Rajnish Verma and V. S. Verma
India is a developing economy having huge potential for development. When the first generation reforms were undertaken, these had a perspective and a direction, which was liberalisation. The impact was resounding as what was done was compelling need of the hour. But as an economy develops overtime, it requires new reforms and changes since it is a dynamic process. A nation has to continuously review the process of reforms, analyse the effect of policies and move to the next phase of reforms. Moreover, the economy has different linkages at micro, macro and even at international level. The govt has delayed the introduction of the ‘Second Generation Economic Reforms’. Whatever policy changes have been framed, were in a piecemeal manner. There is no pattern in the policy measures being undertaken and also not in synchronisation with various sectors to lift the economy. The agriculture sector plays an important role in the GDP growth, especially with regard to inclusiveness. This is evident from what has been stated in ‘Eleventh Five Year Plan – Mid Term Appraisal’- “An important aspect of inclusive growth in the Eleventh Plan (2007-2012) is its target of 4% per annum growth in GDP from agriculture and allied sectors. This target is not only necessary to achieve the overall growth target of 9% per annum without undue inflation, but it is an important element of ‘inclusiveness’ since the global experience of growth and poverty reduction shows that GDP growth originating in agriculture is at least twice as effective in reducing poverty as GDP growth outside agriculture.” Even in the 12th Five Year Plan, the target for growth rate in agriculture sector is 4% if the GDP is to grow at 9%. It is well recognised fact that faster growth of agriculture makes the overall growth process more inclusive. It makes the nation self-sufficient in food. It is the source of livelihood for majority of Indian population. Fifty eight percent of our citizens are dependent on agriculture for employment. Many other sectors like manufacturing, food processing, export, banking, transportation etc. grow as the agriculture sector grows. Overall, the contribution of this sector to GDP of India is about 22%. Agriculture has an average share of more than 10% in the total exports of the country, while it is around 3% only as far as imports are concerned. This indicates its positive contribution in reducing the balance of payment and building up foreign exchange reserves.
Recognising the importance of agriculture in ensuring food security, providing employment to vast majority to our population and its contribution to overall growth of the economy, the Government introduced major policy reforms in the sector of agriculture in early 1960s. This has been termed as phase of Green Revolution in the country. These policy reforms had resounding impact. While we were importing food grains before the reforms, we became not only self-sufficient, but also started exporting grains after the Green Revolution. The agriculture sector was stagnating at 0.3% prior to 1950s. However, the growth rate jumped beyond 2.5% after reforms were introduced by the government. After this achievement, there was a requirement to move to the next level by introducing another wave of economic reforms. But this has not been done and, whatever policy changes have been carried out, were in piecemeal. Integrated second generation economic reforms in the field of agriculture are yet to be carried out. This is evident from the fact that the target of 4% growth in agriculture, and allied sectors, has not been achieved by the nation so far. This sector has grown at an average rate of 2.7% only. In fact, one of the most disturbing features of the recent experience has been that of deceleration in agriculture growth.
Policy reforms in enhancing rural infrastructure, increasing surface water for irrigation, promoting drip irrigation, land reforms, reduction of layers of intermediaries from farm to market, introduction of technology, widening base of credit to poor farmers etc. have been either lacking or undertaken half-heartedly. Even the plan outlay allocated to agriculture and allied sectors in the budgets has been showing a downward trend. It has reduced from 14.9% of total budget outlay in First Five Year Plan to 4.9% in Eleventh Five Year Plan. Net Sown Area irrigated by canals and tanks has shown a decrease and only a marginal increase in case of tube wells.
Despite the fact that agriculture in India is the largest and one of the most prominent sectors of economy, it has not been given the due it deserved, through economic reforms in the recent past. The contribution of the agriculture sector to GDP has declined from about 56% in 1950-51 to 18.1% in 2011-12. The growth rate of agriculture has dropped from 3.0% in 1950s to about 2% in the last decade. This is despite the fact that it provides employment to about 50 to 60% of the work force. Successive Five Year Plans of the government have set a target of 4% of growth in agriculture sector, which has not been achieved. The questions which arise from the above situation are: (i) What ails our agriculture sector? (ii) Why are we not able to exploit record production in grains? (iii) What are the factors which are inhibiting the growth? (iv) Is it lack of policy reforms by the Govt?
It has been well understood that the growth in agriculture and allied sector depends upon many factors. These are irrigation, rural infrastructure, land reforms, research and extension services, technology, credit to farmers, development of manufacturing units to convert raw produce into finished product, building storage capacity etc. Intervention of the government in bringing reforms in these areas is an urgent need of the hour for promoting the desired growth in agriculture and allied sectors. Since a large number of factors are involved in the growth of agriculture sector, there is dire need to analyse each one with regard to agriculture and fucus undivided attention to the important fields such as land reforms, irrigation and rural infrastructure. The policy reforms related to land, irrigation and rural infrastructure should be studied, plan allocations in Five Year Plans of the government should be analysed to study the government spending in agriculture vis-a-vis total budget.
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