Farm economy hit by under-priced water, power, says Stiglitz

Nobel prize-winning economist Prof. Joseph Stiglitz feels that under-priced water and electricity has severely hamstrung Indian agricultural economy.

Lack of enough water in India has “raised the question of sustainability of agriculture economy”, he said responding to a query from Business Line . In a chance interview, Prof. Stiglitz, who has been in the city this week, said absence of a second Green Revolution, underinvestment for decades and limited extent of irrigation created a situation where scarcity of water led to large scale pumping out of ground water, which in turn caused water table to drop seriously.

Since water was under-priced – in some cases water and power to draw it from sources were zero priced – unviability of agriculture was built into the Indian system.

“But if you have to deal with poverty and food security, you cannot afford to ignore the relationship between cost and price”.

Prof. Stiglitz said that the World Bank studied the problems of Indian rural economy and poverty at length when he was the chief economist of the bank.

He felt that though farm land in India cannot be described as “under-priced”, the issue of “compensation” for land in case of acquisition was a vexed and debatable one.

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