The Hindu Business Line : `Can't have economy in boom and agriculture in gloom'

"We have to feed a growing population... Rice, wheat and pulses growth is not picking up. There is a productivity challenge... Except in cotton, we have fatigue... " — MR JAIRAM RAMESH, MINISTER OF STATE FOR COMMERCE

Even as India's continuous salutary economic performance has broadly been appreciated, the persistent slide in agriculture, the mainstay of millions, has caused jitters in the ruling dispensation. The recent conclave of the Congress party in Nainital and the uproar over what is termed indiscriminate allocation of land for Special Economic Zones that might lead to the bartering away of prime agricultural land have all provoked genuine concerns on the need to re-think the priorities for sustainable development.

The latest RBI Annual Report bemoaned the agricultural sector averaging growth of 2 per cent per annum, against envisaged 4 per cent,. during the first four years of the Tenth Plan. While the share of agriculture in GDP has declined from around 35 per cent in 1980-81 to 20 per cent now, the fall in the population dependent on the sector has not been proportionate. This means the government has to find alternative work for legions of farmers. With the UPA Government's Common Minimum Programme setting store by an inclusive growth model that relies mainly on exploiting the farm sector's potentials, the options available to the Government are not many if it is to stem the discontent of the farmers.

A member of the UPA's National Advisory Council and the UPA-Left Coordination Committee, the Minister of State for Commerce, Mr Jairam Ramesh, underscores the significant contribution of agriculture to the economy. Pitching for more public investment, Mr Ramesh said: "You can't have an economy in boom and agriculture in gloom. They don't go together. In the last Budget, the Finance Minister, Mr P. Chidambaram, gave Rs 100 crore to Indian Institute of Science. In the early 1960s, we set up in Ludhiana, Pant Nagar, Coimbatore... a string of research institutions on agriculture. Why can't we give similar amounts to agricultural universities? If agricultural universities are not going to be top-class, where is the technology going to come from? I feel that Indira Gandhi's model for public investment, public institutions and public delivery system still has relevance for agriculture."

Excerpts of Mr Jairam Ramesh's take on the state of the farm sector and what needs to be done to bring hope to farmers:

"The National Commission on Farmers, headed by eminent agricultural scientist, Dr M. S. Swaminathan, has submitted four volumes of far-reaching and comprehensive recommendations covering the entire agricultural sector. The recommendations are engaging the attention of the Prime Minister. There are policy challenges and institutional reforms that the Commission has called for.

The known challenges

"Our challenges are well known. We are going to be adding 300 million people to our population in the next 20 years and the total population will be 1.4 billion by 2025. We have to feed this growing population. We have had farm successes in the last five years. We have seen cotton from the tragic perspective of suicides of cotton growers. At the same time, at the macro level, this year India will be the second largest producer of cotton in the world. It will surpass even the US .

"Cotton production went up by 22-25 lakh bales in 1995-2000, and by almost 80 lakh bales during the last five years. Gujarat, which accounted for 18 per cent of cotton output about five years ago, today accounts for almost 30 per cent. In Punjab, cotton production has trebled in the last five year.

"Against this, the fact is that rice, wheat and pulses growth is not picking up. In the last five years, wheat production has stagnated, while the rice output is not at the rate it should be. Pulses have seen a stagnation for two decades. While the oilseeds production has gone up impressively, edible oil imports still account for close to 45 per cent of our consumption. "Thus, while we have done well in cotton and horticulture, we have serious challenges in the basic staple — rice, wheat and pulses. We have problems in the plantation sector — of low productivity and senility. There is productivity challenge. Except in cotton, we have the fatigue.

"As the challenges are well known, some major responses are forthcoming from the Government. Clearly, in the Eleventh Plan agriculture has to be given the central role. Some economists believe that agricultural trade is the route to farm reform. I think agricultural trade has a role to play. But fundamentally without public investment in irrigation, research and extensions, seed production, we are not going to get to the next technology frontier. This is what both the Congress President, Ms Sonia Gandhi, and the Prime Minister stressed at Nainital. While private investment is the driver of the industrial economy, public investment has to be the locomotive for agriculture.

Profitability is important

"Only 40 per cent of our cultivated area is irrigated. We have to go faster on irrigation. If there is one key element of agricultural transformation, it is irrigation. Ninety per cent of public investment in agriculture is in irrigation.

"The reason why public investment in agriculture has fallen is because investment in irrigation has fallen. We have to work hard at reviving the irrigation investment programme.

"Economists have been preoccupied with the terms of trade, which is important at the macro level. But at the micro level what is important is profitability. You can have improving terms of trade in agriculture, as we had in the mid-1990s, but you can have declining profitability for farmers.

"Political discourse has to realise that with demographic pressure and fragmentation of land holdings, problems of agriculture are not going to be solved only through on-farm investment.

"Non-farm activity is essential for farmer prosperity — the important thing is the link between farm and off-farm and the latter could be livestock, poultry, aquaculture and rural manufacturing.

"If agriculture grows at 4-5 per cent in a sustained manner, as in Punjab, it will generate secondary and tertiary impacts. Hence, creation of rural infrastructure is required and that is why Bharat Nirman has become absolutely critical.

"Agricultural credit remains a weak point. Less than one-third of small and marginal farmers have access to institutional credit. The cooperative credit system has collapsed and commercial banks are not interested.

"Efforts would be directed on some States that are performing much below their agricultural potentials such as Bihar, Chattisgarh, Assam and Orissa. Twenty years ago, West Bengal and Eastern Uttar Pradesh were high productivity zones in agriculture and the effort is to put them on that path.

"Agri Export Zones (AEZs) have not been functional for want of investment window, though 60 AEZs have been sanctioned. In the current fiscal, the APEDA would identify 10 out of the 60 AEZs for focussed infrastructure creation through the Rs 50 crore set apart from ASIDE (Assistance to States for Infrastructure Development).

"It is public-private partnership and now that we have created an investment window, a couple of AEZs will take off with private investor participation."

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