No green shoots in the farm sector
Rewrite the rules to stop this cycle of agrarian distress
The farm protests in Madhya Pradesh that left five people dead this week is symbolic of a wider agrarian distress engulfing India. Farmers are demanding loan waivers and remunerative prices for all crops, many of them encouraged by Uttar Pradesh’s decision to write off loans given to small
ourtake farmers. The governments of Maharashtra and Punjab, where the protests are spreading, have rightly resisted because loan waivers offer relief that is usually exhausted in two farming seasons. The malaise lies in successive governments treating agriculture as a source of votes and not an engine of growth. That kept the ruralurban wage gap wide at 45%, almost four times that of China, and shrunk the share of farming in GDP to under 14%, although more than half of India’s 1.25 billion people still depend on it.
To be sure, India is reforming parts of its economy. But not farming. If farmers are to escape poverty, farming needs to become more like manufacturing: Teched up operations, free as far as possible from imponderables, churning out quality produce that fetch the right price. For this, three things need to change. The old, labour-intensive methods must give way to technology for efficiency and higher yield; Pricing and subsidy mechanism must be overhauled; and, most importantly, India must look at few people farming. For far too long, farming has been at the mercy of nature. The use of technology is patchy and only one-tenth of every rupee the government spends on rural areas goes to improving productivity.
Our farm subsidy policy encourages the production of lowvalue staples, and the output of fruits and vegetables is not covered by the government’s minimum support price. Much of the farm distress now stems from a glut of potatoes, onion and tomatoes. The monopoly of traders over local markets is perpetrated by law, killing all chance of farmers getting a fair price. In the past, a single season of dry spell sent the economy into recession. Now failed monsoons trigger localised distress. But unless the rural economy is unshackled from the time warp, our dream of double-digit economic growth will remain just that: A dream.