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The INDIA ECONOMY · PDF file rate of 10 per cent while the bottom 80 per cent are experiencing 1-2 per cent growth. This upper class should grow at 4-5 per cent while the lower 80

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  • "When the GDP is currently growing at the rate of 8

    per cent,doubling of farmer's income in seven years

    requires a 10 per cent annual growth of income. This

    in other words, means a re-distributionn of income in

    favour of the weaker section .......... But no one has

    picked up on this point. There is a kind of conspiracy

    of silence of this important issue. It is not just growth

    but the spread of growth that is also important. At

    present, the upper class that constitutes 20 per cent

    of our society is experiencing economic growth at the

    rate of 10 per cent while the bottom 80 per cent are

    experiencing 1-2 per cent growth. This upper class

    should grow at 4-5 per cent while the lower 80 per cent

    should have a growth rate of 10 per cent."

    - Dr. M. K. Chaudhuri, in an interview with The Times of India, 24th Feb, 2004.

  • “And he gave it for his opinion that whoever could

    make two ears of corn or two blades of grass to

    grow upon a spot of ground where only one grew

    before, would deserve better of mankind, and do

    more essential service to his country than the whole

    race of politicians put together.”

    - Jonathan Swift

    FOOD FACTORY

    So ur ce

    :w w w .fi rs tli gh

    t.c om

    "Let us together dream of a country where poor are not

    just merely reduced to statistics but where there are

    no poor. Let there be a day when small childrem are

    taken to a poverty museum like science museum where

    they last millennium. Let this dream take the form of a

    revolution and as long as our dreams keep outweighing

    our memories, India would remain a young and

    dynamic nation on its path to global equality. And

    for this let the wait not be for eternity. Let us together

    achieve this in the next 25 years."

    - Prof. Arindam Chaudhuri, 'The Great Indian Dream', Page No.225

  • The India Economy Review 20044 5The India Economy Review 2004

    TT here cannot be any vision that can be chartered for a nation l ike ours discount-ing the agriculture sector For, whatever growth rate and development we envisage as a nation, it cannot be achieved and susta ined by marginalizing 55% of our population (agricultural labourers and cultivators). Constant focus towards generation of purchasing power for this commu- nity is a strategic policy imperative. A hard nosed and an unfinching commitment towards this goal wil l definitely fuel the growth engine on a self sus - ta ining basis. Growth with human face ! ! ! . In this

    context and in a nutshel l, The IIPM Think Tank a sser ts only and the only fol lowing guidel ine

    “If Agriculture Survives, India Survives” The strategic importance of the Agricultural sector comes barely evident i f one were to give a cursory glance to the table mentioned below. According to Mr. G. Ramachandran, a wel l known f inancia l analyst, i f services are the magic fountain of high incomes, agriculture is the deep pit of low incomes. This par ticular pitfa l l should not be viewed in iso - lation for it misguides the policy maker and the

    economist. The lowest base level incomes and the lowest growth rate of the agriculture sector has to devastating ef fects. Firstly it spel ls misfor tune for industria l and service sectors, which cur- rently and pre -dominantly earn a large par t of their incomes from the domestic market. This entire arithmetic leaves us with a simple and evident proposition. India’s per capita and income and per- capita income growth rate wil l continue to remain small i f a large par t of the popu- lation continues to be employed in agriculture, the way it stands now. Secondly, it is the back- wardness and low product iv- ity of agriculture that accounts for the widespread pover ty in India. The highest incidence of pover ty i s among sma l l - sca le farmers and casual labourers. To top it a l l , we have the strategic concern of 'Food Security' at stake. Consider this : Some esti - mates in The OECD Agricultural Outlook 2004 -2013 indicate that ( ‘OECD notes India’s progress in farm sector’; The Hindu; July 27th 2004), in the absence of sig- nificant technological changes in the agricultura l sector, growing income and population would lead to an import demand of 115 mil l ion to 142 mil l ion tones of food gra ins.

    A f ter a spa n of re l a t ive stagnation during the last two decades, agriculture witnessed an improved growth of 3.2 per -

    cent in the 1980s ; but the growth performance was some what sub- dued in the 1990s, and especia l ly in the last six years, with rea l GDP originating from agricul- ture growing at a modest 2.9 percent. Agriculture witnessed a very modest 2.1 percent average annual growth during the Ninth Five Year Plan, while tota l GDP grew at an average of 5.4 per- cent per annum. I f India were to achieve an 8% growth in GDP, agriculture must clock a growth rate of 4% . And this is not possi - ble until the current agricultural practices are reviewed.

