relative decline is leading to misery and a sense of deprivation
in rural India. Finally, nearly 60 percent of population
still depends on agriculture directly or indirectly, and
jobs in non-farm sector are not created on the required
scale to absorb the agricultural workers and new entrants
to labour pool.
these challenges are not addressed swiftly and aggressively,
there could be serious social strife and political volatility.
Already the evidence of rural distress is mounting, with
endless news of hunger, farmer suicides and large scale
migration to urban areas in search of livelihood. The spread
of left wing extremism across large tracts of the country
over the past decade is one more manifestation of growing
despair and anger in rural India. The numbers are revealing.
The income per capita of over 55 percent of Indians dependent
on agriculture is only 23% of the rest of the population.
Such deprivation of the vast majority of people in a poor
country has debilitating consequences to our economy and
can the FM do to stimulate agriculture and rural economy?
Protection from cheap imports is certainly necessary. But
in an increasingly globalized world our consumers will not
accept higher prices of edible oil and pulses when cheaper
imports are possible. Cotton farmers can be given added
protection by higher tariffs. The past few years have seen
over 100 lakh bales of cotton import, which exceeds the
preceding 30 years' cumulative imports! But with the end
of the WTO quota regime, India must aggressively expand
its market share in garment sector. Therefore, cotton prices
cannot be allowed to rise beyond a point, if our garments
are to be globally competitive.
lot of needless subsidies have only sucked up precious resources
(urea) or led to growing corruption without benefiting the
farmer or consumer (food subsidies and cotton procurement).
Most of these subsidies can be rationalized or ended, and
those resources can be channelized into capital in agriculture
sector to boost productivity. Credit expansion is already
a stated policy goal, but it yielded mixed results. Excessive
state control of credit cooperatives, extortion of predatory
public officials, poor land records, weak credit infrastructure,
and sluggish demand for agricultural products limit the
credit expansion. The state extension machinery is virtually
dysfunctional, and the corruption and incompetence of public
agencies is resulting in short supply of seeds and sale
of substandard inputs. Effective institutional mechanisms
must be evolved to address all these issues - subsidies,
credit, extention and inputs.
addition, focus on three areas is critical for the future
of agriculture. First, agricultural markets need to be reformed
and opened up. Regulated markets enjoy a monopoly, and corruption
and incompetetence are rampant. While the mandis function
tolerably well in same states, in other states they are
a source of political patronage and corruption. In case
of vegetables, fruits and fish, the farmers are entirely
at the mercy of local mafias and extortionary middle-men.
Years ago, when Andhra fish farmers wanted to enter Kolkata
markets, they had to submit to extortionary demands of local
mafia. Only timely intervention of the then chief minister
Mr Jyoti Basu helped both the farmers and the consumers.
Agricultural marketing is a state subject and strong incentives
are needed to nudge states to quickly reform the markets.
value addition to agricultural produce is the key to the
future. Tomatos sold at Rs 16 per kg a month ago in Andhra
Pradesh, and they now sell at Re 1 a kg! The story on onion
price fluctuations is too well known to bear repetition.
These price fluctuations in case of perishable commodities
is very common. While a few lucky farmers may benefit from
high prices, most are driven to despair, and often the low
price does not cover even the costs of harvesting. Agro
processing on a massive scale will stabilize process, add
value, raise incomes, assure markets, boost local economy,
and create new jobs. Budgetary support for infrastructure
and investment, and policy support to boost agro-processing
are vital to revive agriculture.
millions of rural youth are both unemployed and unemployable.
Declining agriculture cannot give them livelihood, and industry
cannot absorb them. A massive programme to promote skills
and boost investment in small and medium enterprises in
rural areas is essential for job creation.
years, budget pronouncements have been long a rhetoric and
short on action when dealing with agricultural revival.
Will the 2006-07 budget be different?