Sunday, April 12, 2020

The Great Indian Agrarian Distress - What is the way forward?


“How agonised we are when people die, and how untroubled we are by how they live.” -        P. Sainath

By the time India won freedom in 1947 after about 600 years of colonial rule, she and her majorly agrarian populace was badly battered and bruised. It has been 72 years hence, but the Indian farmers continue to writhe in the shackles of inequity, fettered by maladministered policies.

According to the Economic Survey released in 2018, roughly half of India resort to agriculture for livelihood. We have some of the most fertile land in the world such as the Gangetic plains. Though our food export basket may not be very diverse, India is only second after China in terms of the global food export volume. The government also regularly rolls out a number of policies and schemes to handhold the sector. Why then is the total agricultural contribution to the country’s GDP less than 17%? Why is it that the farmers still suffer from extreme climatic vulnerability, high price volatility, indebtedness and exploitation?

Although half the country is directly involved in agriculture, most of it is considered to be seasonal or disguised employment with very low per capita productivity and remuneration.  But it also true that any shortfall in the yearly urban to rural migration of labour destroys the entire supply chain activity, starting with the inability to harvest crops on time. This points to the abysmal state of farm mechanization in the country, mostly a result of extremely fragmented land holdings. Even if one manages to harvest, storage becomes the next perplexing conundrum. This is being demonstrated live across the country in the face of the Covid-19 pandemic that reinstates the age old saying, that the poor always get the short end of the stick.  Besides this, the practiced form of agriculture is highly unproductive with huge information asymmetry when it comes to suitable cropping, soil health and irrigation, while facilities for the same are sanctioned and implemented only on paper. The governments' urban driven policies signal that the rural farmer will always receive second class treatment, be it in terms of access to infrastructure or price fixing. Many propose policy reforms or technological advancements as a solution to this conundrum. This calls for retrospection.

Shortly after independence, government undertook land reforms to address the dismal state of agriculture in the country, albeit without success. This included abolishing intermediary interests such as the Zamindari system, introducing tenancy reforms to weed out the issue of insecure tenancy, imposing land ceiling to curb concentration of vast amounts of land among a few, and consolidating fragmented land holdings to check its uneconomic nature.

But the focus of the policy makers soon shifted to industrialization as a means to eradicate rural poverty and boost economic growth, and agriculture was left to fend for itself. Reaffirming what Thomas Malthus observed way back in the 1700s, the population grew exponentially while agriculture continued to snail in a linear fashion. The resultant food insecurity paved the path for Green revolution in the country.

While Green Revolution is considered to have achieved resounding success in creating a surplus in the country’s food reserves by focusing on the productivity, it was not accompanied by systemic measures or policy changes to improve the condition of the small and marginal farmers who make up almost 80% of the farming community. While there was a rise in the net per capita income by 190% soon after, this was limited to the bigger farmers of a few geographic areas like Punjab, UP and Haryana. But a 150% rise in input cost followed, plaguing all farmers irrespective of size of land holdings. Along with a short-lived respite from hunger, there emerged widened income inequality, inequitable distribution of assets and unnecessary mechanization that pushed down rural wages.

This reiterates the fact that technicalization of agriculture or sweeping policy changes are not panaceas to agrarian distress. They must be accompanied by the availability of markets, quality roads, avenues of value addition and access to fair prices in a steady market.

45% of the consumption in the FMCG sector is accounted for by rural households. Thus, a boost in the agrarian economy could just be the answer to most of India’s economic and developmental concerns. If the government is serious about its promise of doubling farmer incomes by 2022, the way forward is not by band-aid policies of loan waivers or transfer payments. It needs a multi-pronged approach of cooperative federalism from the Centre and the State governments, to integrate and implement the various disjointed schemes that currently function independently of one another. When data says 40% of the produce is almost always lost to post production losses, the policy makers should understand that increasing productivity is not synonymous with improving incomes or living standards. It involves revisiting the fundamentals to provide for what the system is lacking in – be it facilitating adequate forward linkage points, ensuring a market for the produce, ensuring availability of basic infrastructure, connectivity, and also diversification of secondary income sources like dairy, poultry and fisheries.

We shall try and explore further the widely proposed solutions in the coming weeks. 

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