The Hindu : National : `Strategic policy decisions needed to stimulate pro-poor agricultural growth'

Online edition of India's National Newspaper
Sunday, Mar 13, 2005

National

National

`Strategic policy decisions needed to stimulate pro-poor agricultural growth'

By G. Venkataramani

Dr. Joachim von Braun, Director-General, IFPRI. - Photo: Vino John

CHENNAI, MARCH 12. "India will need to make some strategic policy decisions to stimulate pro-poor agricultural growth and rural development. We have proposed action in five major areas that can help the government to accelerate agricultural growth and reduce poverty, malnutrition, and unemployment quickly and on a sustainable basis. All of these reforms can be achieved with due regard for the well-being of the country's rural poor," said Joachim von Braun, Director-General of the International Food Policy Research Institute (IFPRI), based in Washington DC.

"Indian agriculture is facing a policy paradox. Despite comfortable food and foreign exchange reserves and reasonably high growth in gross domestic product (GDP) of about 6 per cent annually, India still has more than 250 million underfed people (below the poverty line) and high under-employment. This situation reflects severe problems on the distribution front," said Dr. von Braun in a recent interview.

Five areas of action

After carefully studying the reasons for the paradoxical situation, IFPRI's senior management team prepared a strategy paper for consideration by the policymakers.

It has clearly outlined the five areas for action to put rural India on a higher growth trajectory that would cut hunger, malnutrition, and unemployment at a much faster pace than has been the case so far, according to Dr. von Braun.

"The five areas for action are interlinked and would best work if pursued in conjunction. We emphasise investments with a human face that include and reach out to the rural poor and a re-orientation of subsidies towards such investments," he said.

Rural infrastructure

"Our most important suggestion is that India should increase investments in rural infrastructure (including transport and information technology that connects villages) and agricultural R&D (leading to improved technologies for farmers). To ensure high returns on these investments, India will have to invest in institutions that make implementing agencies transparent and accountable to user groups. Part of this expansion of pro-poor investments in rural India should be financed by reducing food and input subsidies, making them available only to vulnerable groups," he explained.

India should re-orient its social safety nets to create more employment in rural areas; help strengthen the human resource base through education, nutrition, and empowerment of women; and build physical infrastructure. In this context, schemes such as the EGS (employment guarantee scheme) of Maharashtra to build rural infrastructure and FFE, well tested in Bangladesh, are much more promising than the untargeted PDS. These social investments must also address the high prevalence of micronutrient deficiencies (especially of iron, vitamin A, and zinc) among the poor, according to him.

Water management

Water is going to be increasingly scarce. Managing water use through institutional changes such as water rights that are based on farmer groups and water-harvesting schemes in dry areas with local participation are likely to be more rewarding.

Price reforms in irrigation and even power supplies for agriculture can succeed only if accompanied by suitable institutional reforms.

Indian agriculture faces promising opportunities in the production and marketing of high-value livestock products, fruits and vegetables and fishery.

To exploit these opportunities, India must liberalise its marketing and trade policies to encourage vertical coordination between farms, firms, and forks (super markets); facilitate increased flow of rural credit, especially to smallholders, through say, non-banking financial intermediaries and withdraw any special concessions in support of foodgrain policies, according to him.

Trade liberalisation

Trade liberalisation in agriculture has the potential to bring rich dividends to developing countries, including India.

To realise this potential, India must work towards establishing and strengthening a rules-based multi-lateral trading system through WTO negotiations.

In the event of major hurdles in WTO negotiations and a delay in reaching any substantive agreement, India should explore the options of reaching bilateral or regional free trade agreements with major developing countries in the region and beyond.

"Furthermore, to exploit the full potential of trade liberalisation, India should carry out "behind the border" reforms by streamlining its own domestic markets, institutions and infrastructure," said Dr. von Braun.

Printer friendly page
Send this article to Friends by E-Mail

National