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India can’t have true reform in agriculture if we keep hitching it to rural development

The systematic marginalisation of agriculture in Indian economy, including by Nirmala Sitharaman in her Budget, reveals why we can never fix it.

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While everyone has been focusing on the Narendra Modi government’s budgetary allocations to agriculture, its location in the Budget has just as much to tell us about how limited the understanding of the problems and possibilities of Indian agriculture has actually become.

By placing agriculture and a wide-ranging 16-point action agenda to double farmers’ incomes in the very opening sections of the longest Budget speech ever delivered, Finance Minister Nirmala Sitharaman might have justifiably felt that she was giving agriculture and India’s farmers pride of place (or plate) on her government’s political and economic agenda. However, this choice reflects quite the opposite: the systematic misrecognition and marginalisation of agriculture and its roles in Indian economy and society. Rethinking these assumptions is critical if deep and farsighted agricultural reforms are to have a real chance.

For instance, what does it tell us about the government’s understanding of agriculture that along with health, water, sanitation and education it is part of a section titled ‘Aspirational India’, and finds no mention in the section on ‘Economic Development’? Agriculture, here, is about ‘seeking better standards of living’ but not about the creation and multiplication of wealth and value, even though the extraction, realisation and transformation of value (in one form or another) is part of virtually every agricultural process.

Also read: Budget 2020 pays little more than lip service to farmers and agri sector. Just like last year

Farmers as aspirants, not entrepreneurs

Farmers are then cast as aspirants, but not as risk-taking entrepreneurs, even though the range and intensity of their exposure to risk is unmatched.

Similarly, they are viewed only as job seekers and not as job makers even though agriculture as a sector remains the largest employer in the economy. And while Sitharaman’s key action points for agriculture covered aspects such as markets, credit, insurance, power, inputs, transport and logistics, these somehow never rise to the status of complex commodity markets, agro-commercial systems, industries, investments, serious risk mitigation instruments, and high-quality public infrastructure.

By glossing agriculture as aspirational, one only reinforces the view that agriculture is some sort of residue, a stalled structural transformation, a subsistence industry, or a buffer stock for food grains. But agricultural commodity markets have always been at the very heart of development: the connective tissue in the Indian economy, a key driver of growth, and vital to the wider dynamics of distribution, diversification and equity. It is time that the Indian policy imagination reinvests in the idea of agriculture and its multiplier effects and on all that it will take to change the terms of engagement in favour of farmers.

Also read: How Economic Survey used ‘Thalinomics’ to defend Modi govt’s inflation management

Why hitch agriculture to rural development

Here’s another one. What does it say about the understanding of agriculture that it has been tethered in the Budget to rural development? In this case, the convergence may be fairly simply explained by the fact that under the second Modi government, the Agriculture and Rural Development portfolios share a common Union minister. More substantially, one might even hope that closer integration of key schemes like the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) and the National Rural Livelihood Mission (NRLM) with agricultural programmes would be more productive.

At the same time, hitching agriculture to rural development is highly limiting on two counts.

First, it obscures the linkages and interrelations between agricultural production, circulation and consumption, which invariably criss-cross over rural-urban boundaries. As importantly, it also sidesteps the very real political and economic trade-offs between maintaining low urban consumer prices and delivering high (or simply remunerative) returns to rural producers. In its chapter on ‘Thalinomics’, the Economic Survey seems to imply (without any evidence or evaluation) that a slew of agricultural reforms introduced in 2015-16 enhanced agricultural productivity and the efficiency of agricultural markets to such an extent that this, in turn, drove the slowdown in the price of the Indian Thali over subsequent years. This is done, moreover, without any mention of the impact of crashing commodity prices, the repeated use of stock limits and trade restrictions at the slightest upward movement in prices, and various other inflation-targeting measures deployed by the government during the same period – and its relation to farmers’ incomes and agrarian distress.

Also read: Modi wants to double farmers’ income by 2022. But it is only their debt that’s growing

The urban and the agrarian 

By drawing agriculture and rural development together, one also completely ignores the historic and dynamic relationship between agriculture and urbanisation in India, especially in the life and fortunes of small agricultural market or mandi towns across the country. Historically, rural India has always been more than agriculture, and agrarian India has always gone beyond the rural to extend into commercial, social and political networks of exchange with urban centres of trade and administration. However, it is all too common for us to characterise the agrarian and rural as an exporter of bulk produce, unskilled bodies and crop burning residue into our cities, with little acknowledgement of the diverse ways in which agricultural surplus has also shaped industrial and urban trajectories across Indian regions.

