The Hindu Business Line : Farm reform must take root

It can be reasonably expected that political pressure will nudge the Finance Minister to present a farmer-friendly Budget. But, the Budget is merely a statement of intent and a work plan. For it to succeed, implementation is the key.

Rising above the many odds.

K. P. Prabhakaran Nair

The Union Budget is round the corner and political parties are making the loudest noise on “behalf of the Indian farmer”, a huge vote-bank in the forthcoming election. While the Congress has taken up the issue with the Chairperson of the UPA, the Opposition BJP has promised to draw up its own farm agenda if voted to power.

The Left has been making a number of “pleas” on behalf of the “beleaguered” farmer. Needless to add, all this will put pressure on Mr Chidambaram to present a “farmer-friendly” Budget.

Before one goes further, it might be educative to critically examine where the previous budgetary provisions have taken Indian agriculture.

Lessons from past years

The last Budget of the NDA regime in 2003-04 saw the Finance Minister, Mr Jaswant Singh, attempting to nudge the Indian farmer from a “grain mindset” to a “fruit mindset, by aggressively promoting the cause of horticulture and floriculture. Mr Sharad Pawar, who followed as Agriculture Minister in the UPA regime, made a whopping provision of Rs 10,000 crore for the promotion of horticulture.

Nothing much came out of both exercises for the ordinary Indian, except that some mangoes were sent to the US, until then a taboo. The facts speak for themselves.

Even at the peak of the fruit season one would need to pay not less than Rs 40-45 for a kilo of good oranges — more than a US dollar.

Now, where would a labourer earning Rs 100-plus a day go to mop up Rs 45 for oranges for his sick child or pregnant wife needing some extra nutrition? So much for making fruits “cheap” for the ordinary Indian consumer. Who is gobbling up the money between the orange farmer and the consumer?

More recently, in the 2005-06 Budget, Mr Chidambaram scaled up the allocation for agriculture from Rs 4,799 crore the previous year to Rs 6,425 crore, a clear 34 per cent increase.

A break-up shows Rs 400 crore for micro irrigation, Rs 630 crore for horticulture, Rs 100 crore for a “Knowledge Centre” and Rs 50 crore for “Strategic Agricultural Research” — whatever it might mean!

And two years down the line, farmers are still taking their lives in the thousands, despite the Prime Minister’s “Relief Package” in Vidarbha district of Maharashtra, the “cotton-bowl” of India. One is at a loss to know what the strategic agricultural research has delivered or what the knowledge centres are doing.

Such is the plight of the Indian farmer.

GDP growth story

Leaf through the Central or State Planning Commission Reports or listen to the harangues of any of the “wise economic planners” and one will hear and read of the unstoppable GDP growth, poised to reach double digits in this very decade, to sustain which agricultural growth has to be not less than 4 per cent.

But if one pauses to examine the India growth story, it would appear that GDP was unstoppable even when the agricultural laggard clocked just 2.76 per cent. The point is, these experts pegged the 4 per cent rate long ago, when GDP was a mere 75 per cent of what one observes now.

The growth is originating primarily from the tertiary sector, IT and IT-enabled sectors, primarily, despite agriculture, the primary sector, languishing. Hence, if farm growth has to be taken to more than 4 per cent, the mandarins in New Delhi must recognise the basic fact that Indian agriculture is weighed down by the “negative subsidy syndrome.”

In fact, farmers, who have been putting the food on our plates despite all odds, deserve congratulations. Put an American, Canadian or a European farmer in this situation, and their agriculture will plummet.

So, the point is, Indian farming has pulled all along, despite the constraints confronting the farmer. It is unfortunate that the National Commission on Farmers (NCF) report failed to recognise this fact while bringing out its five-volume report, compiled at enormous cost to the exchequer.

Accountability, key to success

It can be reasonably expected that political pressure will nudge the FM to present a farmer-friendly Budget. But, the Budget is merely a statement of intent and a work-plan. For it to succeed, implementation is the key. Simply throwing money at problems is not going to solve them.

Policy-makers must find out if the returns from investments in agriculture are commensurate and tweak plans accordingly, the way Singapore does, midway through the Plan implementation period. In India, once the ink on the Budget papers dries, the rest must automatically follow the red tape route.

Consider this example. Despite colossal investments in R&D in agriculture, India has been unable to bring out a desi Bt cotton while a particular MNC had a “very rich harvest” of profits through the “Bollgard” cotton in 2003.

This did not happen in China, where cotton scientists affiliated to the Chinese Academy of Agricultural Sciences worked hard for almost a decade. They brought out a Chinese variety of Bt cotton and the MNC had no other option but to sell a 450-gm seed packet for just under $2, while the Indian farmer had to cough up close to $50 at the time Bollgard was released in India for commercial cultivation, until politicians and the farmers lobby started to cry hoarse to bring the price down to under $20.

Losing advantage

This author was amazed when he was invited by the Chinese Government in 2006 to witness its strides on the agricultural front. Next to the US, India has the largest public-funded agricultural set-up, but China, with far lesser funding, has a lot more going. Even small Brazil has more to show than India. Less than 20 years ago, tiny Vietnam was nowhere on the global pepper scene, but today it has made itself the world’s number one producer.

What prevented Indian pepper scientists from stemming the onslaught? This, despite the fact that it is in India, in Panniyur (Kannur District) Kerala, that the first pepper research station in the world was established in 1953.

The same is true of cardamom. Up until 1970, Indian cardamom was a prized spice in the world market. Since 1970, the tiny South American country Guatemala has edged out India. Examples abound. Interestingly, the Sixth Pay Commission is round the corner and all Indian scientists of the agricultural fraternity will, without doubt, get further hikes whether they deliver or not.

If a critical scrutiny of Budget allocation of the agricultural fraternity, either from the Centre or the States is made, more than 90 per cent simply goes for the salaries. The dictum “neither accolades for brilliance nor boot for sloppiness” holds sway. The just released World Development Report for 2008 focusses on agriculture and stresses that a switchover to a “performance-based system” rather than “seniority-based” principle is the need of the hour if agriculture in India has to take off.

And unless India raises its cereal production by 50 per cent by 2030, that is just two decades away, the country is headed for starvation, cautions the same report.

A number of things can be spelt out in the Budget, such as abolition of fertiliser subsidies through loss-making companies and direct delivery to the farmer, food subsidy through the FCI, abolition of the APMCs and unifying the whole of India as a single agricultural market.

But, most important, the provisions must go with a stringent rider — accountability. Without this, no allocation, howsoever big in the Budget, will make a real dent in Indian agriculture, and the downhill slide will only accelerate.

(The author is an international agricultural scientist.)