Mar 1, 2011 – “Agriculture development is central to our growth strategy. Measures taken during the current year have started attracting private investment in agriculture and agro-processing activities. This process has to be deepened further.”Pranab Mukherjee, Union Budget 2011-12
Truth to tell, the Rashtriya Krishi Vikas Yojana, touted as the prime driver of Indian agriculture is neither rashtriya (pan-Indian), nor quite focused on krishi vikas (agricultural development) and nor is it a competent yojana (plan). Therein lies the problem.
The India of the 9 per cent growth that is being lauded by the world and by the managers of the Indian economy is run by well-meaning people. The philosophy of inclusive development, too, is an unexceptional one. Yet the Budget – that purportedly pushes this noble agenda through – leaves one wondering if the provisions and allocations will actually help the intended beneficiaries or only do collateral good.
Worse, it has led to suspicion about the actual intent of the Finance Minister, whose pronouncements may well be likened to the famous “Ashwatthama hatah” statement of King Yudhister in the Kurukshetra battle described in the epic, Mahabharata. Thus, Pranab Mukherjee makes loud statements about his concern for the farmer and Indian agriculture (see boxes on his Budget speech). Yet, like Yudhister – the Dharmaputra in Mahabharata (who never told a lie) – he is guilty of being economical with the truth. When asked by the commander-in-chief of the Kaurava army, Dronacharya, whether his son, Aswatthama, the mighty warrior, was dead, Yudhister loudly said: “Ashwatthama hatah!” (Ashwatthama is dead) and then, in an aside, added: “Naro Va Kunjaro” (be it great warrior or elephant). Dronacharya, heartbroken by the confirmation of the news of his son’s death, disarmed himself and left the battlefield to meditate. That was when Dhirshtadyumna of the Pandava army killed him. This was deceit of the highest order. In hiding more than it reveals, the Budget exposes itself to such a charge.
Like in any other form of enterprise, credit is vital for sustenance in agriculture and, over the years, it has been established that the corporate and technology sectors have far greater ability to manipulate the system to commandeer the greatest share of credit and other benefits; sometimes even an entirely unintended privilege, making the concept of agriculture credit a misnomer. Mr Mukherjee’s announcement makes it appear that the farmers will get loans for Rs 4,25,000 crore ($80 billion) and, if they are good, at rate of 4 per cent.
Ask how much of this humungous sum was availed of by the farmer at a subvention rate last year and what is the quantum of cash loan to farmers? A close inspection may reveal that the agro-industries sector was the beneficiary and not the farmer. Now compare this with the annual write-off of industrial loans – which take place regularly without a whimper of protest – and the figures, every year, will be higher than the one-time agriculture loan write-off.
It is also important to ask the question around the much talked about “food inflation” that affects everyone. Yet consider food inflation from the farmer’s point of view: In 1981 – I was still at school in Ajmer – my elders say, the price of both gold and cotton was Rs 400 per 10 grams and per quintal respectively. Today, 30 years later, my cotton crop sells at Rs 4,000, while gold sells for Rs 22,000.
The point is that the price of cotton has increased by 10 times and gold by 55 times over the same period. Gold has been a standard against which wealth is measured and the point need not be elaborated any further. If this is the kind of inflation that those in power are worried about, farmers are even more worried.
Where possibly the Budget will make a long-term difference to the food industry, is in the promotion of food storing, processing and preservation infrastructure. These were immediate imperatives given the wastage of food in the government godowns. It needs to be borne in mind though that one important set of beneficiaries of these incentives will be those with the financial wherewithal to make such investments. Hopefully, however, efficient supply chain management with clearance of production and distribution bottlenecks will help reduce the price difference between the wholesale and the retail prices; or increase the farmer’s share in consumer price; leave a little more in the farmer’s hand; and possibly help tackle inflationary pressures. Hopefully also, a reformed Agriculture Produce Marketing Act will also support these measures.
Even so, these financial incentives for private warehousing point to the government vacating space for the private sector in critical areas where its own dominating presence would be necessary to bulldoze change. Such withdrawal from public space is equally obvious in the irrigation sector that is still in a shambles and finds no succour in the Budget.
Even the industrious Punjab farmer – indeed the government of Punjab – is shifting focus to industry. The Green Revolution pushed beyond its legitimate objective and propped up by illegitimate wherewithal in the shape of chemicals has now started showing shockingly deleterious results in the north. Strangely, the government has chosen to extend it to the still fertile eastern region without any announced policy measures to ensure that the mistakes are not repeated.
The Finance Minister’s superficial statement around this: “while the need to maximize crop yields to meet the growing demand for foodgrains is critical, we have to sustain agricultural productivity in the long run. There has been deterioration in soil health due to removal of crop residues and indiscriminate use of chemical fertilisers, aided by distorted prices”, does not indicate a clear roadmap on how this major problem is to be addressed. His proposed solution: “the government proposes to promote organic farming methods, combining modern technology with traditional farming practices like green manuring, biological pest control and weed management”, does not inspire hope that he has the answers; welcome though these measures may be.
Where does it leave the poor Indian farmer in the short and long run? What does it mean for inclusive growth? The point that is being reiterated by large and small farmers the country over is that farming is no longer worth its while. That is a horrific future to contemplate.
Yet, why is India, hailed as the technological wonder, contemplating such a future amidst threatened food insecurity? India is governed by the good, committed people with the best of intentions. The question is whether the country is being best advised on agriculture? Do these advisors have the best understanding of the complexities of Indian agriculture spread over a vast range of agro-climatic regions? Wrong understanding and wrong interpretations of signals lead to incorrect action; often action by rote. What is needed is dynamism at the policy level for transformative change to happen. It does not matter whether or not the Finance Minister’s heart lies in the right place. As was said in a Batman movie: “It is not what you are inside, it is what you do that defines you”.