Very often, targets for agricultural growth are noted every five years and buried in Plan documents, forgotten until the next Plan is ready to be launched. On Wednesday, the growth target for agriculture for the 12th Five- year Plan (2012-17) was announced by Abhijit Sen, a member of the Planning Commission. Agriculture is expected to grow by 4% in this period.
The figures are dismal. A sector that involves nearly 60% of the country’s population is expected to grow at only 4% in the coming five years. This is much lower than the services sector that has not only shown much faster growth, but also involves a far smaller number of persons. The danger here is that this will further fuel inequality. The solution is not to stifle growth in industry and services, but to do something about the rate of growth in agriculture.
Moving individuals away from a slow-growing sector to a faster-growing one is, of course, a preferred solution to limiting poverty. The question here is about speed of movement: Millions of Indians have entered a better life by this route. But clearly, it has to be complemented with faster growth in agriculture. That is not happening.
This difficult task should not be ignored any longer. Even a cursory look at food inflation numbers tells one about the serious demand and supply mismatches inherent in the Indian economy. These are bound to grow in the years ahead. The move from rural to urban areas and the swelling of workers in the services sector are fuelling it. A 4% rate of growth in agriculture simply cannot arrest this situation, leave alone reverse it.
One way to get out of this trap would have been to raise the level of public investment in agriculture. That path is closed: India’s political economy in the years to come will ensure that. The way out is to let the private sector undertake the crucial investments required to boost productivity.
Sen had some positive words on that score. He said the government was holding discussions with the private sector on modernization of storage facilities through public-private partnerships. Hopefully, this will be extended to other areas, too. Modernization of food storage and management infrastructure is only one area that needs money: There are many others as well.
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