42% of India’s population is estimated to be below poverty line and most of it lives in the villages. In the larger cities where employment opportunities abound, the population below poverty line is less than 10%. This urban – rural divide is the foremost reason behind India’s uneven development. Let us understand what the causal factors are – not on the basis of emotional arguments, as is the wont nowadays, but based on facts.
“In God we trust; everybody else, bring data to the table”
– Narayana Murthy
So, let us start by putting some data on the table.
India - Agriculture
1. With 72% population estimated to be rural, India continues to live in its villages.
2. Agriculture contributes only about 20% to the total GDP of the country yet 58% of the population supposedly derives its livelihood from it.
3. Dependent on the vagaries of nature, farming is a tough business and almost 40% of farmers have expressed an interest to be out of it.
4. It is also non remunerative and studies report that rural economic growth in India is largely on account of non agricultural activities.
5. In contrast, just the top ten cities in India comprising only about 5 – 7 % of the population, contribute about 25% to the national GDP.
6. India’s ground water table has been falling at an alarming rate and the World Bank predicts it would dry up in 13- 15 years. This is largely on account of wasteful agricultural practices in millions of rudimentary tiny farms spread across the country.
The key question remains - Can agriculture be turned around in terms of:
- greater food output (direly needed in the era of food shortages and associated inflation)
- efficient usage of water and other resources
- overall better remuneration for the huge population that is engaged in what can only be termed as subsistence farming
If so how?
To answer that, let us broaden our horizon, step back a little and take a look at experience of other nations.
Agriculture – World
1. At the aggregate level, agriculture contributes a mere 4% to the world GDP – the rest comes from value added goods and services.
2. The US and European Union together contribute about 22% to the world agricultural produce but only about 2% of the population is engaged in agriculture which relies on large farms that use machinery, modern farming methods and other scientific knowhow. This leads to efficient usage of water as well as the output is huge.
3. While its “factory of the world” story is well known, China’s lesser known story is its successful reform of the agriculture sector. In the last few years, China has emerged among the top food donors in the world. Yet, the sector contributes only 12% to its GDP. Further, in 1978, about 70% of its population was engaged in agriculture which has come down to just 23% in 2009. Like happened in the Western world in the 19th century, the agrarian population has moved on to industrial jobs. The farms have gotten bigger in size and use of scientific methods has improved efficiency in usage of water as well as increased the overall output.
4. In many of the African nations, about 80% of the population is, on the face of it, engaged in agriculture, but the output remains negligible.
The message here is for all developing nations with large bases of population engaged in agriculture where there are many misconceptions that maybe these governments have to focus on agriculture as the prime growth sector. That is a myth. The fate of agriculture is large farms that can use machines as well as technological and marketing know-how. That would vastly improve food availability and would go a long way in reducing the inflation.
In the West, industrialization precipitated a large scale migration to cities in search of jobs as the farms got bigger and more mechanized. They started using scientific methods in demand prediction, pest control etc. and also made more efficient use of water and soil. As a result food production soared, eliminating the large scale famine threats that had haunted mankind since time immemorial.
In the developing nations with largely poor and rural populations, the farms are small, farmers often debt ridden, relying on primitive wasteful methods and dependent on the vagaries of nature, making farming a risky but non remunerative business. If poverty has to be reduced, it means the agricultural community has to be moved to other avenues and that can be accelerated by the spread of industries as well as educational opportunities. Short term relief may be provided but the long term fate of the agricultural community is to move to other sectors.
What will be these sectors? And why aren’t the farmers in India moving on to better employment avenues and becoming a part of the economic growth story? Why are the economic opportunities in India limited to the few metros that are quite evidently bursting at seams? Is the government not doing enough to spread economic opportunities? Are the urban elites not allowing the spread of industries to the rural areas?
What or who stands in the way?
Surprisingly, the farmers themselves, goaded on to this path by opportunist opposition parties and misguided activists!
In order to alleviate poverty in rural India and lessen the population burden in the cities, the Indian government tried setting up industrial zones in remote parts of India, quite akin to the Chinese SEZ model. This would have provided employment opportunities to this poverty stricken population and allowed them to be part of the economic growth story. But it met with fierce opposition in rural India where people were rabble roused into frenzied fear that industries will take away farmers’ rights and agricultural land is being diverted to industries now (In reality all of the 540 odd proposed SEZs will take away only about 0.06% of arable land in India). Many such industries have been shut down by court orders and such decisions have been hailed as a victory for farmers and democracy.
Now the farmers have gone back to their meager destitute existence and the activists are back to decrying that India’s economic growth is not being shared with its rural majority, the farmers have no real jobs and the government is being blamed for doing nothing about it.
Sonia Gandhi once remarked, “Politics is the art of the impossible”. More to the point, perhaps “Democracy is the art of the impossible - It means opposing everything a government does and then claiming that the government does nothing". Is a democratic government reduced to the position of a mere straw-man?
Full essay in the book : “Democracy on Trial, All Rise!” – Democracy derails development – How and Why?