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Ignoring the farms can have a disastrous domino effect - breeding inflation, triggering population shifts and jacking up food subsidy bills. More than 2 lakh farmers have committed suicide and 8 lakh have quit since 1991, but the government, which insists on investing just 0. 6 per cent of GDP on agriculture, has learnt no lessons.
The disastrous effect of the state throwing up its hands and retreating is most starkly visible in agriculture. Remember: agriculture involves 70 per cent of the country's population, generates about 56 per cent of national income, 64 per cent of total expenditure and about one third of total savings. So, any neglect translates into gigantic costs. And the central crisis in agriculture - production barely matching a depressed level of consumption - casts long shadows. It breeds chronic inflation, dependence on costly imports, and speculation. It drives people to flock to cities and towns in everlarger numbers, starting a new cycle of poverty and misery. It leaves the nation at the mercy of a fickle monsoon, with all the attendant ills. And it bodes ill for the future. Ramesh Chand, director, National Institute for Agricultural Economics and Policy Research, says that at present growth rates demand for foodgrains by 2020 will reach 280. 6 million tonnes while production will lag behind at 273. 4 million tonnes. This is assuming the current insufficient foodgrain consumption by the bulk of the people continues as it is.
How has the state neglected agriculture? The clearest indication of this apathy is the dramatic decline in the government's investment in agriculture. From the heady days of the Green Revolution, when 13-14 per cent of all public investment was flowing into agriculture, the beginning of the reforms era saw a drastic cut as part of the government's new thinking on reducing public expenditure. In 1990-91, public investment in agriculture had plummeted to just 6. 3 per cent of all investment. This was reflected in the share of investment in GDP, too, which dipped to a minuscule 0. 7 per cent.
In the nearly two decades since 1990-91, public investment in agriculture has virtually stagnated at around 6 per cent of all public investment. Even with GDP growing at a healthy 8-9 per cent during 2005 and 2008, agriculture got a bare 0. 6 per cent as investment in 2008-09.
What happens when there is such low public investment in agriculture? To put things in perspective, nearly 2 lakh farmers committed suicide and 8 million quit farming between 1991 and 2001. Take the case of irrigation. Water is the most essential input required for cultivation. In India, 56 per cent of foodgrains are produced from 47 million hectares (Mha) of irrigated land while the rest, 44 per cent, is produced from 95 Mha of rain-dependent land. Put another way, foodgrain production could almost double if presently rain-fed areas were assured water through irrigation. The most sustainable way of providing irrigation is through trapping rainwater and distributing it through canals. This can be done by mega projects or through smaller ones. Both require capital investment, but the government seems to have simply given up on this.
The ministry of water resources has estimated the ultimate irrigation potential (UIP) of the country at 139. 9 Mha. Against this, the irrigation potential (IP) created till the end of the 10th Plan was 102. 77 Mha and the actual net irrigated area around 62. 31 Mha, as per Planning Commission estimates.
Under-capitalisation is money gone down the drain. Although the government spent over Rs 66, 000 crore during 1996-2008 on all kinds of irrigation projects, a recent report by the Comptroller and Auditor General (CAG) says that in the six major states which received 83 per cent of the funds, only 36 per cent of the irrigation projects were completed. Though a part of the sordid story can be linked to corruption, mismanagement and legal delays, the main reason is insufficient flow of funds leading to setbacks and cost over-runs. As a result, millions continue to depend on rainfall and in case of even a partial failure, like last year, shock waves ripple through the whole economy.
Another dangerous consequence of neglecting irrigation is that it forces people to exploit groundwater to irrigate their crops. Over 230 cubic-kilometers of groundwater get drawn every year - one fourth of the world's usage - and almost 80 per cent of this is used for irrigation, leading to an irreversible damage to the country's water resources even as rainwater is wasted in the form of runoff.
Government investment in research and extension has also slowed down in recent years. According to recent RBI data, public expenditure on research was growing at a healthy 9. 5 per cent per annum in the 1970s. In the 1980s, this declined to about 6. 5 per cent and finally to 4. 8 per cent during 1990-2005. With all the talk of technology needed to increase the abysmal productivity of Indian crops, the real state of affairs is that our laboratories and R&D institutions are being slowly starved of funds.
Extension services are needed to demonstrate the results of research to farmers and to train them in the use of new technologies. The flow of funds to this crucial link was growing at 7 per cent during the '80s but slowed down to 2 per cent in 1990-2005.
The short-sightedness of curtailing public expenditure on agriculture has a bizarre consequence: government food subsidy bills keep increasing. Since 1999, while investment in agriculture stagnated at about 6 per cent, food subsidy rocketed from about Rs 9, 200 crore to Rs 46, 907 crore in 2009-10. This happens because agriculture is increasingly becoming unviable;farmers have to be subsidised and because of shortages the government has to run a public distribution system, admittedly lame, which involves huge costs.
Strangely, the government, which is willing to spend thousands of crores on rural employment generation, turns a blind eye towards addressing the root cause of rural unemployment - the languishing agricultural sector. And the penalty is paid by the whole country.
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