BackPotential of agriculture to bring prosperity remains limited: NITI Aayog’s Panagariya
Indian farmers and their children recognize the superior prospects that faster-growing industry and services can potentially offer, says Panagariya
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New Delhi: At a time of acute farm distress with crop losses and low prices, Arvind Panagariya, vice-chairman of NITI Aayog, has said that “in the longer run, the potential of agriculture to bring prosperity to a vast population remains limited."
The economist’s remarks were posted on a blog post, titled Job Creation in Industry and Services and Shared Prosperity, on the website of NITI Aayog launched on Monday.
Panagariya heads the national task force on agriculture set up in March under the aegis of NITI Aayog, the successor to the Planning Commission.
Acknowledging that the fastest relief to the poor can come from productivity growth in agriculture which employs half of India’s workforce, Panagariya observed that “in countries experiencing growth rates of 6% or more over long periods, overwhelmingly, industry and services have grown substantially faster than agriculture."
“Over long periods, experiences such as that of Madhya Pradesh during 2011-12 to 2013-14 whereby agriculture grew in excess of 20% annually are rare. In the recorded Indian history, the fastest that agriculture has grown nationally over a continuous ten-year period has been under 5%," he wrote.
The solution, Panagariya said, is by creation of “good jobs" in industry and services. He cited the example of South Korea and Taiwan (during 1960s and 1970s) and more recently in China where the prosperity of the fast-growing economy was shared widely because agricultural workers could migrate to industry and services.
The Make in India campaign has provided the “umbrella" to move in this direction, Panagariya observed, adding that the federal government is urging states to undertake reforms in labour laws to stimulate jobs. He cited the example of Rajasthan and Madhya Pradesh as states that are playing a leading role.
The issue of diversion of farm land for industry and that it would undermine food security is only a “common fear aired in the media," Panagariya said, adding that the area under non-agricultural use rose by only 1% in 15 years (between 1997-98 and 2011-12) but such use produced more gains in per capita income and poverty reduction than what was achieved in the preceding 50 years.
Even that 1% increase did not hurt agriculture as multiple cropping and productivity increases allowed farm output to “rise proportionally much more," he noted.
“Indian farmers and their children recognize the superior prospects that faster-growing industry and services can potentially offer," wrote Panagariya, citing a survey by the non-profit Lokniti which found that 62% farmers were willing to quit farming if they could get a job in the city.
Panagariya’s blog post dwelled on the long-term prospects of agriculture but did not touch upon the ongoing farm distress which led to a spike in farmer suicides in the 2014-15 crop season.
As a recent series in Mint called Fractured Farms showed, farming has undergone structural shifts with more farmers opting for commercial crops but without any corresponding growth in institutional support to underwrite the new class of risks.
“The NITI Aayog or the present government does not recognize the (agrarian) crisis at hand. But it has to figure out where are the jobs for farmers to move out," said Himanshu, associate professor of economics at Jawaharlal Nehru University, Delhi, and a Mint columnist.
“Indian experience between 2004 and 2012 shows that high growth can also be jobless. A basic understanding of development economics shows that when people move out from agriculture under distress, it only creates more unemployment and social unrest. Telling farmers to move out without creating jobs elsewhere is shirking responsibility," said Himanshu, who uses only one name.
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