The Hindu Business Line : Indian farm output facing sharp drop in growth

The slowdown has been specially marked in what were once the `green revolution' States of Punjab, Haryana, and Uttar Pradesh, which contribute 74% and 26% of the country's wheat and rice production respectively.

Chennai , Aug. 21

A report put out by the World Bank suggests that serious problems could arise if India fails to address the problems facing the agricultural sector.

There has been a sharp and steady drop in rates of growth of agricultural production over the past 25 years.

To make things worse, the slowdown has been specially marked in what were once the "green revolution" States of Punjab, Haryana, and Uttar Pradesh; which even today account for 74 per cent and 26 per cent of the country's wheat and rice production respectively.

Deceleration

At the national level, average agricultural growth decelerated from an average of 3.2 per cent during 1980-92, to just 2.4 per cent over 1992-2003. The period 2003 to 2006 saw a further fall, to just 1.3 per cent per year, compared to the tenth plan target of 4 per cent.

That national growth has not been even lower is because plummeting rates of growth in "green revolution" States have been partly offset by rising growth rates in the west and south.

According to the World Bank, the `green revolution' States have rapidly been increasing their already heavy use of fertilisers, other agro-chemicals, improved seed varieties and irrigation, (and, therefore, their costs of production) but this appears to have had a limited impact on agricultural growth.

Better growth

"It was the southern and western States that recorded rates of growth above the national average despite their more limited use of inputs and relatively meagre access to assured sources of irrigation."

The southern and western States have also taken up a lot more crop diversification than the northern ones. Thereby, decreasing land "fatigue" while simultaneously providing farmers with better insurance against unanticipated shortfalls in production and prices.

But all this is of little use; these States account for just a fraction of total production. Will future prospects be better than the track record of the past? Not likely.

For one thing, agricultural subsidies have been putting the squeeze on the expansion and improvement of agricultural infrastructure, particularly in respect of providing farmers the know-how to assess the need for, and costs and risks of, aggressively marketed high-tech inputs, finding reliable markets for their produce, providing them with more effective real-time risk insurance (including mid-course corrections), improving the quantity, quality and relevance of agricultural research and extension, and by increasing available water and using it more efficiently, rather than squandering it all on crops that simply guzzle it down.

Need for better credit policy

As for the rapid expansion of the flow of credit, the spate of suicides in recent years has made it clear that this policy instrument is simply not designed for tackling the many risks to which farming is subject. Even large differences in rates of interest make only a small difference in costs of production. Apart from the infrastructure factors ,the really important variables are the availability of (sweet) water at just the right times and in just the right quantities and the risks of moving from safe and well tested but low-productivity crops/technologies to more profitable ones about which it is difficult, before hand, to predict output and prices.

Farmer suicides

It is not the landless poor who have been killing themselves; it is the relatively better-off landed ones. And it is not farmers who failed to get loans who have been dying, but those whom bank managers refused to bail out with fresh loans after they had defaulted on the ones taken earlier because of unanticipated price or production shortfalls.

It is hardly an accident that most suicides take places in fast progressing areas like Vidharbha rather than `business as usual' states like Bihar and Orissa.