Jul 16, 2014

How about Smart Villages, Mr Modi

I have never understood why Indian farmers continue to be ignored. With a meager outlay every year, Indian farmers have been producing a bountiful harvest. If only agriculture was to be injected with the much need economic stimulus package, I am sure the Indian farmers can flood the country with food, fruits and vegetables. India can certainly emerge as one of the biggest exporters of agricultural commodities.

In 2013-14, farmers produced a record harvest of 264.4 million tonnes of foodgrains. Production of oilseeds reached a record high of 34.5 million tonnes, a jump of 4.8 per cent. Maize production increased by 8.52 per cent to reach a level of 24.2 million tones. Pulses production reached an all-time high of 19.6 million tones, an increase of 7.10 per cent over the previous year. Cotton production too touched a record high.
With such record production, the nation remains indebted to the virile and hardworking farmers. But last year, in 2013-14, when farm production recorded a quantum jump, agriculture received 19,307-crore from the annual budget kitty, which is less than 1 per cent of the total budget outlay. This year, Finance Minister Arun Jaitley provided only Rs 22,652-crore to agriculture and cooperation departments. 

The neglect of agriculture has become more pronounced since economic liberalization was introduced in 1991. I recall the then Finance Minister Manmohan Singh famous budget speech when he showered all the bounties on industry and in the next paragraph said that agriculture remains the mainstay of the economy. But since agriculture is a State subject, he left it to the State Governments to provide the much need impetus to farming. But what he forgot to say was that industry too is a State subject and should have been left to the State governments. The bias therefore was clearly visible.

Although agriculture grew at an impressive rate of 4.1 per cent in the Eleventh Plan period (2007-8 and 2011-12) it received a dismal financial support of Rs 1 lakh crore. For a sector which directly and indirectly employs 60-crore people, Rs 1 lakh crore outlay for five years is simply peanuts. In the 12 Plan period (2012-13 to 2017-18) agriculture is projected to receive Rs 1.5 lakh crore. Compare this with the Rs 5.73 lakh crore tax exemptions showered on the industry in 2014-15 alone. It’s therefore a matter of priorities. In fact, as I have been saying for long, farmers have disappeared from the economic radar screen.

Despite such low budgetary allocations for agriculture and knowing that the public sector investments have been drastically falling in the rural areas, there is no visible intention of resurrecting the farm sector reeling under a terrible economic distress. As if this is not enough, all the noise in TV studios is to cut down on subsidies meant for the poor – food, fertilizer, diesel, gas and MNREGA. But there is not even a whimper on the desperate need to remove the tax exemptions for the Indian industry.

Since 2004-05, Corporate India has been showered with Rs 31-lakh crore tax exemption. This was expected to boost industrial output and create jobs. But while only 1.5 crore jobs were added in the past 10 years, industrial production has not shown any significant jump. On top of it, Corporate India is sitting over a cash surplus exceeding Rs 10-lakh crores, and has also defaulted the banks (termed as non-performing assets) by another Rs 10-lakh crores or so. It clearly shows how the poor are being denied their legitimate economic support and the resources are being very conveniently diverted to the rich elite.

As I said earlier, agriculture employs 60-crore people. Nearly 82.2 per cent of those employed in agriculture are small and marginal farmers. With a meager land holding, and with virtually no financial support, this majority population has somehow managed to survive. Studies show that nearly 60 per cent farmers themselves go to bed hungry. With agriculture deliberately being turned economically unviable, more than 42 per cent farmers want to quit farming if given a choice. Mainline economists are keen to finish agriculture and move the farming population into the urban centres. But considering that temples are the biggest employer in the country, followed by security guards and the lift boys, I wonder if that is what constitutes economic growth. Nevertheless since the World Bank has prescribed rural-urban migration as the ultimate indicator of economic growth, Indian economists have been parroting the same prescription.

Economic Survey 2013-14 points to the same direction. Raghuram Rajan, the Reserve Bank governor echoes the same argument. Rising food inflation comes in handy to up the ante against Minimum Support Price (MSP) being paid to farmers. APMC mandis are to be dismantled. Farmers are being pushed to accept the market doctrine, which means that distress sale will now become a norm. In Bihar, which has no APMC since 2007, markets have failed to infuse any confidence by way of economic prosperity. But that’s what the markets like. They should be able to source cheaper farm commodities thereby adding on to their profits. What happens to farmers has never been their concern. Nor will it ever be.

I expect Prime Minister Narendra Modi to reverse the trend and thereby make an historic correction. He has repeatedly been emphasizing during his election campaign on the dire need to make farming economically viable. He has also been talking of providing modern amenities right in the villages. Taking development to the villages has been the hallmark of his political thinking. A beginning can be made by revitalizing agriculture in a manner that it brings back the smile of the face of the farmers. In addition to creating 100 smart cities, Mr Modi should also focus on creating smart villages.

A smart village will automatically link local production with local procurement and local distribution. A smart village will not only bring internet connection into the rural hinterland but also provide support to sustainable agriculture practices. A network of small scale industries linked to agriculture, and a strong network of rail and road corridor, with civic amenities like education and health will transform the face of real India. That’s the kind of change India expects. That’s the big ticket reform the country has been waiting endlessly for 67 years. Smart villages will not only reduce the growing inequality but also bring acche din for the last person in each and every corner of the country. It will at the same time reduce the burden of influx on the cities, and help reduce global warming. #

An abridged version of this article appeared in Deccan Herald, July 16, 2014.
Why this apathy? 
http://www.deccanherald.com/content/419924/why-apathy.html

Smart villages, Mr Modi
Orissa Post, July 15, 2014.
http://www.orissapost.com/epaper/150714/p8.htm

4 comments:

Swarnalatha R said...

Smart village would be a happy and contented village. I dare the PM to get the small farmer to certify the arrival of acchE din.

vizeet srivastava said...

Budget was very disappointing. I know most of my friends tell me that I should be happy with the extra tax saving I get. But wait, after the budget real estate is going to boom, flats becoming more costly, more slums getting created, more people living in distress in these urban centers.
We need urbanization of villages. I don't understand these economists; how can they turned around economy unless they bring money to the consumer. Top companies give their top management higher salary every year while they continue cost cutting.
APMC needed some modification so that farmers have a choice to sell their produce both to mandi or market. At the same time Mandi should have minimum price.
We need to move people back to villages so that farmers can grow more nutrition rich food. We do need smart cities but we need less metros. Cities need to be more like corridors connecting villages.
But I think if we don't understand this the imbalance will be fixed through a major economic crisis. Imbalanced growth is not sustainable.

Vaanbhatt said...

Production cost must include rent value of land, 24 hour labour cost of farm family and profit margins...food must be costlier than mobile bills and fuel consumed for expensive cars...so that rich feel shy in flaunting luxuries to common man...probably then we will realize value of farmers and labours...nation of self-interested people wishes farmers to work in national interest so that food for all can be ensure...smart self sufficient villages will reduce load of increasing urban population...

Mahesh said...

"A smart village will automatically link local production with local procurement and local distribution" -- Golden words.
In unrelated news:
Wal-Mart adds $102.9 million in Indian wholesale business in June