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ESSAY : Can India prosper, while its agriculture stagnates?
Saturday, 15 June 2013 04:19

Can India prosper, while its agriculture stagnates?

The NDA leaders were making tall claims of India shinning and about achieving higher rates of economic growth. According to them, we would soon achieve the rank of developed countries. All these claims seem to have no tangent but based on figures of quarterly growth rates and that too in the year of rebound of agricultural growth after the serious setback suffered by it due to severe drought in the preceding year. Foodgrains production in the year 2011-2002 was 212 million tonnes which had declined to only 182.6 million tonnes i.e. by 13.9 percent in the drought year of 2002-2003. This year, the foodgrain production is expected to be about the same as in 2001-2002.

Because of this trend the overall economy would record an annual growth of more than 8 percent. However, if we take a long-term view, the GDP growth rate, during the five years of the NDA rule, 1998-1999 to 2003-2004, comes out, no more than 5.8 percent, almost equal to the growth rate of GDP achieved during the preceding ten-year period, 1988-1989 to 1998-1999.

Les us analyses where India stands in the world context. The figures relating to average per capita GDP and indicators of standard of living in India, those in the developed countries and the world as a whole are presented in the following table:

Developed countries



Life expectancy

Per capita GDP

in PPP dollars

Human Development Index










From the above table it is evident that we are behind the world average, both in per capita income and human development. The per capita GDP of the world, as a whole, is 2.6 times that of India.

Potential performance of our agriculture:

With good area of arable land and temperate climate India is richly endowed by Nature for agriculture production. Our arable to the total land area is 51 percent against the world average of only 11 percent only. Even if half of the average rainfall is received, if preserved and delivered to fields, our entire arable land can produce two crops a year. We are also fortunate in having a temperate climate which enables us to grow crops throughout the year; whereas in most parts of the world due to severe winter only one crop can be grown in a year. The crude fact is that we are not fully utilizing our natural resources. More than 38 million hectares of our land which though cultivable has been le uncultivated, classified as “cultivable wasteland”, or “old and current fallows.” This area of 38 million hectares is more than the total cultivated area of four countries viz. Pakistan, Nepal, Bangladesh and Japan which provide succor to more than 400 million people living in those countries.

Not only our rain water is being wasted but more and more of our good tops soils are being eroded, and our ground water is also getting depleted. The government given little attention to prevent the waste of our most valuable natural assets, land and water. Plan expenditure on “irrigation and flood control, “which was 10 percent of the total was 10 percent of the total Plan expenditure during the Sixth Plan period, was brought down to only 6.7 percent during the Ninth Plan. Similarly, plan expenditure on “agriculture and allied activities,” which was 6.1 percent of total plan expenditure during the Sixth Plan, was brought down to only 4.4 percent during the Ninth Plan. The performance of the farm sector during the Ninth Plan has been very disappointing, though in all those five years, rainfall was near normal. Against the target of 4.5 percent per annum growth rate of agricultural GDP, the achievement was only 1.81 percent per annum, and against the target of 3.05 percent per annum growth rate of foodgrains productions, the achievement was only 1.23 percent which is much less than the growth rate of our population. Consequently, but poverty and undernourishment have increased in rural India.

In spite of all the favourable conditions for agricultural production our productivity per hectare of most crops is much less than the world average and less than half of those already achieved in agriculturally advanced countries. Achieving higher productivity in agriculture is the surest way to reduce incidence of poverty. The two the States Punjab and Haryana, whose yields per hectare are the highest in India, are also the States with the minimum incidence of poverty. Maharashtra which is said to be the most industrialised state in India, has much higher incidence of poverty than Punjab and Haryana.

The main reason for the poor performance of our farm sector has been the long persisting adverse terms of trade against agriculturists. In recent years the minimum support prices (MSPs) of wheat and paddy have been raised much less than the prices of “electricity for irrigation” and “diesel oil”. Lower increase in prices of farm outputs compared to those of farm inputs have led to poor profits, poor capital formation and stagnation in the farm sector. Capital formation in agriculture as a percentage of total capital formation in the country which was 15.4 percent in 1980-81, fell to 9.9 in 1990-91 and to only 7.7 to 2000-2001. It is this sharp decline in capital formation in the farm sector that has led to sits stagnation.

The government of India claims that to provide support to farmers, it very judiciously fixes MSPs of farm products and buys those from farmers when they fail to sell their produce in open markets at prices higher than the MSPs. Both these claims are not true. MSPs of wheat and paddy have always been fixed at levels lower than the indices of wholesale prices of “all commodities,” with base year 1970-1971 = 100. Farmers have been paying a higher level of prices for their purchases than what they have been receiving by sale of their produce. In other words, the terms of trade have always been against farmers.

The claim of purchases of farm products by the government from farmer at MSPs to prevent distress sales by them is also not quite true. An analysis of the government purchased reveals that no less than 75 percent of the total government purchases of foodgrains are made only in three states, viz. Punjab, Haryana and Andhra Pradesh. The contribution of these Sates to the total national production of foodgrains is only about one-fourth. Farmers of rest of India who contribute nearly three-fourths to the total production of foodgrains in the country, hardly get any benefit from government purchases. Even the Commission for Agricultural Costs and Prices has in tis latest report said, “If the procurement arrangements are not equitably expanded and extended to the new and emerging areas, it will send a wrong signal and minimum support prices for the farmers of these States will remain only on paper, leading to large scale discontentment.” For 75 percent farmers in the country, the promise of purchase of their produce at MSPs has so far remained only a promise on paper.

Our policy makers have ignored the fact that it is the people any country who make or mark the future of that country, and not only the politicians, industrialists and technicians. The latter can, no doubt, play an important role in the economic development of the country; but if the vast majority or our people particularly the farmers are left wallowing in poverty and ignorance, nothing much can be achieved. If we really want to make progress, we should first pay more attention to agriculture and human development.

The poor give us much more than we give them. They’re such strong people, living day by day with no food. And they never curse, never complain. We don’t have to give them pity or sympathy. We have so much to learn from them.”–1977 interview.