The Hindu : AGRICULTURE'S MIXED RECORD

Online edition of India's National Newspaper
Friday, Feb 20, 2004

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AGRICULTURE'S MIXED RECORD

THE STRING OF good news about the performance of the Indian economy continues. It is now the turn of agriculture to show a huge jump in production: foodgrain output will be a record 212.2 million tonnes (mt) in 2003-04, according to the advance estimates of the Ministry of Agriculture. There has been an across the board leap in crop output and the production peaks of the past have been crossed in a number of food as well as non-food crops. Even oilseeds, which often end up in a shortfall, will see a record harvest of 24.9 mt. The only major exception has been rice, whose output of 88 mt will be lower than the 2001-02 peak of 93 mt. Agriculture in both the kharif (monsoon) and rabi (winter) seasons has, of course, ridden on the back of the good monsoon of 2003 to recover from the drought of 2002. It will, therefore, be wrong to read more into these numbers than a recovery aided by normal rainfall in most parts of the country. Indeed, there are enough indications to suggest that the farm bounty this year does not herald a second Green Revolution.

First, foodgrain output in 2003-04 may be a record high and as much as 22 per cent higher than in the previous year, but it is a mere 180,000 tonnes more than the 212.02 mt produced in 2001-02. While it was a normal monsoon in both 2001 and 2003, the South-West monsoon last year was far more favourable to agriculture: the average rainfall in 2003 was 102 per cent of the long-term average compared with 92 per cent two years earlier. Clearly, Indian agriculture was not able to take full advantage of the excellent precipitation last year. Secondly, it is the huge harvest during the rabi season that has pushed total output beyond the previous summit. The kharif crop output fell marginally short of the 2001 peak. Since it is the kharif harvest that still accounts for a larger share of annual agricultural production and involves a larger proportion of India's farming population, the overall positive impact of the recovery this year is smaller than what a record harvest should have had. Thirdly, while complete information is not yet available, the surge in the output of most crops appears to have come more from an expansion in acreage than from higher per acre yields. Indian agriculture can claim to have broken through the stagnation of the 1990s only when there is definite evidence of a quantum increase in productivity.

One positive development has been the small but perceptible shift away from rice and wheat, and towards oilseeds and pulses. The Government's new policy of effecting large increases in support prices for the latter crops while holding constant procurement rates for cereals has sent the right signals to farmers. A further diversification in farm production will facilitate greater dynamism in this sector. A pre-condition for sustaining the current rebound is, however, a rise in public and private investment. Higher public investment calls for greater outlays by the Central and State Governments, but until now both have focussed more on the allocation of funds for current rather than capital expenditure. Private investment requires a greater flow of credit from the banking system. Yet, while the Government speaks of its achievement in providing a huge number of new kisan credit cards every year, these are for channelling short- and not long-term credit. All the evidence is of a continued drying up of long-term institutional credit for agriculture. Unless this tap is opened once more, as it was in the 1970s and 1980s, there is little chance of a revival of private investment.

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