Faster, Sustainable and More Inclusive Growth is the theme of the 12th Five year Plan according to the Planning Commission's Approach Paper.

“About half of our population is either wholly or significantly dependant for their livelihoods on some form of farm activity – be it crop agriculture, horticulture, animal husbandry or fisheries. With low levels of infrastructure and human development, and in a context replete with inequalities and uncertainty, rural India views its future transformation with both hope and trepidation. Expansion of farm incomes is still the most potent weapon for reducing poverty. Non-farm income opportunities such as post-harvest operations, maintenance of farm equipment, etc – offer a virtuous cycle connecting expansion of farm activity to that of rural non-farm income opportunities”, the approach paper says.

Faster growth

From less than 2.5 per cent annual average growth in the Ninth Plan and the Tenth Plan, growth rate in agriculture and allied activities improved to an annual average of about 3 per cent in the Eleventh Plan period that ended in March. Yet, it has fallen considerably short of the target of 4 per cent per annum.

Meanwhile, there has been a massive increase in population over the last 15 years. The country continues to add 16-18 million to its population year after year. In the last 8 years in particular, incomes in the hands of a large number of people have increased significantly as a result of robust overall GDP growth. Rising incomes, demographic pressure and appetite for consumption (due to low level of existing consumption) have combined to generate tremendous demand expansion for food.

In other words, food production growth continues to trail demand growth which in turn leads to tightening of supplies and dependence on imports. Rising cost of production and volatility in the market place has resulted in sharp increases in food prices. Food inflation hurts the poor the hardest; and compromises their already inadequate nutrition intake.

Newer challenges have now arisen for the agriculture sector. Land constraints, looming water shortage and worse, adverse effects of global warming and climate change threaten to destabilise the already fragile farm ecosystem. We need a long-term vision backed by a strategic action plan to address these challenges.

The Twelfth Plan approach paper envisages a 9 per cent GDP growth. However, it is becoming increasingly clear that a 4 per cent agriculture growth rate is necessary to support the 9 per cent GDP growth target. Simply put, ‘business-as-usual' attitude must change. We need more rapid rates of farm growth to ensure the country's food and nutrition security. For farm activities to grow at the targeted rate of 4 per cent, we need growth-oriented policies. The mantra for growth comprises the following:

• Strengthen the delivery system for farm inputs (seeds, fertilizers, agro-chemicals, credit etc)

• Rapidly expand irrigation facilities and manage water resources scientifically

• Infuse technology in agriculture (infotech, biotech, satellite tech etc) and revive the ‘extension' mechanism

• Invest in rural infrastructure (warehouses, marketing yards)

• Use the extensive information and communication technology network to deliver price and market information to farmers

• Build capacity among farmers to withstand the vagaries of the marketplace

• Step up public investment in agriculture and incentivize private investment

Sustainable growth

Sustainability has become the new buzz word in recent years. Everyone talks about ‘triple bottom line' approach covering people, profits and planet. Every policy, every program, every project and every business is tested on the touchstone of sustainability. The expression sustainability is generally understood to mean optimal use of natural resources with minimal adverse impact on the environment. But, the concept of sustainability actually goes much beyond environment and economics.

While demands on the planet's natural resources expand rapidly, there are social implications which cannot be ignored. Policies and political predilections of governments cannot be overlooked either for their effect (positive or negative) on programs, projects and businesses. A focus area of the approach paper to the 12th Plan is sustainable growth. This writer has designed a set of sustainability criteria which may be applied to see if the Plan programs are really sustainable in the long run. The 7-way sustainability test may be called STEEPLE test; and is explained as under.

Is the policy, program, project, idea or business:

• Socially relevant

• Technologically feasible

• Economically viable

• Environmentally friendly

• Politically expedient

• Legally permissible / unassailable

• Ethically correct

Without sustainable growth it would be tough to ensure sustained growth. The policymakers must apply this 7-way sustainability to test to ascertain if their policies will deliver real overall benefits in the long run.

More inclusive growth

It is the admitted position of the government that nearly two-thirds of the country's population is indirectly or indirectly dependent on agriculture and related activities for livelihood. It goes without saying that if agriculture were to register robust growth rates for several years in a sustained manner, rural incomes would rise and rural demand for a wide range of goods and services will expand. To meet expanding demand new investment will flow in and generate employment and incomes which in turn will convert to more demand. It will set off a virtuous cycle of demand – investment – employment – and more demand.

With expansion of non-farm economic activities there would be a tendency to exit agriculture – a welcome development indeed. It may sound paradoxical but it is rooted in reality. Currently, the farm sector faces huge ‘disguised unemployment'. Far too many people are dependent on farm but contribute little to farm growth. They need to be absorbed in non-farm activities which will be boosted automatically if farm growth is ensured. The benefits of growth will be more equitably spread. This will make for inclusive growth. Today we have ‘growth without equity'; this must change. We need growth with equity, sooner the better.

>gchandra@thehindu.co.in

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