The Hindu Business Line : Needed, harmony on agri-policy

IT IS HEARTENING that from the Prime Minister on, key ministers in the new government are all talking of strengthening agriculture, on which depends two-thirds of the population. The Finance Minister, Mr P. Chidambaram, wants the economy's growth momentum maintained with special emphasis on agriculture, manufacturing and employment generation. In his new Exim policy, the Commerce Minister, Mr Kamal Nath, wants to focus on agri-exports and ensure remunerative prices to farmers. Not much has been heard from Mr Sharad Pawar, who holds one of the most critical portfolios — the new ministry combining a spectrum of previously disparate ministries covering agriculture and cooperation, and food, consumer affairs and public distribution. The Minister's association with the sugar sector and his views on farm goods imports are well known. Success of the new government's intention to make the farm sector really vibrant and competitive will depend on the convergence of policy prescriptions of the three ministries. By their very nature, different ministries seek to address issues of different constituencies. Will the three ministers pull together and come up with a harmonious policy that takes care of the conflicting interests of growers, consumers, processors and exporters?

Factors impacting the farm sector are complex and often intractable. For instance, should we aim for self-sufficiency or depend on imports? Should we export (with or without subsidies) or service the domestic market first? Allow competition from low-priced subsidised imports or provide tariff protection to domestic producers? The new government has the unenviable task of having to prioritise the competing demands of growers, consumers, processors and exporters. The Left has already made its mind known. Its pro-poor stance may be well-meaning, even politically expedient; but the government will have to pursue growth-oriented policies that lift the poor up through a process of a higher level of economic activity rather than a mechanism of redistribution of existing activity. Mr Chidambaram, in his earlier stint as Finance Minister, brought down Customs duties on imports too steeply for the comfort of many domestic producers. It should surprise no one if his ministerial colleagues did not share his enthusiasm at this point of time and insist on protection for domestic producers. Foodgrains management — procurement, distribution, exports, pricing — is an area that needs urgent attention.

Despite opportunity to reform, the previous government merrily accumulated unconscionable levels of inventory of fine cereals, incurred wholly unacceptable levels of carrying costs, and was eventually forced to subsidise exports to overseas consumers even as the poor at home had limited access to cheap grains. The country can neither afford such fancy notions of producer support nor subsidise overseas consumers in this manner. Huge investments are required for strengthening input delivery systems and building rural infrastructure for which the government will have to find the money. India's stand at the WTO negotiations is equally critical. The Prime Minister, Dr Manmohan Singh's political acumen to be able to bring before the nation forward-looking policies for the agri-sector is on test.

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