Instead of setting up rigid urban-versus-rural oppositions and transfers, it would be far more productive and prescient to draw out the interlinkages and take them into account in both urban and agricultural planning and development.

Also read: India’s agriculture departments are complex. But Odisha is using data to fix it

True reforms need a public vision for agriculture

Finally, what does it tell us when the single largest allocation to agriculture, irrigation and allied activities (accounting for nearly half the total outlay of Rs 1.60 lakh crore) is Rs 75,000 crore to a single scheme, PM-Kisan, an income support transfer amounting to Rs 6,000 per year to landholding farmers? Leaving its current infirmities in design and implementation (exclusion, identification, disbursement) aside, the overriding commitment to a centrally administered income support measure is eventually an almost inevitable outcome of this very limited political and economic vision for Indian agriculture and its future.

It is true that there are significant reforms, especially in the domain of agricultural marketing and trade regulation, that do not depend on the union budgetary outlays to gather momentum. But as long as our dominant assumptions about agriculture remain, Indian agriculture will not be able to mobilise the public vision, investment, knowledge resources, institutional capacities and partnerships it so deeply needs.

The author is Senior Fellow at the Centre for Policy Research and Associate Professor at Ashoka University. Views are personal.

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  1. Agriculture was the main stay of economy in ancient and medieval India. It provided land revenue which was the main source of Revenue for monarchs and emperors. There was no income tax, and commodity taxes were hardly of importance. How did such an important branch of economy become so destressed in the last couple of decades. The answer lies in excessive regulation of production, distribution and consumption. While other businessmen enjoy freedom about what they produce and price at which they sell, this option is not available to the farmer. Remove the restraints on agricultural marketing. It may lead to inflation. But, that must be controlled through monetary policy, not by artificialy restricting the prices of agricultural produce. But, electoral politics has skewed the economic treatment of agriculture in India. Giving Rs.6 k a year hardly improves the condition of farmers, while it causes a big drain on the resources of the government. It is official method of bribing, that is all.

  2. Hail the Agriculturist and Nation will prosper!!
    The great Poet Thiruvalluvar says” Only those ,who use the plough,till the land and eke out their living, ,are those who LIVE in their rights,
    The rest are simply adulating others for their Living.”
    The mother earth is Kisan’s friend ,and the Rain god is a free supplier of water for them.Sun god help his crop and his intelligence provides the know how for the Job.
    He is like Zorba ,the Greek .Let us learn to respect Him,
    It is suicidal for the Nation otherwise.

  3. I have one-person NGO since 16 years working in Tal.Mangaon, Dist. Raigad, Maharashtra. Between 2009-11 I gave best and appropriate quality and quantity seeds and fertilizers with 60% subsidy in the first year, 50% in the second year only on fertilizers and 40% on fertilizers in the third year. Seeds needs replacement every 3 years. As the base was very low and the inputs not adequate and appropriate the production of paddy, the only kharif crop in Konkanmore than doubled from 800 kgs/acre to 17-1800 kgs/acre. Built 2 small check-dams and dredged the small river passing through the Village Chandore, farmers are able to grow watermelon, karela, cucumber, marigold flowers etc. between Nov.-April to be ready for monsoon paddy crop. By spending only 40-50 lacs more than 300 farmers are standing on their feet today. I do not provide any agricultural aid after the first 3-4 years. This is self-reliant and self-sustaining rural economy. Young and middle-aged earning less than 12-13000 Rs. per month in towns and cities have started reverse-migration, as they were not made aware that with 0.5-0.75 acre (that’s average holding per family, surprised!!!) a family of 5-6 can live under better environment and with the family. I have no regret of not-going to Wharton School in 1996 on a large scholarship after my PGDM from IIM, Calcutta. Incidentally IIMC awarded me Distinguish Alumnus award in 2013. Even if MPLAD money, 4000 crores, is used every year in this fashion, we will not need money for agriculture.
    Warm regards
    Bhupendra Madhiwalla

  4. India cant have true Reform in many areas.Supreme court of India has given 101 judgements directing centre to implement many Reforms in the areas of Pollution control, Judicial Reforms like having IJS like the IAS,IPS to have permenant solution to the shortage of judges all over the country, Having supervisory bodies over lower judiciary etc and not less than 101 ideas/Reforms to improve the country,but the govt has hardly taken up any except deforms like CAA etc. I do not think that this kind of approach will help the country and the country’s state is sorry if you look today.Much worse,Rome also went into this kind of Deforms stage,prior to disintegration of The Mighty empire.Half baked kings or half knowledge peoples ended the Once Mighty roman Empire.

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