Indian Economy, 5th edition (32 page)

(iv)
Unforseen disasters may cause economies to fluctuate.

Introduction

Agriculture remains the most important sector of the Indian economy whether it be the pre-independence or the post-independence period. This fact is emphatically proved by the large number of people who depend on it for their livelihood. Before starting any discussion on Indian agriculture, we must look into its
special features
:

•
From monetary point of view the share of agriculture sector in the economy remains at
14.1 per cent of the GDP
1
. In the fiscal 1950–51 agriculture accounted for 55.4 per cent in the GDP.

•
The share of agriculture has been falling in the country’s gross income while industrial and services sectors’ shares have been on a rise constantly. But from the livelihood point of view still
58.2 per cent
people of India depend on agriculture
2
sector. This makes it a more important sector than the industry and the services (for Nepal and Tanzania the dependency for livelihood on agriculture is still higher at 93 per cent and 81 per cent, respectively). It means that 58.2 per cent of the population lives with only 13.9 per cent of the total income of the Indian economy—this fact clearly substantiates the reason why the people who depend on agriculture are poor. In the developed economies such as the USA, France, Norway, the UK and Japan, agriculture contributes only 2 per cent of their GDP with only 2 per cent people dependent on this sector for their livelihood.

•
Agriculture is not only the biggest sector of the economy but also the most free private sector, too. It is the only profession which still carries no burden of individual income tax.

•
This is the biggest
unorganised sector
of the economy accounting for more than 90 per cent share in the total unorganised labour-force (93 per cent of the total labour force of the economy i.e. 39.7 crores, is employed in the unorganised sector)
3
.

•
India is among 15 leading exporters of agricultural products in the world. As per the International Trade Statistics 2011, published by the World Trade Organisation (WTO), India’s agricultural exports amounted to US $ 23.2 billion with a
1.7
per cent share of world trade in agriculture in 2010. On the other hand, India’s agricultural imports amounted to US $ 17.5 billion with a
1.2
per cent share of world trade in agriculture in 2010
4
.

•
According to the export figures, agriculture is deeply related to industrial growth and the national income in India—1 per cent increase in the agricultural growth leads to 0.5 per cent increase in the industrial output (growth) and 0.7 per cent increase in the national income of India.
5

•
The industrial sector was selected as the
‘prime moving force’
of the economy in the late 1940s. But due to market failure the sector failed to lead the economy. Without increasing the income of the people who depend on agriculture for their livelihood, the market was not going to support the Industries. As a result, the Government of India announced agriculture as the prime moving force of the economy in 2002.
6

•
With 1 per cent increase in the share of agriculture in India’s total exports, the money which flows to the agriculture is calculated to be Rs. 8500 crores
7
.

•
Agricultural
growth rate
has always been a matter of concern for the economy. As per the advance estimates for the 11th Paln (2007–12) whereas the economic growth rate is supposed to be 8.6 per cent, the agricultural growth rate is estimated to be at only 3.6 per cent
8
.

•
Productivity Gap
between on-the-field and ideal farm practices decreasing
. As per the recent release of the GoI, the average productivity of rice, wheat and pulses which was 2202 kg, 2802 kg and 625 kg per hectare in 2007-08 increased to 2346 kg, 3026 kg and 649 kg per hectare during 2011-12
9
.

•
Foodgrains production touched an
‘all-time high’
of 259.32 MT in the year 2011-12 while it is estimated to moderate in 2012-13 to the level of 250.14 MT – due to deficiency in the South-West Monsoon and the resultant acerage losses – as per the
Economic Survey 2012-13, p. 175.

•
Nearly 66 per cent of the cropped area in the economy still depends on the uncertainties of
monsoon
for their irrigational requirements
10
.

KHARIF & RABI

There are certain special terms used to understand the cropping seasons of India. The agricultural crop year in India is from
July to June.
The Indian cropping season is classified into two main seasons- (i) Kharif and (ii) Rabi based on the monsoon. The kharif cropping season is from
July to October
during the South-West/Summer Monsoon and the Rabi cropping season is from
October to March
(Nort/East/Returning/Winter Monsoon). The crops grown between March and June are summer crops, known as the
jayads
.

Pakistan and Bangladesh are two other countries that are using the term ‘kharif’ and ‘rabi’ to describe about their cropping patterns. The terms ‘kharif’ and ‘rabi’ originate from Arabic language where Kharif means
autumn
and Rabi means
spring.

The kharif crops include rice, maize, sorghum, pearl millet/bajra, finger millet/ragi (cereals), arhar (pulses), soyabean, groundnut (oilseeds), cotton etc. The rabi crops include wheat, barley, oats (cereals), chickpea/gram (pulses), linseed, mustard (oilseeds) etc.

Food Philosophy of India

Indian food philosophy
11
is generally seen divided into three phases with their own objectives and challenges:

The First Phase

This phase continued for the first three decades after the independence. The main aim and the struggle of this phase was producing as much foodgrains as required by the Indian population i.e—achieving
physical access
to food.

The idea of Green Revolution at the end of this phase at least gave India the confidence of realising the objective. At the end of 1980s, India was a self-sufficient country regarding food.

