Tuesday, January 11, 2005

Agriculture in India: Road to future?

Overview:
The wide ranged reforms launched in 1991 has changed the Indian economy substantially. More sectors are opened to private activity. The license raaj introduced after second five year planning (1956-61) was abolished, thus freeing the economy from the clutches of bureaucracy. Services recorded a boom during 90's mainly due to IT sector. A little more than a decade after, its time to assess and decide our main focus for coming years.
With a 24.2 per cent contribution (triennium ending 2001-02) to the gross domestic product (GDP), agriculture still provides livelihood support to about two-thirds of country's population. The sector provides employment to 56.7 per cent of country's work force and is the single largest private sector occupation. Agriculture accounts for about 14.7 per cent of the total export earnings and provides raw material to a large number of Industries (textiles, silk, sugar, rice, flour mills, milk products). India has 169,700 thousand hectares of arable land (3rd in world), which is 54.35% of total area.
But are we producing to our capabilities? When we talk of yield of principal crops and compare it with various countries, we stand no where close (refer 4). The uncertainity about the contribution of agriculture sector to our GDP is making it mark on the growth rate of nation's GDP. Growth rate of agriculture sector was meagre and constantly on decline during second half of 90's, while Services and Industries were recording increase in growth rates. This was mainly attributed to the draught. So a sector, which employs more than half of the labour force of country, which can boost GDP growth rate from 4.0 to 8.1 in one good season, which holds tremendous potential, should be left at the indeterminate rains?

Problems for Agriculture:
- Uncertainity:
The crop yield is heavily dependent on the rains that year.This was the main reason of decline in growth rate of agriculture sector in second half of 1990's. This uncertainity hits worst the small farmers and labourers, which are usually leading a hand to mouth lifestyle. In a country like our's, where people die of draughts AND floods, every year, something must be done to support farmers and supply them enough water. Ditto with electricity.
- Economically Inactive Population: People often are heard saying that population is the root of every single problem India is facing! Errr... I would like to differ. Its not the population, its the economically inactive people, who are adding to India's problems. Try to see the population we have as a resource (reminds me of an old joke: Q. What does India produce most? A. Indians!). We have huge number of idle people, we must find/invent ways to employ them and make the numbers contribute towards the growth! Especially in agriculture, we can notice passive unemployment. That is, say, 10 persons working where only 2 are required. Hence you'll find, output generated by agriculture, per person, would be way below world average.
- Under-utilization: We already talked about under utilization of human resources. But we can also increase the output by providing water to places where its not currently available. For example, before Indira Gandhi canal came to Sri Ganganagar (in Rajasthan) that area was just plain desert. Now, its among most rich districts in India.
- Poor farmers: Since a huge part of (poor) population is engaged in agriculture, unless we increase their living standards, overall growth of India is not possible. If we keep ignoring the poor, this disparity will keep on increasing between classes. Debt traps in Andhra are forcing farmers to suicide. People are migrating towards city hopeing for better livinghood, but only to increase the slum population in cities. Rural population must be given employment in their areas and they should be given chances to prosper and earn living for them and their families. They just aren't getting enough returns for their efforts

Solutions for India:
India is carrying on the label of "developing" country for quite long now, for making the move towards being a "developed" country we must shed this dependency on agriculture sector. This means focussing more on the Industry and Services sectors. More employment opportunities must be created so that we can better utilize the huge human resources we have. This doesn't mean discouraging the agriculture sector. People don't do it for sentimental reasons, they do it for their living. If you will provide them better life, why won't they move from agriculture to other sectors? Aren't labourers in Punjab are from UP and Bihar? Isn't my cook in Bangalore an Oriya? The bottom line is people will move if they find better life! We need to create opportunity in Industry and Services sectors. Focus must be kept on generating employment in Industry and Services sectors. India has been an economy based on agriculture for centuries, but I believe its time to get over it.

Sources:
1. http://indiabudget.nic.in/es2003-04/esmain.htm
2. http://lnweb18.worldbank.org/SAR/sa.nsf/Attachments/dpr/$File/chapter1.pdf
3. http://www.censusindia.net
4. http://planningcommission.nic.in/plans/planrel/fiveyr/10th/volume2/v2_ch5_1.pdf
5. http://www.nationmaster.com/country/in

1 comment:

suddha said...

Dont you think that forcing more than half of the Indian population from agriculture related employment to other forms of employment in short time is a far fetched dream? Is migratory employment the only way to experience a better life style? By buying this view are not we limiting the possibility of India`s growth only through the wetern model of the previous century??

I would love to read your comments on the above points.