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How Bihar recorded growth but Punjab lagged behind and why farm reforms are important

In episode 634 of #CutTheClutter, Shekhar Gupta compares Bihar's growth after agricultural reforms in 2006 to Punjab's growth rate that has been declining.

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New Delhi: Many prominent politicians, columnists and critics have used Bihar’s abolition of the Agriculture Produce Market Committee (APMC) Act to argue that the reforms proposed by the three new farm laws will be a disaster.

In episode 634 of ‘Cut The Clutter’, ThePrint’s Editor-in-Chief Shekhar Gupta talks about the agricultural reforms in Bihar and the growth the state registered after they were implemented.

Gupta noted that several politicians are saying the abolition of the APMC Act is bad and are calling for a rollback of the three farm laws. However, Gupta said, 17 states have already abolished or made substantive changes to the APMC Act.

These states are Andhra Pradesh, Gujarat, Himachal Pradesh, Karnataka, Rajasthan, Goa, Madhya Pradesh, Telangana, Chhattisgarh, Mizoram, Maharashtra, Uttar Pradesh, Uttarakhand, Jharkhand, Nagaland, Haryana and Punjab. Many of these states are also allowing direct marketing of agricultural produce by farmers in private mandis.

Also read: 5 reasons why Modi govt is finding it difficult to tackle protesting farmers

Case study of Bihar

In Bihar, the APMC Act was abolished in 2006. Between 2011 and 2018-19, India’s growth rate was 7.5 per cent whereas in Bihar it was 13.3 per cent.

Bihar is also the state where around 70 to 80 per cent of the population is involved in agriculture and the state’s growth rate has boomed at almost twice the rate of India’s after agricultural reforms.

In comparison, before the reforms were implemented, from 1993-94 to 2000-05, India’s average growth was 6.8 per cent and Bihar was trailing at 5.3 per cent.

After Janata Dal United’s Nitish Kumar came to power and the APMC Act was abolished, between 2005-06 and 2014-15, Bihar’s agricultural growth was 4.7 per cent while India’s agriculture grew by 3.6 per cent.

In the last five years, India’s agricultural growth has been 2 per cent while that of Bihar has been 7 per cent. Bihar is an example that agriculture does well when reforms are carried out, said Gupta.

Bihar is also the fourth largest producer of vegetables and eighth largest producer of fruits in India, and is also the most heavily populated region with a population density of 1,102 people per square kilometre.

As agriculture grew, other sectors also grew. Bihar’s construction growth rate currently is 29 per cent, noted Gupta.

Comparatively, the two green revolution states of Punjab and Haryana have a population density of 551 and 573 persons per square kilometre, respectively.

If we look at Punjab, its per capita income is four times that of Bihar. However, its GDP growth has been trailing India’s GDP growth since 2013-14.

For the first time in a decade, Punjab’s growth rate surpassed India’s last year but otherwise it has been way behind the country’s, said Gupta.

Between 1972 and 1985-86, when India’s agricultural growth rate was 2.3 per cent, Punjab’s was 5.7 per cent because of the Green Revolution. However, between 1986-87 and 2004-05, India’s agricultural growth was 2.94 per cent and Punjab’s growth declined to 3 per cent and continued to go down. Between 2005-06 and 2014-15, Punjab’s agricultural growth rate declined to 1.61 per cent.

The seeds of decline in Punjab’s agricultural growth occurred because farming in the state was caught in the paddy and wheat monoculture.

Also read: A 2019 email & a govt report — why farmers are refusing to trust MSP, procurement promises

Why Punjab has been trailing 

Between 2005-06 and 2014-15 in India, during the country’s agricultural boom after the Green Revolution, many states recorded immense growth, said Gupta.

During this period, Madhya Pradesh recorded agricultural growth of 9.67 per cent, Jharkhand recorded 8.59 per cent while Chhattisgarh recorded a growth of 6.61 per cent. It was 6.3 per cent in Gujarat, 5.4 per cent in Rajasthan, 5.17 per cent in Karnataka, 4.8 per cent in Andhra Pradesh, 4.45 per cent in Tamil Nadu and 4.06 per cent in Maharashtra.

Agriculture in most states also grew faster than the national average that was 3.5 per cent at the time. However, in states like Haryana (around 3.5 per cent), Uttar Pradesh (3.2 per cent) , Himachal Pradesh (2.97 per cent) and Assam (3.17 per cent), the growth was lower than the national average. Punjab’s agricultural growth rate in this period was only 1.61 per cent while Kerala had a negative agricultural growth rate of -0.97 per cent.

Punjab has a problem in terms of agriculture and it should look within, noted Gupta.

He added that Punjab looks at Bihar and UP as poor states that provide labourers for farming. However, these states are bridging the gap faster and doing much better.

A look at the GDP growth figures of Punjab and Bihar reveals that Punjab’s growth rate was 5.9 per cent in 2005-06 while Bihar’s was 0.9 per cent. In 2006-07, Punjab grew at 10.1 per cent but Bihar’s rate reached 17.7 per cent. In 2009-10, Punjab’s growth rate was at 6.6 per cent while Bihar’s was 10.4 per cent. In 2010-11, Punjab’s rate was 7 per cent while Bihar’s growth rate was 14.7 per cent. In 2011-12, Punjab’s growth rate was 5.7 per cent while Bihar’s was 13.1 per cent.

