In the midst of an economic slump, reflected through the tumbling of GDP figures for the first quarter of this financial year, agriculture has emerged as the only bright spot. Riding on the back of a bountiful rabi crop harvest, agriculture has turned out to be the real saviour. With kharif sowings exceeding by over 8 per cent, and the monsoon rain being normal so far, India is expected to be heading towards another record harvest.
At a time when the gross value added (GVA) — value of goods and services produced minus the cost of inputs and raw materials that has gone into its production — declined across the spectrum, agriculture and allied activities grew by 3.4 per cent.
With most industrial houses pulling down shutters, at least for the first two months of the lockdown, economic activity got severely curtailed. The GDP growth therefore tanked by a steep minus 23.9 per cent — the lowest among the 20 big world economies — the sharpest decline since India began computing quarterly GDP numbers in 1996. Add to it the staggering job losses; the economic hit for the average citizen has been too traumatic. Private consumption being limited to essential buying only, salary cuts and leave without pay added to their woes. As if this is not enough, 1.89 crore salaried people and another 68 lakh daily wage workers lost their jobs since April, as per the estimates of the Centre for Monitoring of Indian Economy (CMIE).
This is in addition to the estimated 3 crore migrant workers (if intra-state migration is considered, the number swells to 8 crore) who trudged back home, some walking hundreds of kilometres, carrying their children on their shoulder or in tow, in what is seen as the biggest reverse migration since Independence. Besides the large numbers, the painful long march in a way brought out the failure of economic policies that had rendered farming uneconomical over the decades. With the cost of production rising, and the output prices remaining stagnant or declining, the terms of trade in agriculture had remained negative. Therefore, instead of making all provisions to bring the migrant workers back to the cities, the effort should now be directed to reverse the economic model that continues to push people out of rural areas. Considering that 70 per cent of the rural households are engaged in agriculture, the time has come to bring the focus back on revitalising agriculture. Turn it into a powerhouse of economic growth.
While the pandemic has certainly exposed the fault lines, it will require a set of new ideas and a strong political will to reshape the new economic agenda that will spur economic growth, create employment, and, at the same, time protect nature and environment. Following the old prescription of economic growth — sacrificing agriculture for the sake of industry — has outlived its utility. Agriculture being the biggest employer, the post-Covid-19 challenge instead should be to strengthen rural livelihoods, bring more income in the hands of the farming community, which alone has the potential to realise the dream of ‘Sabka saath sabka vikas’. As Qu Dongyu, Director General of the Food and Agricultural Organisation of the UN, said: ‘Past progress was sustained by the benign trickle-down effects of strong economies. This is not the case anymore. The facts have changed, and so must our minds.’
It certainly was not an act of God that pushed agriculture into the throes of a continuing agrarian distress. Agriculture has in reality been a victim of a biased economic thinking perpetuated by the World Bank/IMF aimed at drastically reducing dependence on farming. Over the decades, farm incomes have therefore been deliberately kept low so as to bring in macroeconomic stability required to boost growth. With inflation target kept at 4 per cent, plus and minus 2 per cent, and since food items carry a relatively higher weight in the computation of consumer price index (CPI), farmers ultimately end up paying the price of keeping food inflation low.
Take the case of paddy procurement price for the ensuing kharif harvest season. While the MSP has been increased by 2.9 per cent, the Commission for Agricultural Costs and Prices (CACP) has acknowledged that the composite input prices for paddy cultivation have increased by 5.1 per cent.
In any case, fixing the procurement prices keeping in consideration the fallout it will have on inflation is one of the objectives of the CACP’s farm price policy. Even during the lockdown, when agriculture performed well, retail inflation for farm workers being higher than the gain in farm incomes, farmers in reality suffered income losses. This is borne by a survey conducted by the Gaon Connection and Centre for the Study of Developing Societies (CSDS) that showed that a majority of the farmers did not receive the right price (equivalent to MSP) for their produce. Several other studies over the years have shown how the farm prices have remained static or frozen.
It is agriculture that is actually crying for bold reforms. Agreed, in its present form, agriculture cannot emerge as the engine of growth. But let’s not forget, a healthy agriculture requires a prosperous farming community, which is only possible if the emphasis shifts to ensuring a significantly higher and an assured monthly income to farmers. This has to be accompanied by a sharp increase in public sector investments in agriculture, health and education. Is this possible? It is, provided the mainline economic thinking changes with the changing times.
Agriculture has served as the lifeline during the pandemic. The challenge now is to ensure that agriculture no longer remains the laggard but becomes an equal partner in growth. That’s the new normal India should shift its policy direction to.
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