Economic Highlights

New Delhi, 27 March 2010

Investment In Agriculture

INFRA FOCUS NEEDS A RELOOK

By Shivaji Sarkar

The proposed Rs 45-lakh crore investments in infrastructure during the 12^th Plan should have caused elation. But it has not. It is being seen as a roadmap to the difficult days ahead. However, the country needs infrastructure but not for the sake of enriching the Fortune 500 companies.

Sadly, the proposal ignores the basic need of the country – food. Instead it seeks to make agriculture more expensive, beyond the reach of the peasants and withdraws the little State support that it has, in effect cut subsidies. In the coming days, this is bound to create havoc for the people.

The public-private partnership model, the country has witnessed, benefits only the large private corporate at the taxpayers cost. The highway sector is a blatant example of how public money is being transferred to private giants making movement of persons and goods expensive and fuelling prices of commodities.

The Planning Commission has scaled down the GDP growth to 8.1 per cent from 9 per cent during the 11^th  Plan itself. But it may be far less. The panel, strangely enough has not turned to reason and blamed it on external factors such as global recession. The Commission should have looked at closer home. The growth is coming down for some basic reasons; fall in agricultural investments, job losses, lower real income and lower consumption.

Indeed, it is a peculiar mix. More the countrymen are losing; more are the profits of large corporate. Even in a year, that the Planning Commission says it has to compromise on its growth projection, corporate profits have been phenomenal.

The Commission is supposed to be the country’s think tank. It should have displayed wisdom in its thinking process and should have analysed the past trends closely. It should have looked at the results of the recent 20-year experience of its western-backed model of supporting corporate. They have not gone into critical sectors like power and have tried to enter fast-quick-profit sectors. The big question is: Why is the Planning Commission trying to reward them?

Sadly, it has not even once explained why it is trying to ignore the base of the nation’s economy – agriculture. It has also not taken the pains to explain what way the country could have a robust growth if the availability of food at affordable prices flounders. The Commission regrettably draws its inspiration from the US economy.

Just the contrary may happen in the 12^th Plan. Forget about affordability, the country would be left hardly with any food to feed its burgeoning population. The need in 2050 would be 400 million tonnes for a population of 150 crore!

But mere focus on infrastructure has severe implications. Infrastructure projects be it road, building, industry or any other require large tracts of land, mostly prime agricultural land. Since 1980 the arable land has come down to 146 million hectare from 182 million hectare. In 1990, 165 million hectare was available. More such projects mean further reduction in arable land. The Planning Commission should have come out with a policy to preserve land for farm purposes and devised ways to prevent diversion of its uses.

The 11^th Plan document itself expresses concern over the trend and fall in private investment, largely at individual farmers level, in agriculture. “Private investment in agriculture stagnated as a result, the area cultivated fell, and diversification slowed down—all leading to deceleration. Moreover, public investment remained low and technology generation became negligible”, the 11^th Plan document states.

It further adds: “An important reason for recent farm distress was that after improving steadily from 1980 to 1997, terms of trade turned against agriculture from 1999 and, almost for the first time in post-independent India, farm incomes depressed, and also increased farm debt considerably. More generally, farmers are now subject to greater risk because variability of world prices is much higher than what Indian farmers have been used to in the past. There is need to evolve a clear policy on how to deal with this situation”.

Surprisingly enough the document does not find a solution except that it advocates contract farming “whereby the private corporate sector can establish linkages between farmers and markets”. It extols the role of future trade, where corporate rake in huge profits and also calls for strengthening food processing to create demand for agricultural produce, cut down or eliminate post-production losses and provide value added products and create jobs”. It talks of food security but does not speak of affordability. Unfortunately, food processing provides roles to corporate and makes food unaffordable to large population.

A country that has progressed primarily through public sector investment has virtually seen no role in agriculture. Even the public sector enterprises have turned to net savers instead of being net investors. The Food Corporation of India receives Rs 56,000 crore investment from the government every year.  The Planning Commission should have chalked out a role for it in investing in the farm sector. The money given to it by the government is not being utilized for a good cause except hoarding food grains. Should it not have a productive role to play so that farm production increases and the nation can depend on it for availability of food?

That would certainly not suit such sharks that are out to gobble up the people’s money. But the Planning Commission was mooted as an instrument to protect the people against those sharks. It is time to remind it of its primary role. In its definition of infrastructure, surprisingly, the Prime Minister, who is also the chairman of the Commission does not mention agriculture once.

The Planning Commission must redraft the present plan focus and modify the 12^th Plan document to make agriculture as the base for all economic activity. The growth rate in this sector has come down to 0.89 per cent since the 10^th Plan. What the Prime Minister and the Planning Commission is aiming for – higher GDP growth – would not be possible unless this base grows faster. All other plans would be utopian as the trend since 1991 amply exemplifies. The nation has paid heavily for its corporate focus. It is needed but too much dependence on it would only lead to lop-sided development, as we are witnessing. –INFA

(Copyright, India News and Feature Alliance)