Indian agriculture yearns for transformational changes

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By Pradeep Kumar Panda

Bhubaneswar, April 8: Agriculture Sector of Indian Economy has transformed in a significant manner since the 1950s by diving into different policies and reforms, particularly over the years where the transformation took place at an unprecedented pace and witnessed disruptive breakthroughs.

Indian agriculture has come a long way. The growing population became a key driver for agricultural products and with time, rising urban and rural incomes also gave a boost to attractive opportunities in the Indian agricultural sector. Transition of agriculture helped Indian economy to overcome great humiliation of food aid during 1960s and turned the country from severe food shortage to a food surplus nation.

The country also experienced agriculture led socio economic transformation in many parts. Role of agriculture in growth of Indian economy and overall development hardly needs any elaboration. However, this role needs to be re-oriented in the light of changing environment and requirements and to meet the new challenges, and, also to harness new opportunities.

This will require a shift in our approach and thinking towards agriculture from “pushing for incremental change” to “transformational change”. Further, agriculture is at the nexus of three of the greatest challenges of the 21st century – sustaining food and nutrition security, adaptation and mitigation of climate change, and sustainable use of critical resources such as water, energy and land. Agriculture is also acquiring renewed importance for gainful employment due to failure of manufacturing sector to pull labour out of agriculture and to keep pace with the growth in workforce.

India’s achievements in agriculture sector, though impressive in some areas and states, have remained lower than the potential. The main reason for this is the complacence of our leaders, particularly research leaders, with our achievements. We generally compare our contemporary food situation with the situation of food scarcity of mid 1960s and draw satisfaction from the fact that now we are not facing food scarcity.

Our mindset is fixed in comparing agriculture of 2000s or recent years with agriculture of 1965-67 rather than comparing agriculture achievements with the achievements of India’s other sectors and other nations. What has been achieved in agriculture is not compared with what is achieved in space, IT, telecom, services, automobiles, medical science, transport etc. Between 1965-67 and 2000s, we are much more different in all sectors and spheres of life than in agriculture but we do not assess achievement of agriculture against the challenging yardsticks.

Surely, agricultural achievements are big compared to mid-1960s but they look dwarf compared to other yardsticks. Transformation of agriculture sector is crucial for achieving this vision as 44.2 per cent workforce in the country is employed in agriculture and thus depend on agriculture for their livelihood.

There is large gap between income of agriculture workers and non-agriculture workers. Poverty and undernutrition in the country are concentrated among agricultural labour and small and marginal farmers. There is lot of concern relating to rural distress. If current trends in agriculture are not changed there will be little improvement in reducing income gap between agriculture and non-agriculture income and alleviating rural distress.

It has been empirically demonstrated that agriculture growth is significantly beneficial for reducing poverty and increasing per capita income. Beside inclusive growth, agriculture matters for health and nutrition, sustainability, climate change and quality of life in the country. All these factors underscore the need for a new vision for agriculture as we move forward in the 21st century.

Since 1970-71, agricultural output and value added in agriculture in India moved on a growth trajectory of around 2.8 per cent in most of the period. The growth rate moved up and down depending upon the increase/decrease in real prices of agriculture commodities. Terms of trade (ToT) for agriculture followed a declining trend during 1971-172 to 1980-81, increasing trend after 1980-81 which continued till 1998-99.

From late 1990s to 2005-06 there was a decline in ToT which was again followed by increase till 2016-17. Based on these movements in ToT the entire period from 1971-72 to 2016- 17 can be divided in four phases viz. (i) 1971-72 to 1980-81 which marked significant fall in ToT for agriculture (ii) 1981-82 to 1998-99 which marked significant increase (iii) 1999-00 to 2005-06 which marked modest decline and (iv) 2006-07 to 2016-17 which represents very sharp increase in ToT for agriculture.

It is interesting to observe that growth rate in GVA in agriculture moved up and down according to the increase/decrease in real prices of agriculture. It may appear strange that high growth rate in agriculture experienced during some phases did not bring down real prices of food in the country. The reason has been that the prices drove output growth rather than output growth determining prices! Some studies on this aspect also show that during the period of high agriculture growth (above 4%) much of the growth was driven by increase in agricultural prices.

The implications of this strong association between agricultural prices and agriculture growth is that if agricultural prices do not rise faster than other prices, then the growth rate of agriculture is likely to fall, which then becomes a major cause for agrarian distress and adverse effect on overall economic growth. Thus, a formidable and foremost challenge at present is: (i) how to sustain agriculture growth without letting food price inflation rise beyond acceptable limits and (ii) how to incentivize farmers to raise production without causing hardship to consumers?

The answer seems to be change in our goal and strategy from ‘growth to efficient growth’. This requires upgradation of agricultural technology, application of modern skills in farm practices, new innovation in farming, and lowering wastages in use of fertilizer, water and other inputs. Factors for low productivity, high average cost, and low efficiency in Indian agriculture are well documented in literature.