The Second Phase

Meanwhile India was celebrating its success of the first phase, a new challenge confronted India—achieving
economic access
to food. The situation went on worsening and by early 2000 there was a paradoxical situation in the country when it was having more than three times buffer stocks of foodgrains in the central pool but in several states people were dying due to lack of food—a complete mockery of the logic behind maintaining buffer stock, success of green revolution and the concept of India being a welfare state
12
! The Supreme Court intervened after a PIL was filed by the People’s Union for Civil Liberties (PUCL) and a national level Food for Work Programme came up (to be merged with the National Rural Employment Guarantee
s
cheme now). The courts took the governments on task if foodgrains rot either in godowns or destroyed in oceans to manage market price for the foodgrains, or if the centre had to go for exporting wheat at very low price. In this process India emerged as the
seventh largest
exporter of wheat (2002)! Basically, we were exporting the share of wheat which was not consumed by many Indians due to lack of economic reach to the food.

As the inputs of the Green Revolution were costlier, its output naturally were to be costlier. To fight the situation there should have been a time-bound and target-oriented macro-economic policy support which could deliver comparative increase in the purchasing capacity of the masses to make the food affordable for them. India badly failed in it. The crisis was managed by throwing higher and higher subsidies ultimately affecting government expenditure on the infrastructural shortcomings in the agriculture sector. Even after providing higher food subsidies, some people failed to purchase food and they were left with no option but to die of hunger!

India is still in this phase and trying to solve the crisis through twin approach firstly, by creating maximum number of gainful employment and secondly by cutting cost of the foodgrains (via the second green revolution based on the biotechnology).

It must be kept in mind that the food self-sufficiency happiness was a temporary thing for India. By the mid 1990s, India realised that its foodgrain production was lagging behind its population increase. It means India is still fighting to achieve physical reach to the required level of food.

The Third Phase

By the end of 1980s, world experts started questioning the very way world was carrying on with the different modes of production. Agricultural activitiy was one among them which had become hugely based on industries (chemical fertilisers, pesticides, tractors, etc.). All developed economies had declared their agriculture to be an industry.
13

It was time to look back and introspect. By early 1990s, several countries started going for ecologically friendly methods and techniques of industrial, agricultural and services’ sector development. The much-hyped Green Revolution was declared ecologically untenable and the world headed for organic farming, green farming, etc.

It meant that achieving physical and economic reach to food was not the only challenge India was facing but such aims should not be realised at the cost of the precious ecology and biodiversity—a new challenge! India needed a new kind of green revolution which could deliver it the physical, economic as well as
ecological access
to the food—the Second Green Revolution—an all-in-one approach towards the agriculture sector.

Land Reforms

All economies were agrarian before they were industrialised, only their periods vary. Once democratic systems developed, the first thing the developed countries of today did was to complete the agrarian reforms in a time-bound way. As land remains the means of livelihood for the larger section of society in an agrarian economy, the successful completion of agrarian reforms benefitted the maximum number of people thereby improving their economic conditions. At the time of independence, India was a typical agrarian economy and had inherited a very inequitable agrarian system. Land reforms will be a major plank of the independent India and as part of the agrarian reforms it was made clear by the pledge of the Indian National Congress in 1935 itself. Land reforms in India had three objectives
similar to the other economies which opted for it in the past:

(i)
Removing
institutional discrepancies
of the agrarian structure inherited from the past which obstructed increasing agricultural production such as—the size of agricultural holding, land ownership, land inheritance, tenancy reforms, abolition of intermediaries, introduction of modern institutional factors to agriculture, etc.

(ii)
The other objective of the land reforms in India was related to the issue of
socio-economic inequality
in the country. The high level inequality in land ownership had not only its negative economic impact on the economy but it was badly intertwined with caste system of India and the allocation of social prestige and status by the society at large
14
. More than 80 per cent of the population from its livelihood inherited the agrarian system which had inequitable ownership of the asset i.e. land to earn income. The government wanted to go for a restructuring of the land ownership in the economy on the logical grounds and with public welfare approach. This objective of the land reforms got enough socio-political attention as it tried to dismantle the age-old agrarian structure in the country. It became such a hot issue that land reforms in India got a ‘bad-name’, synonymous to land-grabbing by the government and allotting them to the landless masses.

(iii)
The third objective of the land reforms in India was highly contemporary in nature which did not get enough sociopolitical attention—it was the objective of
increasing agricultural production
for solving the inter-related problems of poverty, malnutrition and food insecurity.

To realise the objectives of the land reforms, the government took three main steps which had many internal sub-steps:

1. Abolition of Intermediaries

Under this step, the age-old exploitative land tenure systems of the Zamindari, Mahalwari and Ryotwari were fully abolished.

2. Tenancy Reforms

Under this broader step, three inter-related reforms protecting the land tenants were effected:

(i)
Regulation of rent
so that a fixed and rational rate of rent could be paid by the share-croppers to the land owners;

(ii)
Security of tenure
so that a share-cropper could be feel secure about his future income and his economic security; and

(iii)
Ownership rights to tenants
so that the landless masses (i.e. the tenants, the share-croppers) could be transferred the final rights for the land they plough -
“land to the tillers”.

3. Reorganisation of Agriculture

This step again has many inter-related and highly logical provisions in the direction of rational agrarian reforms:

(i)
Redistribution of land
among the landless poor masses after promulgating timely
ceiling laws—
the move failed badly with few exceptions such as W. Bengal, Kerala and partially in Andhra Pradesh.

(ii)
Consolidation of land
could only succeed in the regions of the Green Revolution (i.e., Haryana, Punjab and
w
estern Uttar
p
radesh) and remained marred with many loopholes and corruption.