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How inclusive has been our growth?

The Statesman
By Professor  

Over the past couple of years theories of inclusive growth have found growing relevance in the Indian agricultural sector. This owes to the mounting tensions tied to myriad issues spread over drought, irrigation water shortage, crop failure, volatility in market prices (nationally as well as globally), higher input costs, lack of appropriate food-storage, processing and distribution facilities, rise in electricity and fuel prices, lesser access to technological innovations, transparent credit services and many more.

All of which eventually culminate into farmers’ suicides, spiked by horrendous livestock and property losses, besides brutal conflicts between law enforcement authorities and peasantry in various states. It might not be an overstatement to say that the whole of the agrarian economy has taken a severe beating lately making ideas of rural sustainable development a rather vague notion, especially for small holders who make up the bulk of the nation’s agrarian workforce, producing over two-thirds of the cereals.

But this is an opportunity as much as a challenge to test the Prime Minister’s idea of Sabka Sath Sabka Vikas – the Indian model of inclusive growth designed to instill a sense of communal well-being, by opening up lucrative financial opportunities for marginal producers with meager belongings living at the mercy of climate and market.

A major theme emphasized by the Planning Commission in the 10th Five Year Plan was to seek means of expanding inclusiveness of growth by creating market opportunities in the agriculture sector in all states, and improving people’s participation on more and more favourable terms in the market. Laudably, the government has set up several lucrative schemes including a micro irrigation fund under NABARD (Rs 5,000 crore), a dairy processing farm of about Rs 8,000 crore, more opportunities for women under MGNREGA, short-term crop loans up to Rs 300,000 with subsidised interest rates (7 per cent annually) etc. for FY 2017-18.

An additional incentive of 3 per cent is provided to farmers for prompt repayment of loans within due date, making an effective interest rate of 4 per cent. In addition, between 2000 and 2016, different agricultural sectors have cumulatively attracted FDI equity inflow of over $2300 million, tying up with Brazil, Israel, US etc. The government even launched a national crop insurance scheme – Pradhan Mantri Fasal Bima Yojana (PMFBY) in January 2016– to offer financial protection. The question is why after all these progressive ‘arrangements’, most of the state authorities still are compelled to come up with emergency/populist make-overs such as crop loan waivers and free electricity?

Are the farmers not trustful about initiatives or are the schemes not reaching them at all? A likely question to be asked herein is how did demonetisation affect the agro-industry, where transactions are primarily done in cash, owing to measly digitalisation in rural areas? Here’s a curious fact about current trends in agro-economy in India, as compared to other sectors.

Post-independence, contribution of agriculture and allied sector (livestock, forestry, fishing etc.) to the Gross Value Added (GVA) at current prices, have been on a slide. Between 1950 and 2016-17 it plummeted from about 52 per cent of total GVA to about 17.3 per cent.

Is this something to be alarmed about? Especially when still about 58 per cent of the population banks on agriculture? On the other hand, share for industry (about 29 per cent) and services (about 53 per cent) are steadily rising. In view of impending climatic shifts and recurrence of severe drought events, a major step to ensure inclusive growth will be right implementation of crop insurance policies alongside building farmer-friendly market portals to minimise economic losses.

If focused on agriculture alone, appropriate pricing of inputs/outputs, fluidity in credit/extension services, accessible technology (agro-research and development), pervasive capacity-building initiatives via apt Information-Education-Communication (IEC) on climate change and resilient agricultural techniques, incentivisation of low-water-demanding crops, technical/monetary support for rainfed agriculture – inclusive growth should take into stride all and more. But even before that, a major issue needs to be resolved.

Can focusing on agriculture alone win it for inclusiveness? Shouldn’t it actually seam together multiple rural sectors that contribute to agrarian development in a holistic sense? For example, lack of education (not just improving literacy scores), and healthcare facilities, undernourishment, clean/sustainable energy, improved water and sanitation, gender divide, all converge to destabilise agrarian livelihood and the economy thereof. These need measured intervention should we wish for agricultural proliferation.

Added to these are policy debates, electoral politics, corruption, community infractions, forced out-migration etc. that affect the peasantry. Most agricultural surveys from the past decade revealed that in about 30-35 per cent cases farmers want to quit but stick on due to lack of any viable option. So, offfarm job opportunities should be created so that farmers can resort to alternate modes of sustenance at times of drought/crop failure. Sure, MGNREGA is always there. But aren’t we aware of its inherent flaws already?

No doubt it is hard to capture the idea of inclusive growth in totality and draw out a workable plan as the facets keep changing over time and space. And climate change, already getting into thick of things, has begun dictating terms on food-water security and human subsistence. But if wish to take inclusive growth seriously, the webbed pattern of different aspects of rural livelihood have to be factored in, no matter how daunting a task it is. We have to strive for a collective approach in which different governmental departments come together and seek for and implement integrated agrarian welfare schemes.

And not only at the higher levels of administration, it has to be achieved at the grassroots level. Executed properly, inclusive growth might even open up possibilities of entrepreneurial role for small holders by helping them directly interface with the agoindustry right from production to endusers. All in all, government has to be more proactive and methodical, and maintain active liaison with rural communities and self-help groups in implementing schemes to ensure they become more penetrative.

Climate change alone may push us further to the brink if not factored into inclusive growth models. Between 2002 and 2016, we’ve already had 5 drought events in India that affected over 11 states, claiming lives of over 4,000 farmers, depleting freshwater reserves and degrading land resources (often to the extent of desertification, making them unsuitable for future cultivation).

Studies reveal that there will be more severe droughts between 2021 and 2049, which means harder times ahead. Thus plans for inclusive growth should be backed by appropriate social protection interventions, based on regional needs and available assets, in order to help farmers cope against climate fluctuations.

And one key requirement that may never slip down the crack is digital archives -facts and figures (time-series information) of success and failures of the schemes – so that robust data analytic can be run by research organizations to identify major potholes.

Without this, schemes will be on paper alone.

(The writer is on the faculty of environmental studies at the OP Jindal Global University Sonipat, Haryana and is co-Director to the Center for Environment, Sustainability and Human Development (CESH))