proportion of rural families incur
huge debts at usurious interest rates to meet rising hospital
costs, driving many to despair.
a casual glance at the comparative trends of GDP growth
in farm and non-farm sectors indicates the magnitude and
gravity of the crisis afflicting agriculture. About 55%
of the population dependent on agriculture shares only 20%
of the GDP. In effect, the income per capita of this vast
population is only one-fifth of the rest of the people dependent
on industry and services. With agriculture growing at 2%
and the rest of the economy recording over 9% annual growth,
the share of agriculture is failing each year by almost
1% of GDP. If the current trends continue, agriculture's
share of GDP will decline to about 14% by 2014. Even maintenance
of the income per capita differential of 5:1 between other
sectors and agriculture would require a shift of about 11%
of population from agriculture to non-agricultural occupations,
reversing the current ratio of 55:45. Given the slow rise
in employment opportunities in non farm sector, such a huge
occupational shift seems impossible; which means that agricultural
incomes will register a further relative decline from the
current ratio of 1:5! Clearly, the majority of the population
has no place in the growth bandwagon, making rapid growth
unsustainable, and society and polity unstable.
farm crisis needs a robust, all-out response from the Indian
state. Certainly we need to invest heavily in agriculture,
harness every drop of water, and enhance productivity through
better inputs and extension. But much more needs to be done.
wherever farmers need protection from cheap imports, tariffs
need to be raised. Cotton is a good example. Foreign governments
are heavily subsidizing their cotton farmers, and Indian
farmers are unable to compete because of low import duty.
It is no accident that a large proportion of suicides are
in cotton belt.
national policies must be pursued in respect of ground water,
cooperatives and markets. Judicious price incentives will
remove distortions in ground water use, and democratization,
member-control and competition will liberate the cooperatives
and agricultural markets from the clutches of corrupt politicians
and bureaucrats, and unscrupulous money lenders and mafias.
the focus should be on value addition, particularly in case
of perishable crops. Extreme price fluctuations and distress
sales can easily be prevented by creating a network of processing
industries, guaranteeing fair price to both farmers and
a massive programme should be launched to promote high value
crops like medicinal plants, and bio fuels. India is well-placed
to take advantage of the next agricultural revolution in
the offing, as both food and fuel will compete for the same
land, with the end of the era of cheap oil.
special attention needs to be paid to artisans, occupational
groups, animal husbandry, poultry and fishery sectors. Agricultural
crisis acutely affects the artisans and occupational groups
in villages, and skills, credit, market linkages and a measure
of social security to them are critical. Sixth, we need
to develop urban amenities in rural areas and promote non-farm
activities and services sector.
the state needs to focus on its core functions and guarantee
good quality, accessible, free education and healthcare
to all citizens. Much of the rural distress is the consequence
of state's failure in basic services. We cannot sustain
high growth rates, nor can we alleviate rural distress,
without transforming our politics and governance.