Page 15PAI/October – December 2000

The Central Government inearly August 2000announced the New

National Agriculture Policyenvisaging more than 4 per centannual growth rate. The ‘rainbowrevolution’, it promises, would coverall aspects of the farm sector. Tabledin both Houses of Parliament on 28July 2000, the Policy Documenttalks about increased private sectorparticipation through contractfarming and land-leasingarrangements. It also emphasizesprice protection for farmers tosafeguard their interests amidremoval of quantitative restrictionson import of agriculture produce.

Addressing a Press-conferenceat New Delhi, Sh. Nitish Kumar,Union Agriculture Minister said“Agriculture has become anincreasingly unrewarding professionand corrective measures are the needof the hour. This policy will help thefarm sector to meet the challenges ofeconomic liberalization and formthe basis of an action plan foragricultural growth”.

The New Agriculture Policyhas involved different reactions fromvarious quarters. The consensus,however, is on the point that onevital issue that is glaringly missingin the policy document is – timebound, sector-specific approach ofthe government to tap the potentialsin various agri-segments. Theanalysis, outlook, views, etc. asreported in major national dailiesand economic papers have beenexcerpted by NCDC Bulletin,

August 2000 to provide an insightinto the issues involved and thefollow up action. Below we quotean excerpt from the Hindu, Chennai,1 August 2000.

The Union Cabinet took thedecision on 28 July 2000 for 100million Indian farmers for aNational Agriculture Policy (onlycoincidentally abbreviated as NAP).

Its major objectives would bethe attainment of a 4 per cent annualgrowth in the agricultural sectorand enhanced levels of efficiencyof input use consistent withenvironmental sustainability.

The question is not so muchabout the imperative need (a) toraise levels of productivity both infood production and in the non-foodsector and (b) to achieve rapiddiversification of agriculturecovering horticulture and floriculturetapping the unutilized potential, asabout the instrumentalities of policywhich are required to bring about anagricultural transformation thatwould be consistent with the factthat around 65 per cent of the peopleof India are still rooted in agricultureand related sectors.

The reality is that there arepronounced disparities among theStates in agricultural progress. Thismakes for a certain degree ofincongruity about a National Policyon Agriculture especially when theformulation of such a policy is madewith little or no participation byState Governments. Among the

major issues that need to beaddressed here is the decline incapital formation in this sector overthe years.

According to the CentralStatistical Organisation (CSO)estimates, gross capital formation inagriculture has virtually remainedstagnant (at 1993 – 94 prices) ataround Rs 165 billion during thethree year period, 1996-99. Theshare of public investment inagriculture has actually come downfrom 28.2 per cent in 1996-97 to23.6 per cent in 1998-99. A pointrepeatedly made in the annualEconomic Surveys of the UnionGovernment is that the decline inpublic investment in the agriculturalsector had arisen mainly because ofthe diversion of resources fromcreation of assets (irrigationcapacity, water management, ruralinfrastructure) into subsidies ofvarious kinds – food, fertilizers,water, power and so forth.

Is this problem beingaddressed by the NAP? There is acertain formulation in the policydocument which deals with“rationalization and transparentpricing of inputs” for the purpose ofgenerating resources for agriculture.This is all right by way of intent butpolitical sensitivities involvedappear too forbidding for the policydocument to spell out clearly how alarger flow of investments couldbe facilitated either throughgovernment budgets or through theprivate sector.

India: New Agriculture Policy

Page 16PAI/October – December 2000

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Page 16PAI/October – December 2000

PAI

The notion that the privatecorporate sector can make big foraysinto agriculture can never be part ofpublic policy in India owing tomillions of small and marginal farmsdepending on tiny holdings for baresubsistence. NAP seems to beopening up some new avenuesfor corporate involvement inagriculture through contract farming,a mode which has made for apositive impact on the farmingcommunity in the sugar sector, forexample. Consolidation of holdingsas has occurred in Punjab andHaryana can be replicated in otherStates but only on the basis ofdiversification of the rural economyand the supply of capital to farmersto enable acquisition of marginalholdings.

NAP envisages institutional,legal arrangements for leasing ofprivate lands for cultivation andagribusiness, which would presumethat holders of uneconomic farmswould find it prudent to engagethemselves in alternativeoccupations in the rural sector ratherthan migrate in large numbers totown and cities. The fashion of theday is a VRS policy for industrialworkers and not for the marginalfarmer!

Whatever the premises onwhich a new policy for agriculturalprogress is built, there is the alltoo basic question which would cryfor attention. And that is thevexatious issue of farm price supportwhich has come to mean “publicprocurement and distribution” ofnot only foodgrains but also ofcommercial crops such as tobacco,tea, coffee, and the political processof fixing sugarcane, at the Statelevel.

Should agricultural policyfoster cropping preferences of bigfarmers that are driven by greedrather than by the agro-economicrealities of the region in question?Merely saying that exportcompetitiveness of Indianagriculture will be strengthenedwhile decisions are taken regardingminimum support prices is nosubstitute for an active policy ofidentification and support foragricultural commodities which dohave a global competitive edge. Butit is a dicey game because worldcommodity markets are all toovolatile and it would be a grave errorof macro management of theeconomy for the State to emerge asthe underwriter for agriculturalexporters.

The Agri-policy envisagesRainbow Revolution

• Over 4 per cent annualgrowth rate.

• Greater private sectorparticipation throughcontract farming.

• Price protection forfarmers.

• National Agriculturalinsurance scheme to belaunched.

• Dismantling of restrictionson movement ofagricultural commoditiesthroughout the country.