With some farmers' unions from Punjab resuming their protests and the Union government fortifying roads around Delhi, agriculture has made a reentry into public consciousness, this time just before the Lok Sabha elections.
A thorough, and more importantly, serious debate on agriculture is absolutely essential for India’s future for two basic reasons. One, agriculture still employs almost half of India’s workforce even though it contributes just around 15% of India’s GDP. This is the core issue as far as India’s inequality and poverty challenge is concerned. Two, a country of India’s size -- we are now the most populous nation in the world -- even if it wanted to, will not be able to source its food requirements through the foreign trade route. There cannot be any food security without a thriving agriculture sector.
To be sure, nobody (in their right mind) disagrees with the import of these two factors. The question is how should one go about resolving these challenges. At least three factors need to be kept in mind while answering this question.
One, any effort to reduce agriculture’s employment share will have to be mindful of the fact that without any additional skill sets in the non-farm job market, existing farmers will not be able to land remunerative jobs outside agriculture. Essentially, this means that blanket efforts to push capital intensity in agriculture to reduce its employment share and hence improve its income-employment share asymmetry could end up doing more bad than good.
Two, any policy which seeks to increase agriculture’s income share in GDP by nudging it to shift to the production of high-value crops (food or non-food) will have to be mindful of the fact that a very large part of India’s population does not have the purchasing power to buy such commodities: 800 million people in the country depend on free cereals from the Public Distribution System (PDS) to meet their calorie requirements. If the diversification in agriculture comes at the cost of cereals and is towards more expensive food or non-food crops directed at export markets or industrial uses (such as ethanol for blending with fuel) it could potentially put a squeeze on food production for the poor.
Three, one cannot but accept the fact that government intervention in food markets since the days of the Green Revolution in the late 1960s has helped India achieve its strategic objective of food self-sufficiency, but it has also led to institutionalising perverse incentives and cropping patterns in the country. These have worsened the regional, ecological and nutritional balance in Indian agriculture. The root of these perverse incentives is to be found in political economy rather than technical debates. Having said this, calling for an end to all state intervention is akin to throwing the baby out with the bathwater. Agricultural markets are perverted the world over, especially in high-income countries, on account of the massive subsidies given there. The promise of making global agricultural markets more just and less discriminatory against the Global South is as good as dead with the Doha round of WTO negotiations having received a burial for all practical purposes.
The first thing which needs to be acknowledged is that there is no silver bullet as far as fixing India’s agriculture is concerned. To use a provocative analogy, it is too broken to be able to run on anything but policy support steroids such as direct income transfers, minimum support price (MSP), and fertiliser subsidies, among other things. Withdrawing any of these will be tantamount to the proverbial last straw that breaks the camel’s back. This means that the best way forward is to reduce inefficiencies linked to state support rather than withdrawing it altogether. This would primarily entail a move towards better nutritional balance in the use of fertilisers and greater regional equity and agro-climactic balance in the procurement of crops on MSP. Doing both of these things will require taking on vested interests by the political regime which makes these changes.
The preceding paragraph lists the errors of commission being committed by the state in the realm of agriculture policy. Equally, if not more important, are the errors of omission being committed by the state when it comes to Indian agriculture.
Agriculture’s share in government capital spending has been reduced. This is despite the fact that public investment in agriculture is known to give a boost to private investment. Agricultural research and development is increasingly becoming a preserve of private companies, especially large multinational ones. Such players, even if one were to ignore the super-normal profits they make at the cost of poor farmers, have very little incentive to invest resources in pursuit of factors such as long-term sustainability in agriculture. To raise this point is not to pander to the so-called Narodnik line in agriculture which summarily dismisses the role of technology. An earlier edition of this column cited research which has spoken about the limits and challenges of so-called game-changing innovations such as GM crops in agriculture.
Can the state live up to these two challenges which require it to take on the vested interests in both input and output markets in agriculture? Does it even want to take up this challenge given the deep political economy nexus which is bound to have proliferated in the labyrinth of political funding? Or are regimes, irrespective of political affiliation, more than happy to pander to these vested interests while doing cyclical tweaks or throwing in fiscal tidbits to placate the numerical majority without doing anything to address the systemic crisis in farming? Even if the state were to want to do this, how can it cultivate allies for such a project? This question has to be answered in the wake of the fact that such a policy effort will most likely be a long-term move outspanning the typical election cycle.
These are the most pertinent set of questions as far as the future of Indian agriculture is concerned. Anybody who even claims that they have all the answers is a victim of either hubris or delusion or is outright bluffing. If the country needs a White Paper on political economy/economy, this is the issue which should have been chosen. Is the regime interested? Can the representatives of farmers push the envelope in the discourse on farm policy in India? The challenge is not an easy one, but it is too critical to be ignored. Farmers have been an integral part of Indian politics since the days of the freedom struggle. 21st-century farmers' politics should rightly draw inspiration from these struggles, but it also needs to re-strategise its battle plans.
Every Friday, HT’s data and political economy editor, Roshan Kishore, combines his commitment to data and passion for qualitative analysis in a column for HT Premium, Terms of Trade. With a focus on one big number and one big issue, he will go behind the headlines to ask a question and address political economy issues and social puzzles facing contemporary India.
The views expressed are personal
Roshan Kishore is the Data and Political Economy Editor at Hindustan Times. His weekly column for HT Premium Terms of Trade appears every Friday. ...view detail
Terms of Trade | India needs a White Paper on agriculture
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16.02.2024
With some farmers' unions from Punjab resuming their protests and the Union government fortifying roads around Delhi, agriculture has made a reentry into public consciousness, this time just before the Lok Sabha elections.
A thorough, and more importantly, serious debate on agriculture is absolutely essential for India’s future for two basic reasons. One, agriculture still employs almost half of India’s workforce even though it contributes just around 15% of India’s GDP. This is the core issue as far as India’s inequality and poverty challenge is concerned. Two, a country of India’s size -- we are now the most populous nation in the world -- even if it wanted to, will not be able to source its food requirements through the foreign trade route. There cannot be any food security without a thriving agriculture sector.
To be sure, nobody (in their right mind) disagrees with the import of these two factors. The question is how should one go about resolving these challenges. At least three factors need to be kept in mind while answering this question.
One, any effort to reduce agriculture’s employment share will have to be mindful of the fact that without any additional skill sets in the non-farm job market, existing farmers will not be able to land remunerative jobs outside agriculture. Essentially, this means that blanket efforts to push capital intensity in agriculture to reduce its employment share and hence improve its income-employment share asymmetry could end up doing more bad than good.
Two, any policy which seeks to increase agriculture’s income share in GDP by nudging it to shift to the production of high-value crops (food or non-food) will have to be mindful of the fact that a very large part of India’s population does not have the purchasing power to buy such commodities: 800........
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