The Hindu Business Line : Is India falling into the Malthusian trap?

The increasing gap between foodgrains production and population growth by itself does not fully explain the present foodgrains crisis, which is beginning to assume global dimensions.

C. J. Punnathara

Twenty-first century India is beginning to retest the theories and philosophies of two of the greatest economists of the classical world: Reverend Thomas Robert Malthus and David Ricardo.

Malthus and India

The connection between Malthus and India are twofold. For one, the country provided the fitting final stage to re-enact his theory on divergent growth pattern between population and foodgrain production even as late as the 1960s, when India was plagued by booming population growth and a diffident growth in food production.

However, there was a more tenuous connection between the economist and Indian economic history. Malthus was the first professional economist by training to teach at the college founded at Haileybury in England by the East India Company to train its young administrators on the rudiments of economic theory.

Though it would be farfetched to hold Malthus responsible for East India Company draining India of its agricultural and other natural resources to fuel the Industrial Revolution in Britain, several of his bright and aspiring students would have been privy to this exploitative practice.

The seeds for the theories of Malthus, as propounded in An Essay on the Principles of Population as it affects the Future Improvement of Society, were sown then, centuries before the India’s foodgrains crisis of the 1960s. Dispelling the notions of Utopia, Malthus condemned the human lot to waging a relentless and often losing battle of feeding the ever-increasing mouths amidst a perpetually insufficient foodgrains situation.

Declining production

Now, over 200 years after his doctrine was first published in 1798, the ubiquitous Malthusian theory has come back to haunt the Indian economy all over again. Agricultural production has slowed to a crawl, dipping from 3.8 per cent in 2006-07 to 2.6 per cent in 2007-08. Though on a long-term basis Indian agricultural production still seems resilient, the real crisis is of more recent origin.

Coming to foodgrains, between 1950-51 and 2006-07 the production increased at an annual clip of 2.5 per cent, which was well ahead of the population growth of 2.1 per cent. But during the period 1990-2007, there has been a sharp dip with foodgrains production dropping to 1.2 per cent even as population growth averaged 1.9 per cent.

However, this disproportionate growth between foodgrains production and population growth by itself does not fully explain the present foodgrains crisis, which is beginning to assume global dimensions.

Enter Ricardo

This is where the theories of David Ricardo, another classical economist of the eighteenth century, come in handy.

He developed theories of rent, wages and profit which showed that economic development is not all-encompassing and universal. Instead, his theories have helped prove that countries do not develop at the same pace and that development often accentuates economic and social inequity.

This theory has also been tested in the Indian growth story. The strident growth since the 1990s has nurtured a middle class with greater purchasing power, demanding greater volume and better quality food.

The volume of food consumed by the burgeoning middle class and the upper crust has grown significantly. This increased demand from the economically well-off sections would also have contributed to the crisis that is unfolding in the food sector.

There has also been a significantly slower growth in the agricultural sector compared to the non-farm sectors. This gap, though widening since 1981-82, has been far more pronounced since 1996-97, mainly as a result of the acceleration in the growth of industry and the services sectors — which in turn also contributed to the increased demand for foodgrains.

There was also a change in the pattern of demand, which resulted in a shift in cultivation from coarse to fine cereals. This shift seems to have eventually led to a fall in the area under foodgrains production, declining at an annual rate of 0.26 per cent during the period 1989-90 to 2005-06.

It is quite likely that the poorest segments of society paid the highest price for this shift.

Lower consumption

The decline in area under foodgrains was also accompanied by a fall in the per capita consumption. On a long-term basis, the consumption of cereals fell from a peak of 468 gm per day in 1990-91 to 412 gm in 2005-06. Meanwhile, the consumption of pulses declined from 42 gm to 33 gm. For the booming middle class and the upper crust, any possible reduction in cereal consumption would have been more than made up by their moving up the food value chain through increased intake of milk, eggs and meat — richer sources of fat and proteins. But no such shifts can be conceived for the poorer segments. There can scarcely be any doubt that the cascading impact from decreased food consumption would have hit the poorest segment the hardest and spared the relatively better-off.

Meanwhile, the crisis in foodgrains production has been compounded by a surge in global demand and prices. Surging demand for foodgrains is not unique to India. Fast growing economies of China, Brazil and East Asia have precipitated the demand. Simultaneously, several of the food surplus countries across the world have been shifting from food crops to bio-fuels which promise greater potential and enhanced returns to the farmer compounding, thereby, the woes in the international foodgrains markets.

Lagging behind

Backed by huge foreign exchange reserves India was quick to enter the global markets seeking to purchase foodgrains. But even this surfeit of foreign exchange proved insufficient in these times of global deficit. The Finance Minister, Mr P. Chidambaram, was quick to point out that the Government is willing to import wheat, rice or edible oils to contain the price rise, but they are not available even in the global market. Every other country has banned the export of agricultural commodities, he added. And woefully, Indian agriculture remains the only sector lagging behind in the GDP pie.

But this in no way implies that the crisis stalking Indian foodgrains production has assumed grave dimensions as yet. Rather the vicissitudes of the problem is just beginning to manifest. India is quite unlikely to go back to the PL 480 days when the country had to virtually wait for the next shipment of foodgrains to arrive to feed its population. Even now, it is still not too late to revitalise Indian agriculture and augment the production.