Haryana, which was carved out of Punjab in 1966, has also done better than Punjab in terms of GDP growth.

Except in 2007-08, Punjab’s growth rate has been less than Haryana’s since 2005-06.

People of Punjab need to ask their politicians what they have done wrong, said Gupta. He added that data revealed that the land under lentils, oil, seeds, cotton has collapsed in Punjab.

Everybody in Punjab has moved to the vicious cycle of wheat and paddy, while other states such as Maharashtra Andhra Pradesh, Karnataka are moving on with vegetables, fruits, and other value-adding crops, said Gupta.

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  1. Instead of writting, the person in charge of assimilating all the data should have put up a couple of comparative bar graphs with the help of excel. It would have been a much better representation than the lengthy paragraphs.
    I had seen the CtC episode of Mr. Gupta. There too I felt the need of graphs. It would have been much more effective in the minds of the listener.
    If u can’t do, tell me.. will be happy to do it..

  2. Farmer’s income depends upon productivity ×prices .Some people just shout msp,msp and forgets about rising productivity.
    Contract farming will productivity ,ECA amendment will attract investment in supply chain.
    We have MNC ,cooperatives, brands in dairy industry,and there is no opposition against it why??

  3. A rather superficial analysis. Shekhar doesn’t explain why bihar farmers get the lowest prices and why their per capita income is the lowest in India.
    On an aggregate level, it does seem as if agricultural growth has lifted all boats, but after 14 years of no-APMC, why is bihar per capita income still the lowest and why do they migrate out of Bihar.
    Also, if prices for agricultural procurement has gone down in Bihar and farmers are getting lesser prices than in Punjab, then how come prices haven’t reduced in urban India for vegetables and cereals.

    • you just don’t listen or you ignore what u don’t want to listen. Bihar growth is much higher but it will take time to overtake Punjab because of low base. Secondly, farmland is much what a farmer can grow is much less than Punjab..but wilh increasing productivity in few years Pujabis will be going to Bihar to find work

      • Farmland is higher in bihar than haryana, punjab have highest 3.62 hectare land on an average , haryana have 2.2 hectare land on an average , while bihar have 3 hectare land on an average. Now coming to average income , punjab farmer earns 2 lakh 17 thousand on an average, haryana farmer earns 1 lakh 73 thousand on an average , bihar farmer earns 43 thousand on an average , per hectare income is highest in haryana rather than punjab and bihar have lowest one. Bihar increased GDP claims are like a drop of water on vacant glass can be seen so it have significance while in filled glass it have no significance. Reality is bihar farmers are selling different type of crops and using new farming method which increased their productivity . what about price? They are selling grains at much lower than price than punjab haryana do at MSP and private players will never give them MSP , in long run punjab haryana will not gain anything since both state have well organised APMC mandi while other states have mandi but not they never worked well, if punjab lost it APMC system they will be in loss in long run

        • That is correct. But Punjab is getting MSP and where does money come for MSP? Landless laborers toiling in factories that create industrial tax base for the center are paying for Punjabi farmers to enjoy their ensured profits and excessive lifestyles. The real loser is the laborer whose sweat is not being invested back for providing decent employment. Farmers are stealing because they own land (even though asset prices have increased 10 times in 30 years)

  4. No act should be framed to harass someones.The farm acts have been rejected by the farmers.The government should study the reasons for which farmers have opposed the recently enacted farm acts.Of course, one should not be adamant upon one’s decisions.

  5. Growth rate of developed countries is 2-3% while of developing nations is 7-8%. That does not mean developing nations are doing better than developed part of the world.
    Panjab and Bihar are not comparable by the statistics of growth rate.
    Bihari labour annually migrates to Panjab for agriculture.

    Never expected Shekher Gupta comparing apples with bananas …
    Based on theoretical understanding.

    Very poor awareness

  6. Growth rate of developed countries is 2-3% while of developing nations is 7-8%. That does not mean developing nations are doing better than developed part of the world.
    Panjab and Bihar are not comparable by the statistics of growth rate.
    Bihari labour annually migrates to Panjab for agriculture.

    Never expected Shekher Gupta comparing apples with bananas …
    Based on theoretical understanding.

    Very poor awareness

  7. Completely biased. India has higher growth rate than US. Bangladesh higher than India and US. This means Bangladesh has better reforms/laws than india and US ? Percentage off course will be higher in Bihar, Orissa, Jharkhand because they lagged behind when Punjab and Haryana grew. Theses states are already at the saturation level of productivity. Compare the actual percapita income for a truer comparison.

  8. Did that brought a betterment in the lives of the farmers and labourers. Gupta has not cared to analyses that. It is a big NO. What he is saying is if you give better prices to farmers the growth will be lesser. Why? No logical explanation is given. Analysis in growth rate is mostly illusory. India and several developing countries have higher growth rate than USA, does it anyway suggest that India’s growth model is better than USA. If not why this analysis regarding agriculture.
    An eyewash analysis!

  9. I have seen how a corn and agri revolution in the last decade and a half has pushed land prices in my hometown. Apartments have mushroomed and land prices have gone up 30 to 40 times post Laloo.. People like me who moved out have their lands still cultivated in the most archaic ways but of last I have seen my peers evincing interest and even attempting new tech on professional level.

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