It is now becoming quite evident that the spectre of drought hangs over large parts of the country. The resultant setback to agriculture will place an additional burden on the growth rate. The effects of this slowdown will be accentuated by the longer-term crisis in agriculture and the use of water.
With the number of persons dependent on agriculture not declining as rapidly as this sector’s share of GDP, there are pressures even in a year of normal monsoons.
The crisis in the availability of drinking water in our cities too can be accentuated by the failure of the monsoons. And with inflation remaining at far from comfortable levels, the option of raising the fiscal deficit to provide adequate drought relief is severely constrained.
Grim as this picture is, it is not without its opportunities. But to tap those opportunities the government will need to look far beyond merely releasing funds for drought relief and hoping that the leakages are not too high.
It would have to recognise the longer-term transformation of the Indian economy and then see whether drought encourages people to make decisions that move the economy in that direction.
One of the key transformations that are needed is to reduce the number of persons dependent directly or indirectly on a unit of agricultural land. For agriculture to generate the personal income that is comparable to those in other sectors of the economy, the earnings per unit of land have to be distributed among fewer people. This would necessarily imply moving jobs away from agriculture.
This process is usually linked to urbanisation. As non-agricultural jobs are concentrated in cities, workers seeking to avoid the crisis in agriculture move to urban areas. When the shift is permanent, it could result in the sale of any agricultural land the worker may own. With less labour left in rural areas, agriculture would have to get more mechanised.
The growth of cities is then marked by the simultaneous development of a more mechanised agriculture.
This process has not been uniform across India. There are States, typically the more developed ones, where there are several cities growing rapidly enough to absorb labour being displaced from agriculture. But there are other States, usually those with few rapidly growing urban centres, where persons seeking to leave agriculture have nowhere to go. The crisis in agriculture in these States is matched by the crisis in cities.
In these latter States with a stagnant agriculture and cities that cannot absorb the rural workforce, the way forward would be to see if the movement to non-agricultural activities can take place in the vicinity of the village.
This could involve developing the growth potential of small towns to absorb workers from nearby villages. And there may even be villages that can be home to non-agricultural activities.
USING DROUGHT RELIEF
The long-term challenge then is to find ways of helping this transformation to non-agricultural activities in the slower growing States. And a drought year may, oddly enough, even help this process.
To the extent that such States are affected by the drought there would be greater access to funds for drought relief. The governments can then ensure that at least a portion of the employment generated by these funds is in non-agricultural activities.
The vehicles for the deployment of drought relief already exist. It may also be useful to make better use of the Mahatma Gandhi National Rural Employment Guarantee Schemes in the different States.
These schemes are designed to provide employment to the poor, and can be expected to attract more labour in a drought year. The current MGNREGA guidelines may not allow for this employment to be created in some non-agricultural activities. But the list of projects eligible for MGNREGA funds can be altered to address this requirement.
It may also be possible to create vehicles that would link rural investment to public funds. In a drought year when farmers would not find it worthwhile to invest in agriculture, they may be willing to consider other options.
These rural public-private partnerships can then be in non-agricultural activities that would not have to follow the MGNREGA norms, such as being labour intensive.
If these projects are well chosen they would help remove bottlenecks to growth in some of the more backward regions of the country.
And if the economics of these projects turns out to be profitable some members of rural families may prefer to concentrate on them even in later years, thereby reducing the number of persons dependent on the family land.
The possibility of non-agricultural income for farmers would also allow the government to follow food policies that focus more on the availability of grain and a little less on the earnings of farmers.
The government could then use its surplus food stocks to ensure that the inevitable reduction in agricultural production in a drought year does not set off an inflationary spiral.
Managing the consequences of a drought undoubtedly calls for a multi-pronged strategy with its primary focus on ensuring the availability of food and drinking water for every Indian.
But the poor monsoon also offers opportunities for a more fundamental transformation of the rural economy.
(The author is Professor, School of Social Science, National Institute of Advanced Studies, Bangalore.)