The Hindu Business Line : Three nutrients for farm growth

Sustained farm growth at robust rates for 5-10 years is the answer to correcting the lopsided nature of current overall economic growth and ensuring genuine inclusion. Huge investments are required. But these must be properly deployed and value realised. It is more an issue of governance, accountability and teamwork, says G. CHANDRASHEKHAR.

Despite high-pitched claims of having been voted to power to serve the aam aadmi (common man), the Government has so far been long on promises and short on performance. When measured in terms of delivery of real benefits to the vast multitudes of the really needy, the Government's performance falls woefully short of expectation.

Specifically, agriculture and food sector policies have failed to deliver. Agriculture, on which depends the livelihood of nearly two-third of the population, registered a shameful 2.2-2.3 per cent annual average growth for the last ten years. Although this government recognises the urgent need to spur growth in the sector, effectively it has done little to alter the challenges facing the farm sector last three years.

Food Shortages

Raging food-related inflation, loss of livelihood, mass migration from the rural areas, farmer suicides and rising urban poverty (in addition to rural) have become the hallmark of governance. Food shortages are becoming more chronic or endemic. Rising global food prices, dependence on imports and serious crop shortfalls have combined to push up food prices, often beyond the reach of the poor.

Inflation hurts the poor the most; and rural poor are hit harder still because of very low-income growth over long years. The Public Distribution System and welfare programmes have become inadequate to put enough food and money in the hands of the people, especially the rural population. Under-nutrition saps the poor.

Thankfully, manufacturing and services sectors have been growing at double-digit rate; but such growth is not without its flip side. The growth benefits accrue to only 30 per cent of the country's total workforce that is engaged in the two sectors. The third leg of the economy, agriculture, has continued to remain a laggard, exposing the vulnerability, not only of the economy but also of society, to downside risks.

Deepening Divide

This has further accentuated the urban-rural and rich-poor divide. Rapid spread of information and communication technologies has raised the aspirations of people. Rising aspiration levels are a major source of strength for the economy; but if conditions to fulfil the aspirations are not created, it can potentially lead to social unrest and chaos.

Instead of inclusive growth, the country's much acclaimed success story has resulted in skewed growth and development. The Finance Minister is obsessed with growth. Without doubt, growth is important. Wealth has to be created before it can be distributed. But that's not all. The Finance Minister must remember that growth without equity is like a bloated balloon that can burst with the smallest pinprick. The lopsided growth can seriously impair and imperil the country's economic and social fabric and unity.

Not only that, often, the Finance Ministry fails to reads correctly the supply side issues and signals on the price front. Its fiscal policies have often been knee-jerk, devoid of commercial intelligence relating to commodity market dynamics.

If one were to judge the performance of various ministries of the present government, one of the worst performing would be that of Agriculture. Conceded that even before this government took over, the farm sector was in no great shape. The fact of extremely tardy growth of agriculture over ten long years is sufficient evidence to judge the performance (or the lack of it) of the Ministry of Agriculture. Initially, there was some hope that the current crop of policymakers would address the issues confronting the farm sector; but the hope is evaporating.

No accountability

Annual production targets are set; but seldom reached. Implementation of programmes and schemes is routine and devoid of a sense of urgency. Importantly, there is no explanation for non-achievement and simply, no accountability for huge sums spent on various schemes and programmes. No one is bothered and no one is responsible. The Ministry of Food and Consumer Affairs has come under intense pressure for over a year now. It has been groping for effective solutions against shortages, dependence on imports and rising prices. Food subsidy is becoming increasingly burdensome, but much of it seems wasteful. The policymakers exhibited undue haste in allowing derivatives trading without addressing the structural problems of production and markets. Reaction to inflation is knee-jerk. Nothing worthwhile has been done to strengthen the PDS on which several millions depend for their food purchases. Prices of edible oil and pulses have remained at high levels for over a year now; yet, there is no attempt to augment supplies for the poor people who depend on PDS for food rations.

If anything, the Centre merely seeks to abdicate its responsibility by blaming the States for non-cooperation. Food security is largely perceived as the responsibility of the Centre; but the Centre seems to believe its responsibility is restricted to supplying rice, wheat and sugar under PDS. On edible oils and pulses, the Centre says States are free to import and distribute as the import of the two commodities is under Open General Licence. By the same logic, if the argument is stretched, there is no need for the Centre to procure wheat for PDS as wheat import is also currently under OGL. The Agriculture Ministry has got all its priorities mixed up. It is excessively obsessed with the sugar sector when several others are crying for attention.

Banking on SEZ

The Commerce Ministry is obsessed with promoting the concept of Special Economic Zones even if it means dispossessing poor farmers of their land and converting agricultural land for industrial use. India has world's 17 per cent population, but only 2 per cent of land and 4 per cent of water resources. Land and water both are extremely scarce, and need to be used judiciously. Far from promoting employment, SEZs in their current design would further squeeze farmland availability and lead to large-scale unemployment.

Very simply, Indians — poor consumers — are paying for all the past omissions and commissions of successive governments. There has been a lot of self-congratulatory noise from the present government about economic growth. But the economy's soft underbelly is beginning show. Failure to bring equity in the growth process is perhaps the reason why the Prime Minister felt anguished, and rightly so, about the non-inclusive nature of the current growth process. He asked if the country was practising `crony capitalism'. It is.

Onus on the PM

But if there is any one person in the government who can actually make things happen, especially for the poor, it is the Prime Minister. Instead of losing heart and agonizing over failed delivery of benefits, he must crack the whip. He alone can ensure that his ministers stay focused and perform.

There admittedly are political compulsions; yet, it is possible to ensure that his senior ministers in-charge of important portfolios perform well and acquit themselves. The Prime Minister has the moral authority to extract work. In matters that would potentially benefit the poor, the Left can be expected to support him.

Agriculture must engage his focused attention. Sustained farm growth at robust rates for 5-10 years is the answer to correcting the lopsided nature of current overall economic growth and ensuring genuine inclusion.

Huge investments are required. Importantly, the funds already earmarked need to be properly deployed and value realised. It is more an issue of governance, accountability and teamwork. State governments have a critical role to play in agriculture development. It is time to elicit a national consensus on not only the growth trajectory, but also the nature of growth.