Di­ver­sify the ru­ral econ­omy

The new gov­ern­ment must be­gin agri­cul­tural re­forms fast

Hindustan Times (Patiala) - - Comment -

Lat­est gov­ern­ment data that shows the slow­ing of ru­ral wages is wor­ry­ing. As is the de­tail that they de­clined for sev­eral months in 2018-19. The sit­u­a­tion is ex­ac­er­bated by the agrar­ian cri­sis which, at least to date, hasn’t been ad­dressed ad­e­quately by ei­ther the spate of farm loan waivers across In­dia or the in­crease in the gov­ern­ment’s pro­cure­ment price for key crops.

Lower than an­tic­i­pated sum­mer rains (which keeps the soil ex­tra dry) and fears that El Nino could af­fect this year’s mon­soon rains just serve to in­crease the risks.

The im­por­tance of the ru­ral econ­omy can’t be over­stated. It pow­ers many con­sumer- and agri-prod­uct com­pa­nies and also pow­ers In­dia’s boom­ing scooter/mo­tor­cy­cle and con­sumer elec­tron­ics mar­kets. In 2008-09, in the wake of the global fi­nan­cial cri­sis, it was the re­silience of the ru­ral econ­omy (in turn, buoyed by a farm loan waiver) that helped in­su­late In­dia. Al­ready, In­dia’s largest con­sumer prod­ucts com­pany, Hin­dus­tan Unilever Ltd, has in­di­cated that its num­bers for the three months ended March 31 were hit by a ru­ral slow­down.

It is ev­i­dent that the old for­mu­lae for re­viv­ing the ru­ral econ­omy and in­comes are no longer work­ing. Nor, it would seem, is the handout-based ap­proach to re­viv­ing agri­cul­ture. Both of these state­ments can be made with some level of cer­tainty es­pe­cially be­cause some of the Bud­gets of the Na­tional Demo­cratic Al­liance gov­ern­ment, in­clud­ing its In­terim Bud­get spelt out ear­lier this year, have fo­cused sharply (and some­times ex­clu­sively) on the ru­ral econ­omy. Part of the so­lu­tion may lie in rad­i­cal agri­cul­tural re­form. For in­stance, where is the fo­cus on wa­ter-use in a coun­try where al­most half of the area un­der crops de­pends on mon­soon rains? (This em­pha­sis on wa­ter-use should also con­sider the choice of crops). And where are the mar­ket link­ages so im­por­tant to a thriv­ing (or at least self-sus­tain­ing) agrar­ian econ­omy? In­dia’s pro­duc­tion-cen­tric fo­cus on agri­cul­ture also ig­nores the very real and ris­ing threat of cli­mate change, which is al­ready mak­ing it­self felt through ex­treme weather events. And part of the so­lu­tion may lie in di­ver­si­fy­ing the ru­ral econ­omy, wher­ever pos­si­ble, into ar­eas other than agri­cul­ture.

With the elec­tions be­hind it, the gov­ern­ment that takes charge in late May would do well to ig­nore po­lit­i­cal com­pul­sions (never out of the pic­ture in a coun­try where the next round of state elec­tions is sched­uled for late 2019) and em­bark on much­needed ru­ral and agri­cul­tural re­forms.

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