May be the market forces might dictate the new agri policy!
There are so many reasons to worry about the Indian agri crisis.This sector fails to respond to the many pious hopes(yes,there is no visible active agri policy as such as of now) and there is a steady decline in all major crops.
The outcome?An all-time high inflation rate,at 6.12%.In any other developed country such a steep rise would have created alarm.In India we have a mix of many contrary forces,the Left has its own constraints,more so now as they are caught in the W.Bengal muddle of a policy for reversing their ideological fix and an adventure on the industrialization drive with such disastrous consequences!So,we see the CPM blowing hot and cold in Delhi,clutching to one pet subject or other with which to beat the government or better just to embarrass and also gain some debating points.After all,CPM is known for more destablising policies rather than contributing to steady economic growth,be it Kerala and W.Bengal.
Given this political constraint.the coalition in Delhi is caught in other contradictions too.UP and in a way TN are also causing concern.In UP the Congress wants to reverse its fortunes,it looks like never materializing,in TN it likes to see the mercurial DMK doesn’t spring any surprise.So anarchy is let to reign in there,the high court just striking down the Chennai corporation elections and thereby opening up the possibility of some new alignments of the Opposition parties.
So,there is almost a certain higher level of confusion in policy making in Delhi.The inflation rate is a subject for the experts and also for the intelligent general public.As for the more savvy economically-oriented policy experts,inflation is a combination of monetary supply and also some economic distortions in the economy.Dr.Singh is supposed to be an economic wizard and so he can be trusted to take some urgent steps to bring down the galloping inflation rate?
Let us see.
As we can see from the statistics,it is the year to year rise in food prices that are the major causes.Food grains prices has risen 12.5% in one year.Wheat 17.4%.Oil seeds 18.6%.Other food articles 16.6%.Spices and condiments 33.8%.Black pepper 46.8%.Chillies 61.3%.
The impact of the inflation is widespread.It covers almost all the food articles,more particularly the pulses and other cereals eaten by the poor.
There are so many specific technical issues that contribute to the runaway inflation,the present rise is in fact a sort of runaway inflation.Since the public is lulled by the current euphoria of high salaries and high spending and the consumerist boom,also fueled by the business media and the general upbeat mood of the nation in the wake of the IT industry reporting high growth and high profits,not many had noticed or care to notice the basic fundamentals giving way to the current concern over the price rise all around.
Unfortunately,the experts don’t talk much.That is the economic experts who must be knowing more clearly the basic unhealthy economic management.
Prof.T.N.Srinivasan of Yale university,perhaps he is based away from the din of Delhi politics,has taken some time to draw our attention to what is what.
According to his recent column,we find that the gross fiscal deficit(GFD)rose from 5.9 per cent to 9.9 per cent in 1986-87,to 9.4 per cent in 1991.Fiscal consolidation was a major item in the economic reform agenda of 1991.But this was not achieved as a conscious policy and we find that in 2000-07,it is budgeted at a high 6.5 per cent.The result?The debt of the Central and state governments stood at 88 per cent of the GDP at end March 2006,with its ratio to current government revenues at an extremely 440 per cent.Fiscal Reform and Budget Management (FRBM)legislation was meant to bring down the govt.debts both at the Centre and in the states in a phased manner.But then the Finance Minister’s flip-flop”pause button” on its targets had completely eroded the credibility of the FRMB).
What this means in common man’s language?Just mere populism was the politicians ‘act and populism means that you spend without an income.You can see this profligacy at the Centre and in the states today.TN is making a killing of it but merely become a government of the daily freebies!The Centre too has announced so many populist schemes,employment guarantee etc and these schemes obviously dont work in the way expected.Huge leakage of funds only add to the inflationary spiral and this is what we are seeing today.
There are so many basic issues about the Indian economy.One,it is still a highly protected economy,India’s share of world merchandise exports is only 0.9 per cent,compared to China’s 7.5 per cent.India is doing better in exports of commercial service where we are having a 2.9 per cent share vs China’s 3.1 per cent.
India is a casue for concern when it comes to high fiscal deficit,high debt/GDP and government debt/revenue ratios.
Now,coming to agriculture,there are so many policy reform suggestions that cry for attention.Yes,the government is not indifferent but its approach is pro-active enough.There is an unwillingness to face the dire situation in which the Indian farmers find themselves.There is no sense of urgency.
Land reforms today has come to acquire a new meaning.It is not to protect the small farmers,it is to ensure that big investments flow into the agri sector.This can happen only when big corporate s enter the field,this means there must be a very transparent contract farming legislation to protect the small farmers,to ensure that corporate don’t exploit them,ensure them fair prices,and also bring in investments and technology,use of IT tools to ensure efficient use of resources and labour of the farmers.
There is a mistaken view,shared by many sections,the government,the NGOs and the industry that Indian agriculture would somehow become like the US model.It wont and it shouldn’t.
This has to be understood.
To cite one example and to warn,India wouldn’t go for any deal like the Indo-US nuclear deal! You say one thing when you star and when you end ,end up getting what you got with the present caps and other conditionalities!
So,with the US economy and agriculture poised to dominate the world,it is anybody’s guess who would be at the US end and who at the Indian end.Whoever are,they shouldnt be doing things as Bush and Singh did the nuclear deal!
Much more serious than the nuclear deal is the livelihood of the millions of the poor farmers of India.So,we have to articulate and be more active to define our agricultural goals:food self-sufficiency,food security as a vital strategy for our geo-political sovereignty,our own role in the world.India is a large economy,with a large population and therefore our agriculture has to mean something more than production and exports.
India’s agriculture’s future
May be the market forces might dictate the new agri policy!