When government announces that GDP is growing at a rate of around 9 per cent and that India has emerged as one of the fastest growing economies of the world, it gives a feeling of pride. In fact in the last fiscal year from April 2007 to March 2008, our GDP growth rate, though less, was still around 8.8 per cent.
Government is patting its back for the so-called growth experience. What does GDP mean to an average person living in this country? If we have a look at the composition of GDP, it includes agricultural products including foodgrains, industrial products and services. On the one hand more of GDP should mean more of wheat and rice, more of cars and two-wheelers and other industrial goods. But it also means more of transport services, electricity, tele-communication, etc. If we try to look into the factors leading to increase in GDP, we find that agriculture does not contribute to this growth experience, industry is growing almost equal to the rate of growth of GDP and growth of services surpass all limits and as such the contribution of services sector to GDP jumps from 45.80 per cent in 1997-98 to 55 per cent recently, whereas gain of services is the loss of primary sector, contribution of which dips from 26.50 per cent to 19 per cent during the same period.
Latest NSSO data shows that still 58 per cent of the population depends on agriculture and rest 42 per cent is engaged in non-agricultural activities. Another important thing to note is that hardly 7 per cent of total work force is engaged in organised sector, both public and private. If we try to compare the share of primary sector (including agriculture, fishing, mining and animal husbandry) in GDP with the proportion of population engaged in the same, story of unequal and non-inclusive growth experience becomes evident. Vast majority of population is reeling under poverty, while a few enjoy all sorts of luxuries.
Experience of 60 years after Independence has been a mixed one. In these 60 years we have built up a wide production base, large scale infrastructure, and self sufficiency in foodgrain, far reaching achievements in the scientific and strategic fields and so on. But we are facing a serious challenge of unemployment, poverty and hunger of our masses.
Unprecedented agricultural crisis
Continuous neglect of agriculture by the government, declining capital formation both by public and private, consistently rising cost of production and unequal competition with imports has made agricultural the most vulnerable sector of Indian economy, translating into unprecedented crisis of agricultural sector. Farming is becoming most unprofitable venture, deepening of farmer'sdebt translating into large-scale farmers? suicides. So far lakhs of farmers have already committed suicide and many others are loosing their titles over land. The process of pauperisation of agriculturists is being accentuated by entry of multinational agri-business firms, whose interests are being promoted by the state.
Indian economy is going through a critical phase today with worst situation of agriculture than ever before, rising unemployment both in absolute terms and as percentage of working population, sky rocketing prices especially of food products etc. on the one hand and rising aspirations of the people at large and youth in particulars.
But response of our policy makers has been very dismal. They perhaps have left the economy to the whims and wishes of markets, especially international markets, which in turn are controlled by transnational corporations. When our Finance Minister rose to present his budget proposals for the financial year 2008-2009, this influence was once again looked very apparent and solutions suggested in response to the present problems have not only been insufficient they also lacked depth.
Loan waiver for farmers is no solution
The fact that agriculture is in a very bad shape has been clearly conceded in Economic Survey 2007-08 and in the Union Budget 2008-09. More significantly the government has also conceded that agriculture has been grossly neglected during the period of economic reforms. In the last four years when GDP was growing at an average rate of 8.8 per cent, agriculture was lagging much behind with growth rate of less than 2 per cent. Ever increasing suicides by farmers, persistently rising cost of production, declining area under food crops are all indications of the crisis in India'sagriculture.
There is no reason to believe that our Finance Minister does not know about the root cause of agriculture crises in India. But the only package he chose was loan waiver for farmers. It was told that 4 crore farmers would be benefited from 60 thousand crores of loan waiver. But he conveniently ignored the fact that farmer indebtedness is not the cause, but actually the effect of agriculture crises. The crisis of agriculture is caused primarily due to lack of infrastructure such as electricity, irrigation, roads, market etc., high cost of production due to rising prices of fertilizers, pesticides, electricity, seeds etc. and above all non-remunerative prices for their produce. Farmers? indebtedness thus is only an indicator of deep agricultural crises. To solve the problem of agricultural crisis we need to attack the root cause of the problem.
It is important to note that loan waiver as announced by the Finance Minister can give relief to only those farmers, who have borrowed from Regional Rural Banks, Co-operative Banks and Commercial Banks. But 70 per cent farmers, those who have borrowed from moneylenders, traders etc., could not get any relief from this loan waiver scheme of ballot box budget. More important is a fact that there is no significant impact of government'sclaims about agricultural policy at ground level. Rampant corruption in National Rural Employment Guarantee Scheme, persistently increasing cost of production and non-remunerative prices of agriculture produce are all making agricultural crisis more and more deeper.
Just saying that slow growth of agricultural sector is disappointing and conceding that agriculture has been neglected during the reform period, will not serve any purpose. Some concrete measures are called for including a policy shift, giving due respect to the agricultural sector in National Economic Policy. If the policy makers do not rise to the occasion, not only sectoral inequalities would get more widened, disturbing our social fabric, even our food security would also be endangered.
(The author is a professor in Department of Economics, PGDAV College, University of Delhi and can be contacted at M-451, Guru Harkishan Nagar, New Delhi-110 087.)