When you think of low growth, think of inflation as well. What links these two dots? India’s chief statistician, Pronab Sen, provided an answer on Thursday when he said that growth in the third quarter of this fiscal may be significantly lower than the second quarter. If Sen is to be believed, agriculture is the great laggard that is pulling down overall growth.
This is a 50-year-old story that has defied any solution. The problem seems twofold: institutional rigidities and lack of investment. In fact, it is a single problem. Rigidities are preventing the flow of investment, something that makes agriculture a low productivity sector. Supply bottlenecks (read inflation) and political discontent (sugar cane farmers’ agitation being the latest example) are constant features.
Agriculture needs forward-looking reforms such as corporate farming. These may not be easy as it is the vote catchment area of our democracy. But if reforms are not undertaken there, it will become the final frontier of India’s growth story.