    Against this backdrop, The I I PM T h i n k Ta n k h a s c on - structed a matrix of problems that a re plag u ing the Ind ian agricultura l sector.

    PROBLEMS

    In 1980, investments in agr i - culture were twice the va lue of subsidies. In 2000, d irect and ind irec t subsid ies were tr iple the va lue of a l l investments in agriculture, which throws l ight upon the dismal state of a f fa irs. As matters stand, fer ti l izer com- panies receive the bulk of the Rs 15,000 crores fer ti l izer sub - sidy. (Financial Express editorial t it led ‘Input Subsidies’; June 4th 2004). Another main reason for the dismal per formance of our farm sector has been the per- sisting adverse terms of trade aga inst farmers. Dr. Y.K A lagh

    “India needs to move from

    the government driven

    increase in production to

    the market driven increase

    in consumption.”

    CII’s National Council of Agriculture and ITC Chairman YC Deveshwar in Times of India; May 17th 2004.

     Studies by the Ministry of Agriculture show that farm incomes have fallen in the past five years. Rice farmers in West Bengal, for instance, earned 28 percent less in 2002-2003 than they did in 1996-1997. Incomes of sugar cane farmers fell, 32 percent in Ut tar Pradesh and 40 percent in Maharastra. Farm incomes of Nor th Indian farmers eroded by 10 percent, on an average. (Source: ‘Mirage of goodies for farm sector’; Mr. Devinder Sharma; Business

    Line; July 20th 2004.)

    Name of % of Households % of contr ibution Per Capita Per–Capita Growth the Sector dependent upon in the f inal GDP Income (Rs.** ) rate dur ing 1994 to the sector 2001 in % terms

    (Source: “The Progression to Prosper i t y”, The Hindu Business L ine, Januar y 28th, 2004, Mr. G. Ramachandran)

    Agr iculture 55 25 Rs. 5,129.00 2.10

    Industr y 18 27 Rs.17,588.00 2.51

    Ser vice 26 48 Rs.21,463.00 2.88

    ** The f igures are applicable in cons tant 1994 monetar y uni t s.

    “Agriculture is not a commodity machine

    but the backbone of the l ivel ihood

    security system in India, where 70

    percent of the population is in the

    villages. So agriculture is not just a

    question of economics and trade but

    of dignity and survival.”

    Dr. M.S. Swaminathan, Chairman, MSSRF

    Annotat ion On Agr iculture

    “Agriculture is not a commodity machine

    but the backbone of the l ivel ihood

    security system in India, where 70

    percent of the population is in the

    villages. So agriculture is not just a

    question of economics and trade but

    of dignity and survival.”

  • The India Economy Review 20046 7The India Economy Review 2004

    has observed that profitability has fallen by 14.2% during the nineties. This could have a varied impact on different categories of farmers, particu- larly, marginal farmers. (Please refer the box)

    Capital formation in agriculture, as a percent of gross capita l formation in the country, which was 15.5% in 1980 -81, fel l to just 7.1% , in 1999 - 2000. It is this sharp decl ine in capita l formation in the farm sector that has led to its stagnation. Likewise, there are other critica l problems which mars the agriculture sector today.

    As was edif ied in a enl ightening ar ticle, authored by Mr. Sharad Joshi, ( ‘Budget: No good harvest, rea l ly’; Business Line, July 21st 2004), the state has not only fa i led in its duty of provi- sioning the requisite services and public goods to its farmers, it has caused more harm than good, through its pol icies. In fact, according to Mr. Joshi,(Founder, Shetkari Sanghatana and Rajya Sabha member) i f one were to draw up a ba lance sheet of what the farmers owe to the government and vice versa, the farmers wil l emerge net credi-

    revea ls that in areas where pesticide use is ram- pant, chi ldren had retarded menta l development that includes analytica l abi l ities, motor abi l ities, memory and concentration. The locations chosen reported a high use of dangerous pesticides such as organophosphorous, organochloride, carba- mate and synthetic pyrethroids, in addition to “new generation” pesticides such as spinosad and nicotinoid pesticides, a l l for cotton.

    A classic case of high water usage has been well researched and documented by Mr. V. Uma Shankar, Managing Director of Daksh

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