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Wednesday, January 19, 2011

INVESTMENT IN AGRICULTURE WOULD ONLY TAME THE PRICE LEVEL

It is now apparent that from 2011 the growth rate of Indian Economy would be 9% ( 8.75% plus or minus .35% ) or more. The contribution of such higher growth rate would be possible due better development of scientific Agricultural reform and not only by arrival timely monsoon.. The agriculture growth is going to be doubled in a few years provided scientific reforms measures are taken up in Agriculture sector. However the expected 9% growth rate would not be possible if investment in agriculture is not taken up , current account is not controlled, higher crude oil price ( above $ 100 per barrel) continues affect the economy and fiscal deficit remains uncontrolled. Since our country has no control on crude oil prices, and facing difficulties to control deficit due to political reasons only savior could be higher agriculture output.

The revaluation of assets, from time to time, is an accepted norm for industry. Why not this practice should be adhered to in case of Agriculture too? The land could be revalued in terms of inflation rate, purpose of utilization and potential to earn out of that property for next twenty years. It is a fact that in future land also would be required for industrial development. None can stop that process if high economic growth needs to be achieved. Agriculture alone cannot give the required economic boost. Unless farm land reform are taken up immediately even smaller state like Assam would face unprecedented public wrath while trying to allocate land for the development of industry and even for development of real estate enterprises. In modern time secondary sector and service sector would play the greater role in determining overall economic growth. But initially the primary sector has to provide the much required push by enhancing the productivity of land.
The increase in productivity of farm land has to be the first priority now.. It is the productivity of land that would determine ultimate economic growth. In a state like Assam which is endowed with great water resources and fertile land the enhanced productivity would set in motion a great all-round economic growth rate. There would be surplus availability of land if productivity is ensured. By utilizing 20% of this excess land the capital intensive manufacturing enterprises could be ushered in unleashing a chain reaction that would create near full employment situation.. This is not a euphoric dream but a possible hard life reality The former Federal Reserve Chairman Allan Greenspan of USA recently reiterated that India has potential for the robust economic growth and thereby change the face of the world provided it takes up the agriculture reform in proper perspective. The high food inflation is direct result of systemic failure of supply side management of agricultural commodities. Unless agriculture reforms and time management to improve supply side are taken up the country may face uproar sooner than later.


The foremost requirement would be to overhaul the entire structure of Indian agriculture. To achieve the enhanced productivity four factors would be required i.e. (a ) developed infrastructure, (b) consolidation of fragmented holdings and (c) better varieties of seeds and tilling machineries suiting Indian condition AND (4) revaluation of land .Primarily the agricultural land valuation need to be enhanced first. The archaic land valuation procedures need to be re-looked at. The rate of premium payment of 25% cost of agriculture land to land less cultivators must be changed whenever the land is acquired by government or sold by the landowners for the purpose industrial development. The Government needs to pass a law revaluing the cost of land of the state and the rate of payment to landless agricultural workers whenever land changes hand. The compensation must commensurate with earning capacity of the land for fresh utilization. The landless workers or his nominee must be made partners of the new enterprise whenever agriculture land is made to surrender for development .In North India value of farm land have gone up by 5000% in ten years. The Real Estate agents have made money while poor agriculturists have remained poor. This situation needs to be salvaged.

Now, the government should encourage joint sector farming, providing power and irrigational facilities to the farmers. The easy financial access alone would not help unless backed by infrastructure. The developed nations are using laser technology instead of tractors to till the lands. This helps in optimizing the use of various inputs such as water, seeds, fertilizers, etc. The problem is that Indian farmers cannot afford this technology and unless government ushers in corporate sectors to support for agricultural infrastructure.


I have a practical model in mind which could be given a try. This model is not a commune system but is based on three platform system unlike dual platform system of Russia and even China. The government should encourage joint sector farming, providing power and irrigational facilities to the farmers. The easy financial access alone would not help unless backed by infrastructure. The corporate sector would provide the organization to run the massive farms and landless cultivators would be absorbed as the workers. They would be employed full time till they retire at fifty years with pension benefit. The landowners would get part compensation in terms of money value AS AND WHEN LAND IS HANDED OVER to the corporation .The landowners would also be the minority shareholders of the corporate entity .The Tripartite involvement would generate employment for educated class as supervisors and Managers.

The Economic Advisory Council to the Prime Minister advocates the role of corporate sector in agriculture and says that activities other than food grain production like commercial crops, horticulture etc. have contributed most to agricultural GDP. The council recommends removal of subsidies related to grain procurement and REVAMPING of Public Distribution System. The recent suggestion of Dr. Kaushik Basu for introduction of Smart card is welcome. If government accept even the suggestion of Dr. Rangarajan and Dr. Basu it would be good for the state and in long term would be able to avoid Nandigram type situation .

From Africa to Asia, countries are scrambling to buy or lease land overseas to grow crops and feed their people. China, which has to feed the world’s largest population, has taken the lead by contracting land in Tanzania, Laos, Kazakhstan, Brazil and others. India has set its eyes on Uruguay and Paraguay, while South Korea is looking for farming deals in Sudan and Siberia. Libya and Egypt for their part have been negotiating deals to lease land in Ukraine.

With greatest potential, Assam was experiencing with negative growth rate for past few years. May be they would reverse the trend this year. For better economic growth ,Assam Government must enhance the value of Farm land. The large entrepreneurs must be encouraged to cultivate in collaboration with local land lords and cultivators. Agricultural sector of India is mainly covered by small and marginal farmers, so our government should promote small scale agriculture .But corporate sector could be ushered in as an experiment in joint sector basis in large farming where land lord and cultivators become partners with corporate HOUSES on a selective basis. The government remains as the facilitators. Assam can experiment with this model and outshine Hariyana and Punjab.
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1 comment:

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