Farmer and the budget
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India has made great strides in increasing agricultural production over the last few years. Now it is time for it to focus on farmer prosperity. Often, incorrect data and interpretation, as well as lopsided analyses, have had a damaging impact. Accurate data collection and innovative thinking are needed to address the myriad issues around Indian agriculture. To do this, Budget 2013 would be a good place to begin.
The business of collecting data, determining measurement indices and data analyses must be carried out in a more professional and scientific manner, in order to gauge the problems that affect farms and enable policymakers to make informed choices and responsibly allocate funds for the farm sector. This discussion becomes critical on the eve of the budget because deceptive indices and data are normally trotted out as growth indicators. Good policies based on wrong information do as much damage as bad policies.
At a seminar on a new "vision for agriculture" at the World Economic Forum, Davos, it was said, "everyone gets snippets of information and no one fully understands the implications". This holds true for people across the board, but it is particularly true for policymakers and economists vis-a-vis Indian farmers.
Numbers related to the GDP, considered by many as the right measure of a nation's growth, have ceased to be relevant. Projections linking growth to the GDP cannot always be relied on. Consider this reality: an insured tractor has an accident and the GDP goes up. The GDP is at best a speedometer for the economy. It does not tell us if the economy is heading in the right direction. Yet policymakers cynically hide bad policies under the guise of GDP growth. Farmers would have preferred slower growth than the targeted percentage, provided the gains were equitable and environmentally sustainable for all the stakeholders.
Huge figures of expenditure on infrastructure projects are quoted all the time. When the government lays electricity wires and sets up electric poles, one naively believes that the task of rural electrification is accomplished, even though electricity is not consistently delivered to the farmers. The farmer is then forced to use diesel for power generation, increasing the fuel subsidy bill.
The government has also set up Krishi Vigyan Kendras and rolled out the Agriculture Technology Management Agency (ATMA) network, which does not deliver on the training and advice that it is supposed to give. So farmers are forced to take advice from shopkeepers selling agrochemicals, who have vested interests. This leads to the overuse of inputs. Infrastructure expenditure is not the critical parameter; delivery of services is. It is this physical delivery of services that must be measured in innovative ways.
The routine highlight of every finance minister's budget speech is the disbursal of agriculture credit, but most farmers in the country have no access to institutional credit. This is why moneylenders rule the roost, while farmers continue to suffer because they are denied access to credit. It is time the government focused on collecting correct data and tabulating the real disbursal of funds. Even the data collected for tabulating the minimum support price by the Commission for Agricultural Cost and Prices is often incorrect.
How one measures returns on investment is important for planning a better future. The extension of roadways into rural areas has been an excellent indicator of rural economic upliftment and serves as a good example of what works. A less positive indicator is spending on research and development in the farm/rural sector. Every rupee spent on agriculture R&D yields a more than 13 times return to the rural economy and adds to farmer prosperity. Yet government spending on research and development is insufficient and private investment is urgently required to supplement it. However, while private sector partnerships will be an integral part of any successful future strategy, they can at best complement government initiatives, not replace them.
Ultimately, money is finite and innovative ways are needed to measure the cost of lost opportunities. Policymakers could then learn from the follies of previous and
current policies. Among other things, development policies have given rise to socio-economic crises in Indian farming. The government needs to understand this before formulating future policies and actions. Merely making farm sector allocations that seem to benefit everyone but the farmer is hardly the best that the finance minister can do.
The writer is chairman, Bharat Krishak Samaj