Sir Arthur Lewis, a Nobel prize winner argued that economic development is eventual everytime and everywhere about getting people out of agriculture and of agriculture becoming over time less important part of economy in share of GDP and employment. Not only western thinkers, even urban intellectuals and social scientists of India are also of the same opinion that declining agriculture growth is just a part of economic development. Industries and urbanisation are viewed as alternatives to achieve better living standards for fortuneless Indian population.
In dire straits, this idea slowly ignores the plight of millions of farmers and also shifting public policy to industry and service sector. But in reality, Indian agriculture is different from western cycle of economic development – both historically and socially. Even though agriculture contributes only 16 per cent to total GDP, it absorbs 49 per cent to total population by providing employment. For a demographically rich country, where 10 lakh new people are entering the labour market every month, only 458 persons are formally employed every day and employment in agriculture is a great shock absorber. Further, unlike western economy India skipped manufacturing sector to become a service economy. Thus closing the opportunity for unskilled workforce and productive migration. Finally, we don’t have enough exchange reserves to feed millions of mouths via food imports, thus making Indian economy fundamentally different from Western economy.
To keep the ball of Agriculture rolling in our own way, by balancing economic development backed by agricultural prosperity is to learn from our neighbor China. Added to historical underpinnings, Indian agriculture has many more factors in common with China. Farming in both countries is dominated by small farmers. As per NSSO data, the average size of operational holdings in India in 2010-11 is 1.2 ha whereas according to 2000 world census of Agriculture, average size of Chinese holdings is 0.6 ha even smaller than India. Also, the size of population dependent on Agriculture, food security and climate change issues are also common factors.
So it is quite good to compare and learn from China than from the ‘exit’ model of west. One, China’s farm success is driven heavily by public investments. The rate of growth of capital formation in Agriculture was excess of 20 percent over last decade. India’s gross capital formation has been showing a fluctuating trend from 18. 2 percent in 2011-12 to 16.4 percent in 2015-16, but never crossed above 20 percent like China in the recent past.
Second, farm productivity with minimum resource usage. The national average productivity of Wheat in India is 3075 kg/ha compared to 3257 kg/ha. Even Punjab, that records highest rice productivity of around 6000 kg/ha is far below than China’s national average of rice productivity at 6709 kg/ha. Further, India is also poor in resource use efficiency. It uses three to four times of water to produce a unit of major food crop than China.
Third, vulnerability to vagaries of weather. Though the volatility of agricultural growth in India has declined substantially over time from a standard deviation of 6.3 percent between 1960 and 2004 to 2.9 percent since 2004. But levels of volatility continues to be higher than China, where ups and downs is virtually eliminated, claims the Economic Survey 2017-18. Main reason is that the 52 percent of agricultural land in India is Unirrigated or Rainfed, making food grain productions volatile to droughts and unseasonal rains.
Fourth, extension activities in China is more decentralized and focused on small land holders. Targeted extension program at every village, agriculture engineering emphasising on small tools, machines and engendered self financing do the trick well in China.
Hence, Indian agricultural policy should boost public investments, increase farm productivity with ‘more from less’ concept, extend areas under irrigation and deploy targeted – decentralized extension education like China. These all would eventually help Government’s commitment to double farmers income by five years. Socio-economic development of Indian population is all about facilitating transition in prosperous Agriculture rather than abdicating altogether. Because prosperous Agriculture alone can facilitate sustainable urbanization and growth of other sectors of economy.
(This article was originally published as ‘Letter from the Editor‘ in ‘The Agraria’ e-Magazine. You can Subscribe it here)