Agriculture has emerged as the weakest link in the story of Indian growth in the last decade. Slow growth and declining productivity has hit the sector hard. By one estimate 60% of the country’s population now contributes only 18% of the gross domestic product. The national policy for farmers, tabled in Parliament on Monday, is the government’s answer to the crisis. It only raises more questions.
The content is a jumble of pious hopes, measures and pronouncements on Indian agriculture often aired before. How these will be effective now, when they have failed earlier, is not clear.
Two features stand out. First, populist intent is an integral part of the policy. Second, the means for achieving its goals are statist. Virtually every desired measure will require a bureaucrat at some point. Not only will it greatly empower bureaucrats, it will also lead to corrupt practices creeping in. Unsurprisingly, there is little for the market. This is 16 years after economic reforms began and when big retail outlets are hungry for farm produce.
For starters, any effort aimed at increasing farm incomes that is divorced from raising agricultural productivity is unlikely to pay. While it enumerates steps needed to enhance productivity, it’s not clear how they are any different from past measures. The policy centres around farm income and productivity comes second. It notes that “...there is a need to focus more on the economic well-being of the farmers, rather than just on production. Socio-economic well-being must be a prime consideration of agricultural policy, besides productivity and growth.”
When translated into a goal, this becomes: “To improve economic viability of farming by substantially increasing the net income of farmers and to ensure that agricultural progress is measured by advances made in this income.”
The rest is only a matter of detail. One example illustrates this. The minimum support price (MSP) mechanism is to be implemented effectively countrywide. In addition, the government will ensure farmers’ interests in getting better prices when deciding the MSP. This is likely to result in complete political control, devoid of any economic rationale, over agricultural pricing. This has been done before, but its institutionalization and extension across India will only serve political ends. One can only conjecture that electoral battles in 2009 may be the reason for this.
As mentioned above, bureaucratic aggrandizement is a distinct possibility. One gem that stands out in the policy is the “definition” of a farmer. Farmers have been defined before, for purposes of the census and data collection. Revenue officials across India can easily distinguish a farmer from a non-farmer. They have their own ways, suited to local requirements for this. Yet, it was thought necessary to define them in the widest possible manner. This has been done in a manner that even film stars can call themselves farmers. Given this, leakages from welfare schemes for farmers is now certain.
With corruption being pervasive, one can ask whether the policy will benefit farmers. Against this backdrop, the document makes sad reading. In the section for “Asset reforms to empower farmers,” virtually every area covered—land, water, livestock and forests—has caused distress to farmers at the hands of bureaucrats. How is it different this time is a question left unanswered.
The document lists no measures by which its efficacy will be assessed, or a time frame over which it will be implemented. It’s the approach to its implementation that gives away the government’s ruse. Central ministers and bureaucrats from various ministries will “evolve the guidelines.” It’s a poor crop that will satisfy no one.
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