Jan 1, 2013 – When one farmer works hard he becomes rich; when all farmers work hard, all farmers become poor

India has made great strides in increasing agriculture production over the last many years. It is time that the country focused on farmer prosperity. Very often, wrong data, incorrect interpretation of facts and lopsided analyses have led to disastrous consequences for the nation. This is one area where there is urgent need for not only correct data but innovative thinking as well to address the myriad issues relating to Indian agriculture. Budget 2013-14 should be a good place to make a beginning.

The entire business of collecting data, determining measurement indices and data analyses has to be put on a professional and scientific footing to understand the real distress on farms to enable policy makers make informed choices and fund allocations for the farm sector. This discussion assumes paramount importance on the eve of the budget because deceptive indices and data are normally propounded as growth indicators. Economists and those in power are constantly manipulating information. Good policies based on wrong information do as much damage as bad policies.

It was said at a seminar on a new ‘Vision for Agriculture’ at the World Economic Forum, Davos, that I attended that: “Everyone gets snippets of information and no one fully understands their implication.” This pearl of wisdom holds true for people across the board but particularly for policy makers and economists vis-à-vis Indian farmers.

Numbers around the gross domestic product (GDP) considered by many as the right measure of a growth of a nation have ceased to be relevant. Projections linking growth to GDP are not enough. Consider the reality: an insured tractor has an accident and the GDP goes up. At best GDP is like a speedometer for the economy but does not tell us if it is heading in the right direction. Yet policy makers cynically hide bad policies under the cover of GDP growth. Farmers would have preferred slower growth than the targeted percentage provided the gains were equitable and environmentally sustainable for all stakeholders.

Humongous figures of expenditure on infrastructure projects are quoted all the time. When the government lays electricity wires and poles, one naively believes that the job of rural electrification is accomplished even though no electricity is actually delivered to farmers. The farmer then is forced to use diesel for power generation, increasing the fuel subsidy bill.

Yet again, the government sets up Krishi Vigyan Kendras and rolls out the Agriculture Technology Management Agency (ATMA) network, which does not deliver on training and extension that it is supposed to. Then farmers are forced to do with advice from vested groups like shopkeepers selling agrochemicals, leading to overuse of inputs. It is not infrastructure expenditure that is the critical parameter; delivery of services is. It is this physical delivery of the service that must be measured in innovative ways.

What every finance minister routinely highlights in his budget speech is the figure of disbursal of agriculture credit but most farmers in the country have no access to institutional credit. This is why moneylenders rule the roost while farmer suicides are rampant because of denied access to credit. It is time that the government focused on collecting correct data and tabulating real disbursal of funds. Even data collected for tabulating the minimum support price (MSP) by the Commission for Agriculture Costs and Prices (CACP) is often incorrect and both farmers and the commission are suspicious of the same numbers but for completely different reasons.

How one measures returns on investment is important for planning a better future. The extension of roadways into rural areas has been an excellent augury for rural economic upliftment and serves as a good example of what works. There is the not- so- good example of research and developement (R&D) expenditure on the farm/rural sector. Every rupee spent on agricultural R&D yields more than 13 times return to the rural economy and furthers farmer prosperity. Yet government spending on R&D is insufficient and private investment is urgently required to supplement it. However, while partnerships with the private sector will be an integral part of any successful future strategy, they can at best complement the government sector, not replace it.

Ultimately money is finite and innovative ways are needed to measure the cost of
lost opportunities to be able to educate policy makers on follies of the past and what present policies should focus on. Development policies have regrettably given rise to socio-economic crises in Indian farming: most farmers do not want their children to remain farmers or their daughters to marry one. This is what the government needs to understand before embarking on a course of action. Mere farm sector allocations that benefit many save the farmer is hardly the best that the finance minister can do.

The farmer does trust the government’s intent but seeks better application of mind so that his problems are addressed. The good news is that the government is trying to mend its ways under intense public scrutiny. It needs to do more than just announce policies and tout them as reforms. Growth, prosperity and equality must be synonymous with policy making.