Tuesday, July 19, 2011

Revolution next-Across much of the country, agricultural growth rates have been deeply disappointing over the past 10 years.

Across much of the country, agricultural growth rates have been deeply disappointing over the past 10 years. State-wise figures released last week by a national chamber of commerce reveal that most states are stuck with growth rates hovering around 2 or 3 per cent, although there have been some standout performers, particularly Gujarat and Maharashtra, which have delivered agri-growth of over 10 per cent annually. On Saturday, Prime Minister Manmohan Singh released another set of figures: for the foodgrain production in 2010-11. India is expected to produce 241 million tonnes of foodgrain, a record amount. But Dr Singh took the opportunity to warn the audience that high food prices, and sustained food inflation, cannot be controlled by such record harvests alone. Only increased productivity in the primary sector overall would deliver that. Indeed, he said that below-target agricultural growth in recent years was responsible for what he called “unacceptable levels of food price inflation”.

Across much of the country, agricultural growth rates have been deeply disappointing over the past 10 years. State-wise figures released last week by a national chamber of commerce reveal that most states are stuck with growth rates hovering around 2 or 3 per cent, although there have been some standout performers, particularly Gujarat and Maharashtra, which have delivered agri-growth of over 10 per cent annually. On Saturday, Prime Minister Manmohan Singh released another set of figures: for the foodgrain production in 2010-11. India is expected to produce 241 million tonnes of foodgrain, a record amount. But Dr Singh took the opportunity to warn the audience that high food prices, and sustained food inflation, cannot be controlled by such record harvests alone. Only increased productivity in the primary sector overall would deliver that. Indeed, he said that below-target agricultural growth in recent years was responsible for what he called “unacceptable levels of food price inflation”.

This is, of course, the correct diagnosis of what might be argued is India’s most immediate and urgent policy problem, food inflation. Yet, diagnosis is one thing, and working out the correct cure quite another. The first, most important step might well be to extend the benefits of the irrigation-driven green revolution that has remade farming in the north and the west of India to the east and those parts of the south that are still largely dependent on rain-fed agricultural techniques. The second step is to look at areas that have succeeded in stepping up their rural productivity, and working out how it is done. In semi-arid Gujarat, for example, local water conservation has been prioritised by building check dams and recharging rural water reservoirs. Soil health was examined, and newer techniques introduced. And, by many accounts, the upgrade of transport infrastructure was a crucial step, too, in that better access to markets allowed farmers to see a tangible return on their effort, which served to incentivise further investment and improvement.

The longer-term steps will have to be to allow for larger landholding, and a freer market for agricultural land. Preserving agriculture in aspic, it can now be seen, hurts the rural poor who aspire to better than what their parents had; and it also leads to spiralling food prices, which pinch absolutely everyone in India. The second generation of reforms, long delayed, must include plans of this sort for a second green revolution, or we will be condemned to a depressing future of poor agricultural performance.

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