The finance minister of India made a remarkable statement that good monsoon may push economic growth to 8.5 percent. His confidence is the lower interest rate declared by the RBI. It is quite odd to put onus on monsoon for higher economic growth. It invariably accepts the importance of agriculture, which is quite unusual in the present day economic policy discussions.
Government seldom considers that agriculture has the potential to push the economic growth. It proves that the government accepts that agriculture is the major sector in the economy. Such declarations and hope are indeed good for the agrarian economy of India. It's also relevant now since 33 crore people (majority are rural) are bearing the brunt of drought and 256 out of 675 districts are declares as drought affected. So these districts and people are going to play a significant role in pushing the economic growth up. But, how?
So it is imperative to look at some statistics about the capacity of the agrarian infrastructure to push up the growth. The critical factor is the irrigation and reservoir capacity. The latest report by the central water commission tells that all prominent reservoirs in the country are having 46 percent of water. It is an indication of the irrigation potential and the huge expectation on these reservoirs. There is reason to trust on monsoon and relative economic growth out of it.
Good monsoon does not directly bring in prosperity. It is a common understanding that it depends on multiple factors, the most prominent among them is the capital investment in agriculture sector, rural credit facility and prevent farmers’ suicide. As per the data about 270,940 farmers committed suicide since 1995. There exists an infrastructure inequality in agriculture sector such as access to irrigation and credit facilities. Such inequality does matter in the Indian farm sector.
If the government really wants to get the benefit out of expected good monsoon, it has to put effort into the agricultural sector. It is a fact that agriculture gets less priority in the government’s growth preferences. It never considers as having capacity to contribute to the GDP growth. It is precisely due to the realisation that rural distress cannot be neglected. Drought and drought management is the best example. Drought is a recurring phenomenon and farmers are forced to live with distress agriculture. Drought refugees stay in the temporary shelter in Thane urban area shows the severity of the problem at the grass root level.
Even farmers are staying in the camp and doing daily wage for survival. These poor farmers are indeed part of the agrarian economy, which is going to push the growth rate up. As per the 2011 agricultural census the small and marginal holding (below 2.00 Ha) constitutes 85.01 percent in 2010-11 as against 83.29 in 2005-06. The operated area also increased to 44.58 percent from 41.44 percent in 2005-06. On the other hand the semi-medium and medium operational holding (2.00 ha to 10.00 ha) in 2010-11 were 14.29 percent and the large holding (10.00 ha and above) is 0.70 percent of the total number of holdings. So it is quite obvious from the facts that any reforms which target to achieve higher economic growth based on agriculture should focus on these marginal farmers. The major share of gross capital formation in agriculture is still from the private sector. Public investment is essential for the survival of majority small farmers and there should be scheming and programmes.
The latest budget 2016-17 provides considerably high preference in the budget. It's quite un-usual. A close examination of the budget report tells that fact that there is not much increase in the allocation to the agriculture sector. The only exception is the crop insurance scheme- Prime Minister Fasal Bima Yojana and budget allocation of Rs 5,500 crore for it. There is a crop insurance scheme called Rashtriya Krishi Bima Yojna under operation in the country, however, it has not yet reached out to the marginal farmers of the country. As of now nearly 39 percent of farmers are covered under the scheme, and nearly 10 percent are really benefiting by this scheme. The budget proposes the idea of hiking farmers income by 2020, however, no specific project or plan has been put across by the government to achieve this.
The expectations of Finance minister on the potential of farming are a welcome, however, it is the responsibility of the government to describe the reasons and the areas in which such expectations arises. It is imperative to accept the class difference of Indian farming and its contribution to rural economy. Unfortunately, India’s development policy is yet to recognise it. It includes agrarian infrastructure development, capital flow, marketing and most important one is real income of small holders. Agrarian India needs such intervention and not a short term support system.
The writer is an assistant professor (Jamsetji Tata School of Disaster Studies) at Tata Institute of Social Sciences.
Updated Date: Apr 22, 2016 14:47 PM