Challenges facing Indian agriculture
INDIA'S AGRARIAN STRUCTURE, ECONOMIC POLICIES AND SUSTAINABLE DEVELOPMENT — Variations On a Theme: V.S. Vyas; Academic Foundation, 4772-73/23 (23, Ansari Road) Bharat Ram Road, Daryaganj, New Delhi-110002. Rs. 695.
THIS VOLUME is a collection of various public lectures delivered over the last 25 years by the author. V.S. Vyas is a member of the Economic Advisory Council to the Prime Minister. A key policy maker over the years, he has been a member of the Scientific Advisory Committee to the Cabinet and also of the Agricultural Prices Commission.
In a phase of policy dominated by a chorus in favour of privatisation and globalisation, he sounds a note of caution. And reminds us of issues that have been long forgotten and suffered even greater neglect in the 1990s.
Vyas speaks of "immense harm to agriculture and to the economy" caused by a slowdown in public investment in Indian agriculture in the 1990s. In a report on "Food Security in South Asia" prepared for the Food and Agricultural Organisation (FAO), he argues that "private sector investment is generally complementary to public investment" and occurs when "public investment makes returns on private investment attractive."
According to him, the key areas of concern in Indian agriculture even in the "pre-reform period" were neglect of the dry lands and environmental issues, as also weak extension efforts and disregard of self-help institutions, such as cooperatives.
This oversight has not only been aggravated in the 1990s, coupled with a decline in public investment and what he calls a "high subsidy, high prices regime", it has led to a virtual crisis in Indian agriculture.
For the first time since Independence, the 1990s witnessed a decline in per capita output in Indian agriculture, with virtually all foodgrains suffering a sharp decline in the rate of growth of output and yield.
Vyas also laments the continued neglect of rural infrastructure as also the social sector (education, health and nutrition). India's expenditure on these sectors continues to be among the lowest in the world in comparative terms.
This is something even the World Bank has pointed out in various recent reports. It is in this backdrop that the author argues strongly against succumbing to pressure to move away from our policy of self-sufficiency in food.
In his Dantwala Memorial Lecture titled, "The Second Round of Reforms in Agriculture" delivered at the 83rd Conference of the Indian Economic Association, Vyas argues that comparative advantage is at best a static concept. It ignores the dynamic role of technological and institutional change.
It also assumes that domestic producers can make quick and frequent changes in cropping pattern, while responding to fluctuations in international prices. He points out that international prices are subject to wider intra-and inter-year swings than domestic prices and unrestricted exposure to international markets would increase risk and uncertainty for Indian farmers.
In his C.N. Vakil Memorial Lecture on Globalisation, the author outlines an aggressive, pro-active strategy to be adopted by India at the WTO negotiations, based on alliances with other countries to change the rules of the game.
In an insightful discussion of food grain markets within India, he argues that the poor who buy and sell in small quantities and intermittently, incur high transaction costs and face discriminatory prices due to weaker bargaining power and asymmetry of information. Difficulty in enforcing contracts creates moral hazard.
This leads Vyas, in his presidential address to the Asian Conference of Agricultural Economists (2000), to outline a major pro-poor agenda of agricultural market reforms.
While he continually alludes to the importance of environmental issues and the need to move towards a truly sustainable agriculture, a reader looking for insights on these issues would be sorely disappointed.
The author hardly even mentions the "man-made" crisis of groundwater caused in many parts of India through intensive tubewell irrigation.
This crisis is evident especially in those areas (65% of India's land mass) that are underlain by hard rock formations. But even in the alluvial heartland of the Green Revolution in Punjab and Haryana, the levels of groundwater development have reached such unsustainable levels that farmers are being advised to move away from rice and wheat dominated cropping patterns.
Vyas has surprisingly little to say on the excessive emphasis in Indian agrarian policy on these two crops, not only in production technology but also pricing and procurement that has created major inter-crop and inter-regional inequity in Indian agricultural development over the last 30 years.
MIHIR SHAH
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