TCA Ranganathan
Credit: DH Illustration
Farmers’ unrest is again making news. Interestingly, the farmers of the well-irrigated and more prosperous northern belt are more vociferous nowadays. The grievances, we must note, are about the management of surpluses, not shortages. Also, the agitation is being viewed by everyone as a ‘Farmer vs Centre’ dispute, although as per the Constitution, agriculture is a state subject.
Decades ago, when the Centre intervened, it was to tackle the then persistent droughts and famines. It undoubtedly succeeded. In the next three decades, the Green (food crops), White (milk) and Blue (fisheries) revolutions happened. Food growth outstripped population growth. We became a major exporter of wheat, rice, and other agricultural products. We are the largest producer of milk and milk products, rank second in horticulture and floriculture products, third in poultry products, and fourth in fishery-related products. These achievements have not, however, translated into rural prosperity or contentment. We need to introspect on the ‘why’ of this.
There are two principal factors at work. One relates to system design. Unlike most countries, India did not use urbanisation as the principal instrument for securing economic development. Instead, imitating the erstwhile Soviet Union, it tried to promote autarkic manufacturing systems. This approach did not succeed either there or here. Though some track changes occurred with liberalisation, the basic system structures, thought processes and policy reflexes have remained unchanged. Our current urbanisation index of 35 per cent is significantly below the global average of 57 per cent. Advanced economies are above 70 per cent and competing emerging market economies, including China, are in the mid-60s. Thus, our dependency on agriculture for providing employment is higher than that of our peers.
Our population growth played out in this faulty structure. Consequently, rural population increased from 280 million at Independence, to almost a billion at present. And 80 per cent of our rural households are either landless or hold less than 1 acre. Another 10 per cent hold up to 2 acres. So, at least 90 per cent need supplementary survival wage income.
Further, worldwide, just as automation/AI are eliminating manufacturing jobs, mechanisation in agriculture via myriad devices, such as tractors, tillers, seeders, harvesters, and increasingly drones, etc., are eliminating varieties of farming jobs. Currently, our mechanisation levels are below global standards. As mechanisation picks up, the labour needs of our farms will reduce further. Also, the irrigated belts are mechanising faster, and thus unemployment levels and consequent frustrations may be growing faster there despite growing surpluses.
The other factor relates to policy signalling mechanisms in play. Despite liberalisation, wide inter-regional diversities, and existence of increasing agri-surpluses (with pockets of shortages), the Centre did not change its role. Our commodity markets are still not as free, nor as deep, as our stock markets. This diminishes investment potential for improving agri-logistics, notwithstanding wide gaps between farm gate and city retail pricing. Export bans on a variety of agricultural products, to protect the interests of domestic consumers, continue to be announced, regardless of the impact on farmers’ profitability.
Meanwhile, climate change is aggravating crop prospects. Situations of adverse income volatility have increased. A history of farm loan waivers to mitigate rural anguish also exists. Alongside, increased travel, mobility, and use of social media are reducing information gaps that existed in the past, thereby increasing rural aspirational levels. This is adding salt to the existing sense of injustice. Multiple stories of similar or lesser-skilled farm workers creating better life-trajectories for themselves in Canada/US/EU than their India-based relatives are often heard nowadays. Likewise are the stories of desperate efforts at emigration, including illegal (Dunki type) emigration, and of the use of narcotic drugs as an alternate escape route.
Earlier, media reports of large-scale farmer suicides were rife. Now, agitations have replaced them. The current agitation has started even though the announced Minimum Support Prices (MSP) for some Rabi season crops, including wheat, are apparently already higher than the demanded formula of ‘cost of production plus 50 per cent’. Forest fires, one must note, start only if the grassy undergrowth is excessively dry!
Long-lasting solutions to this crisis will thus require reducing the systemic dependence on agriculture for providing employment. The only practical method would be to promote widespread urbanisation, as done elsewhere. It is cities that create jobs because this is where the local consumption multipliers play out, creating varieties of jobs/income streams. This is the reason why our better developed cities are literally bursting at their seams! Creating desirable cities requires creating strong USPs, as recently done for GIFT city or Ayodhya.
Several different types of city creation may be needed. The number of additional cities required is large because of the size of our population, the extant sub-continental diversity, and prolonged neglect of this important developmental need. Since, a new Finance Commission has been set up, it could perhaps be asked to take cognisance of these issues and prioritise the urbanisation drive. Also, since our current share of ‘local government expenditure’ to ‘total government expenditure’ is in the low single-digits, quite unlike other peer country practices, we could also think of creating a third tier of ‘autonomous cities’ below the existing Centre/state tiers, somewhat on the lines of the Chandigarh and Puducherry models. This will create a better-balanced system.
However, all this will take time. Short-term fire extinguishers also need to be in play. Various sector experts have suggested a variety of market related/non-market solutions. ‘Ease of cultivating’ as also per/acre profitability are what will interest the farmers with large holdings, while the landless/marginal farmers may better value income security schemes. A careful but compassionate balancing act will benefit all.
(TCA Ranganathan The former chairman of the Export Import Bank of India is a banker with a theory of everything X: @tcartca)