With the ‘Make in India’ slogan, Prime Minister Narendra Modi has touched upon the biggest problem faced by the country.

And by not repeating the agriculture/farmer rhetoric, he has done a great service to the agriculture sector.

A simple glance at the living standards of farmers could prompt many of us to write off our successes in agriculture.

Progress in agri

But we must remember that from the time of Independence, the sector has been growing consistently at the annual rate of 2-3 per cent. Let us also look at the quantum of production as a barometer of success. India has the 7th largest arable area in the world.

Today, India is among the top five producers of almost all agricultural products. We are among the top five producers of rice, wheat, maize, cotton, millets, pulses, sugarcane, mustard, guar, soya, etc. India is also home to second largest cattle population in world and among the largest producer of poultry produce as well. We account for 10.5 per cent and 8.6 per cent of the world fruits and vegetables production respectively.

We are also the largest producer of potato, onion, garlic, cauliflower, brinjal, etc without genetic engineering. We would not be among the top five producers in these categories, if we were not doing something good in this sector.

And despite the losses in storage and transit, we are producing enough to feed 125 crore people with limited imports, and have also managed to create a good buffer stock.

In addition, the sector is amongst the largest foreign exchange earners by way of exports for our nation.

Bottlenecks

For those of us who should look at this success only from an efficiency point of view, arguments would be made on our lower per acre productivity.

But ours is a country with many agro-climatic zones and different levels of farm management understanding.

There are zones where production levels exceed most developed nations, and also zones or patches with the poorest production level.

Having said this, there, certainly, are areas that need improvement.

Being a democratic and socialistic country, we also need to contend with the resistance to genetically modified seeds, lower land holdings and lower levels of farm mechanisation which affect productivity. We should, however, also compliment the agriculture sector for its ability to employ a vast majority of our population.

This data is a reality check on the sector’s well-being.

A good sector should attract more employment opportunities or should be able to afford to pay the employed population not only in cash; but also ensure a better living standard by way of providing housing and other facilities.

With the economic development of the country, manufacturing and services sector have attracted more employment.

However, food inflation has reduced the disposable income available with people in these sectors. Further, the effects of urbanisation reduce the living standards of the people in these two sectors to levels that are lower than the rural population engaged in agriculture.

Employment capability

It is only when technological development is introduced in the agriculture sector can a fewer people continue to produce more food for the country.

However, in our country since manufacturing and services sectors are not growing at the desired pace, the incentive to mechanise remains restricted. Hence the number of people “reported” to be engaged in feeding the country is huge impacting productivity in this sector.

The availability of cheap labour stifles innovation, and since over 50 per cent of our population is engaged in agriculture, the possibility of witnessing innovation and large investments in the near future is negligible.

Long value-chain

The employment capability of the humble sector is disguised by the long value chain it supports in our country, starting with the farmer, labour, farm owner, the consolidator, the primary commission agent, the broker, the secondary commission agent, the wholesaler, the processor, the metro retailer and finally, the consumer.

The problem is further complicated by political interference, farm debt waiver, and vote-bank politics discouraging investors and innovation.

In addition to this, the presence of structures that levy taxes, cess such as the APMCs and State taxes add a phenomenal 40 per cent to cost of agricultural commodities before they reach the end-user.

Other sectors

Credit must to go to the agriculture sector for being able to bear these burdens and still managing to export some of the produce. The blame for this lies on our manufacturing and services sector.

In developed economies or even developing ones such as China, the manufacturing and services sectors have managed to generate sufficient employment and leave agriculture to be modernised/mechanised for better productivity.

The dragon has well outpaced our elephant in manufacturing by 10 times; the Chinese contribute 22 per cent of world output while India’s contribution is a paltry 2 per cent.

The bottom line is that success of the agriculture sector is dependent on the robustness of manufacturing/services sector.

Till such time that reforms are made and a conducive environment is created for these sectors, the agriculture sector will bear the brunt of our population and continue to be termed a failure.

The writer is Senior Vice-President, Kotak Mahindra Bank. Views expressed are personal.

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