Dec 29, 2013

Agriculture was the saviour of Indian economy in 2013. But farmers live in misery. Will 2014 be the Year of Aam Kisan ?



With a bountiful monsoon, and a record foodgrain production, agriculture has been the savior of the Indian economy in 2013. At a time when there is an all around doom and gloom -- industrial output failing to keep pace, manufacturing sector refusing to look up, joblessness growing, fiscal deficit mounted and the current account deficit grew to a worrisome level -- it was only agriculture that provided a glimmer of hope.

Foodgrain stocks of wheat and rice soared to an all time high of 823 lakh tonnes. Grain exports increased to 200 lakh tonnes. India emerged as the world’s biggest exporter of rice, and the farm exports zoomed exponentially. While the value of India’s farm exports has nearly doubled from around Rs 12,000-crore in 2010-11 to Rs 20,000-crore in 2012-13, it is primarily because of meat exports. Basmati exports too have increased and farmers have realized a much better price this year.

But that is where the brightness ends. For the 60-crore farmers 2013 has been like any other year. Every time when the dawn of the New Year strikes, there is an expectation of a better year for the annadata, but I have seen their plight worsening with each passing year. The year that has gone into history was no exception. In fact, at a time when the government employees have been promised a further pay rise from the 7th Pay Commission, farmers remain at the bottom of the pile, neglected and forgotten. On an average, 2,500 farmers quit farming every day to join the army of landless workers.

With farm production looking up, and with no indication of any supply constraints, 2013 also witnessed an unusually high food inflation. With the Wholesale Price Index inflation of 7.4 per cent, and with Consumer Price Index remaining in double digits for most part of the year, all explanations to assuage the rising anger of the consumers failed. Reflected in the overwhelming debacle of the ruling party in the recently concluded State Assembly elections, failure to check runaway inflation cost the ruling party dear.

In fact, inflation dealt a big double-whammy. With a massive trade deficit of over $ 203.6 billion hovering on the horizon and a rising fiscal deficit, the government’s scissor fell on the employment programmes, along with rural infrastructure and agricultural investments. With joblessness growing and the policy thrust on reducing subsidies for the poor and needy, the number of poor in absolute terms has been increasing. By reducing the poverty line to Rs 28 in urban areas, and Rs 24 in rural areas, the government can play around with figures but the fact remains poverty is on an upswing.

The enactment of the Food Security Act ensuring a monthly entitlement of 5 kg of rice/wheat/millets to 67 per cent of the population or 830 million people is primarily aimed at offsetting the additional burden of the unprecedented price rise. The laudable objective of providing a legal entitlement of foodgrains every month without making adequate investments in agriculture clearly shows that the annadata will continue to go to bed hungry. Food security requirements can be met by food imports, and given the emphasis on land acquisition for the industry, real estate and highways, the task of producing food for the population will become more and more difficult. Already there are indications that India will turn into an importer of rice in the next three years.

From a high of 9.3 per cent two years ago, the GDP has fallen to less than 5 per cent in 2013. With agriculture growth expected to provide a push to GDP in 2013-14 financial year, the deceleration in growth is because of the poor performance of the industry and manufacturing sectors. At a time when non-performing assets of public sector banks have grown to Rs 6 lakh crore plus despite a tax exemption of Rs 5.73 lakh crores provided in 2013 budget, the fact remains that the Indian Corporates are slush with money. It only points to the poor performance of these sectors, and the tax exemptions coming in handy to add on to assets/profits. 

A Planning Commission report released early this year underlines the contradictions in India’s growth story. At a time when GDP was galloping at 8-9 per cent between 2005 and 2010, the report shows 140 lakh people were displaced from agriculture. Generally it is believed that those who quit agriculture would be joining the workforce in the manufacturing sector. But the report showed that even in the manufacturing sector 57 lakh jobs were lost. A clear pointer to the jobless growth the country is witnessing.

Nothing has changed in 2013 to bring back the focus on creating employment. Let’s be very clear. More investments do not necessarily lead to more jobs. With the new land acquisition law coming into force, more people would be driven out of their meager land holdings and left to migrate to the cities looking for menial jobs. Agriculture too will not be able to sustain its role as the biggest employer in the country given the push to bring in corporate agriculture linked to foreign direct investment in multi-brand retail. #   

3 comments:

Shripad said...

Very good article sir. Bang on.
That's the bitter that most are leaving farming, moving out, looking for other better jobs. While majority of them may be dissatisfied with farming itself, however some may want better jobs than this. That portion will always be there, just like Rostow theory suggests.
And some minor changes: Poverty line for urban is Rs.33 and for rural it is Rs. 27 per day

Bruce Scholten said...

The National Dairy Development Board neglects the Northeast where human development can profit from farmers' cooperatives. Fortunately a MoU between India Oil (CSR dept) and the Institute of Rural Management Anand (IRMA) is stepping into the breach.

Deepak Sharma said...

As usual another eye opener for agriculture and farming community linked stakeholders and thinkers

Deepak