"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
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"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
