Your columnist was asked to participate in this dialogue organized by the Employers Federation of India at Kolkata on Wednesday, the 21st of April at the Bengal Chambers of Commerce as part of their ‘social dialogue series’ in which employers and trade unionists come together to discuss issues of common interest. The agenda was perhaps to make a case that business leaders and trade unions were together in so far as issues regarding land and infrastructure for industry is concerned, and also that there was need for skill upgrading to move the vast numbers of under-employed people in rural areas from agriculture to industry. Implicit in the subject for discussion is the assumption that there is something wrong with agriculture for if 70% people produce just 20% of the country’s GDP, then they must be moved out from the primary sectors to those which are more ‘revenue generating’ . The fallacy in regarding the GDP as the sole ‘criterion’ is well established – but the following example will illustrate this further. When citizens go for a morning walk in the neighborhood garden where there is no entry fee, or may be a nominal charge, they are not adding to the GDP. However if they go out in their car to a garden which is ten km away from their house, they are adding to the GDP. If their cars meet with an accident and need repairs, it further adds to the GDP. This is not all. If the cars had been covered by comprehensive insurance, even better. If some of them are also hospitalized, this marks the icing on the cake! Likewise, the revenues generated from events like the IPL add to the GDP, and thereby also reduce the proportion of agriculture to the overall economy of the country – should we ask farmers to abandon their crops and get involved with cricket?
Unfortunately this bias against agriculture is shared by most people including those who write columns in popular media. The more important question about valuing the agricultural produce in the first place, and determining the sector’s share as the produce moves along the value chain is more an issue of ‘political economy’ rather than the efficiency of the farm production system, especially as the net realization from primary produce is going down, not just in India, but across the globe. Thus the 10 million tonnes of potato produced in West Bengal can be valued – either at Rs 1.50 per kg (the farm gate price), Rs 3.50 per kg( the MSP approved by the state governemtn for half a million tonnes) or Rs 3 per kg (as approved under the MIS by the Union governemtn) or Rs 2.50 per kg (the price at which the bulk of the material is now available at the cold storage) or at Rs 5 per kg (the retail price in Kolkata ) or Rs 15per kg (the retail price in Chennai and Bangalore ). Where all the intermediate transactions are accounted for till the potato reaches the consumer as a potato, or as value added product like chips, flakes or a confectionary item.
The other notion that we need to rid ourselves is that work on the farm in unskilled and non specialized. True some of it, like weeding or spraying of pesticide can be done without any special skills – but try ploughing a field with two oxen, or steering a bullock cart to the Mandi, or operating a Zero Till Machine . The realization that it is a specialized task will sink in deep and proper. Unfortunately, because of skewed policies, agriculture, and all those connected with it have always been discriminated against. Again, if we look at investments in agriculture , we find that this sector has never received more than 1.5% of the union budget and 3-5% of the budgets of the state governments. For a sector which has from times of Independence been one of the main contributors of GDP and continues to employ the largest numbers of people, why are public investments so pathetic. True, there has been some change over the last three years , but compared to investments in civil aviation or power or even Commonwealth Games, the investments in agriculture are meager. Even when the investments are being made, they are mostly on inputs, rather than on processes because it is easier to deliver inputs rather than follow the ‘process approach’ which is more difficult to implement, and even more difficult to quantify.
AgriMatters would also like to place on record its strong conviction that Indian agriculture is not inefficient, as the captains of industry would like to make it out to be. With just 2.5% of the world’s area, of which not more than one third is under assured irrigation, Indian agriculture is in a position to feed a fifth of the world’s population . If structural deficiencies in land and water entitlements, rural credit and risk mitigation can be addressed, and if local agricultural produce, especially coarse cereals and pulses can be utilized for the Mid Day meal scheme, the PDS and for the entitlements under the Food Security Act the situation will augur better for Indian agriculture. The potential for employment in agriculture and allied sectors is at par, if not higher than in manufacturing sector, because the post modern industrial sector does not create jobs. The argument that land should be released from agriculture to industry makes sense only if the employment potential is higher – but an investment of a thousand crores in irrigation, water bodies and hybrid seeds will have a more positive impact than a like investment in the industrial sector. Moreover the growth will be in the rural areas and will also met the test of creating a more egalitarian order in the countryside.