The Hindu Business Line : Archaic prescriptions for agriculture

THE MAHARASHTRA Chief Minister, Mr Vilasrao Deshmukh, must be congratulated on his candidness. Recently, on the eve of the Maharashtra Legislative Assembly's session at Nagpur, he stated categorically that 92 per cent of the suicides among farmers were directly attributable to their chronic indebtedness. The reports brought out by the Central Government and NGOs over the last three years tried to obfuscate the issue by drawing up a long list of causes, including family disputes, ill-health, addiction to drugs and alcohol as also crop failure.

Mr Deshmukh has, in effect, concluded that the economics of agriculture is far more relevant to its development than its material environment, including infrastructure and technology. Curiously, at about the same time Mr Deshmukh was making this statement, the Finance Minister, Mr P. Chidambaram, was striking an entirely different note. Addressing the India Economic Summit 2005, Mr Chidambaram outlined a six-point reform agenda to enable the economy achieve and sustain an annual growth rate of 8 per cent-plus in the coming years. Of the six points, two each relate to agriculture, industry and services.

Outlining his development programme for infrastructure, he emphasised the massive and rapid programmes for development, citing several examples to point out how China was scoring over India with its ruthless adherence to efficiency. On agriculture, Mr Chidambaram said that growth rate of 3.5-4 per cent, or higher, is achievable in the near future through his two-point package. He identified the following main points. And there is nothing innovative about them! The paucity of investment in agriculture, both public and private, has been talked about for decades. While the UPA Government prescribes private investment — particularly foreign direct investment, for all other sectors — for agriculture Mr Chidambaram is only as innovative as the drafters of the First Five-Year Plan. He wants to step up public investment in irrigation and wants to open up to the corporate sector pre-tilling and post-harvest farm operations.

Turning a little nostalgic and romantic, he emphasised the sacred relationship between the tiller and the land and promised that it would never be broken. It would be difficult to believe that the Finance Minister, a lawyer, is unaware of the doctrine of eminence juris embedded in the Constitution that permits acquisition of farmers' land at the drop of a hat. The Finance Minister, in fact, is going back to the 1950s, when Nehruvian economists believed that infrastructure and technology were the two determinants of the rate of agricultural growth and that such growth is price-neutral. One expected that the government economists had understood by now that all the three factors — infrastructure, technology and price incentives — are important for agricultural growth; but that, of the three, price incentives were crucial.

Experience shows that if the tillage is economically worthwhile, the farmers innovate and improvise, both in infrastructure and technology, to give a fair account of themselves.

However, if agriculture is not remunerative, no level of infrastructure and technology support is likely to help farmers obtain higher yields and greater productivity. Another remarkable thing: The Finance Minister was full of praise for China, which had taken rapid strides in infrastructure development. Mistakenly, he attributes the Chinese performance to ruthless efficiency. There is some truth to this contention. The output of a typical Chinese worker is supposedly equal to that of five Indian workers. China, in its present liberal avatar, has inherited a submissive and disciplined labour force from the Maoist dictatorship. A labourer found to be dragging his feet is likely to lose much more than his job and bread. Surely curious, coming from the spokesman of a government tied up by coalition partners from taking up any reform of labour laws.Surprisingly, Mr Chidambaram also contemplates the entry of the corporate sector into agriculture for pre-tillage and post-harvest operations. Going by a recent OECD study, China has allowed supermarket networks to take care of those operations. Supermarket networks in China are formed through foreign direct investment as also through joint ventures with local businesses.

Many famous brand names, such as Cadbury's, Campbell's, Cargill, Coca-Cola, Danone, Wal-Mart, Metro and Pricemart, have become common household names there. New Delhi, on the contrary, has stoutly opposed FDI in agriculture, in general, and in retail trade, in particular.

The Prime Minister talks every now and then about the need to take massive initiatives agriculture. If Mr Chidambaram is going to be his guide in the matter of strategy for agricultural growth, he would do well to learn from the Indian experience of the last five decades and draw from the lessons of Chinese advancement since liberalisation.

(The author, Founder of the Shetkari Sanghatana, is Member of the Rajya Sabha. He can be contacted at sharad.mah@nic.in)

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