Agri-growth loses steam under Modi’s rule, was highest during UPA rule

Claiming that the agriculture sector witnessed its highest ever growth phase during 2004-14 under the UPA rule, the Dalwai Committee report has pointed out that farming sector is now in a deep crisis

Photo courtesy: social media
Photo courtesy: social media
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NH Web Desk

While the agriculture sector witnessed the highest growth during the ten years of UPA rule from 2004 to 2014, it has fast slipped back to near-zero growth despite normal monsoons and bumper yields under the BJP-led NDA government, according to a report published by Down to Earth: “How India lost its historic agriculture recovery growth phase in just four years”.

Government reports say 2004-14 had the highest agriculture growth that has fast slipped back to near-zero growth despite normal monsoons and bumper yields

“The best phase of agricultural growth coincided with the two tenures of the United Progressive Alliance (UPA I-II) government led by the Congress. Just before this, the low growth rate phase coincided with the NDA-I tenure when Atal Bihari Vajpayee was the Prime Minister. NDA-I lost elections in 2004 unexpectedly and analysts attributed this to deepening rural crisis during that time,” the report maintains.

Despite Prime Minister Narendra Modi’s promise of doubling farmers’ income by 2022, the report—which is a first part of the series on deepening farm distress under the Modi government, says: “Government data on economy shows a disturbing trend. In financial year 2017-18, agriculture would be growing at 2.1 per cent compared to 4.9 per cent in the previous year. This is not a good sign given the fact that India had a normal monsoon and was preceded by two below normal monsoons. Usually, after a drought, agriculture growth is higher due to low baseline level.”

Even though PM Modi met over 100 economists in a first ever such interaction on January 10, the report claimed that a crucial fact that got buried in the Modi-economists meeting is his own government’s series of rigorous reports on agriculture called “The Committee on Doubling Farmers’ Income” led by Ashok Dalwai.

“The first report of the Dalwai committee using inputs and research of over 100 experts has pointed out that India’s agriculture is currently in a deep crisis. And it says so because during 2004-14, the country’s agriculture sector witnessed its highest ever growth phase. The report calls it the sector’s ‘recovery phase’; a term it defines as historic,” the report says, adding, “The agricultural sector grew at the growth of around 4 per cent per year during 2004-05 to 2014-15 and the growth was quite impressive as compared to 2.6 per cent per annum during the previous decade (1995-96 to 2004-05).”

“The most important factor for improved performance of agriculture, post 2004-05 period, has been the price received by the farmers caused by a number of underlying factors: hike given to MSP, increase in foodgrain procurement, increase in global agricultural prices and strong domestic demand for food,” it says, referring to the Dalwai committee report.

The recent farmers’ protests amid bumper harvests were for increasing the government’s minimum support price (MSP) and to force the NDA government to keep its electoral promise of a MSP plus 50 per cent extra to farmers. “In the last three years, less than 10 per cent farmers could sell their produces at MSP, which is growing at pace seen during the 2004-14 period. Also, farmers across the country sold their bumper harvests at 30-50 per cent less than the MSP for all their produces during 2015-17,” it says and adds that the Dalwai report just adds on to this worry of Modi. “It sees the recent farmers’ protests as an indication of deepening crisis in agriculture sector post the ‘recovery phase’.”

“At the basic level, agriculture when defined as an enterprise comprises two segments–production and post-production. The success of production as of now amounts to half success, and is therefore, not sustainable. Recent agitations of farmers (June-July 2017) in certain parts of the country demanding higher prices on their produce following record output or scenes of farmers dumping tractor loads of tomatoes and onions onto the roads or emptying canisters of milk into drains exemplify neglect of other half segment of agriculture.”

The Down to Earth report further says: “Modi government’s performance in agriculture has been lackluster. In 2015-16, agriculture contributed 17.4 per cent to India’s GDP, which was 18.3 per cent in 2013-14, the year before he came to power. In 2014-15, agriculture reported negative growth at -0.2 per cent. Despite this low base, next year it reported 1.2 per cent growth. And in 2016-17, it was estimated to be 4.1 per cent. At an average, the growth in the last four years is around 2 per cent.”

Referring to the rise in incidents of cow-vigilantism across north India, the report further claims that the last three years are also known for restrictions on livestock trade. It underlines the Dalwai Committee Report findings that the biggest contributor to the agricultural growth in 2004-14 was the livestock sector, which has never reported a negative growth in the last 35 years. “Thus, the livestock sector is likely to emerge as engine of growth of agricultural sector and can be relied upon for risk mitigation and minimising the losses to the farmers in case of even worst outcomes from others sub-sectors. Previous studies have unanimously reported that livestock as the best insurance against agrarian distress as the sector is the source of sustained income and generates income more frequently than the crop sector.”

The current agrarian crisis is too deep-rooted to witness an instant recovery through a farmer-friendly budget, according to the report, that claims that during the “recovery phase” itself, a member of an agricultural household earned around Rs 214/month. “But his/her expenditure was about Rs 207. In simple term, a member had a disposal income of just Rs 7/month. Since 2015, India has witnessed two major droughts, some 600 incidents of crop losses due to unseasonal rains and other related incidents, and finally in two years of bumper harvests prices for their produces crashed majorly. It means, a farmer is now without any base capital to invest, and nor has he the capacity to take the risk of going back to agriculture. This has added to the crisis that manifests in extreme resentments.”

“For the first time in recent history, relatively rich farmers were out on the streets protesting for better price for their produce. The Dalwai Committee report shows that the government’s move to import foodgrains to curb inflation has majorly distorted the market against the domestic farmers. India’s export of agricultural produces has dipped. It recorded more than five times growth during 2004-2014: from Rs 50,000 crore to Rs 260,000 crore. In a year it dipped to Rs 210,000 crore in 2015-16, or a market potential loss of Rs 50,000 crore,” the report says, adding that agricultural import has reported constant growth. “It was Rs 30,000 crore in 2004-5, which increased to Rs 90,000 crore in 2013-14, the last year of the

UPA-II government. In 2015-16, it reached to Rs 150,000 crore.”

“Close to 22 per cent of farmers subsist below the poverty line. The dip in farmers’ income, while giving a call for doubling income, shouldn’t be just another grand plan for a “new India”, because agricultural growth critically decides poverty reduction. According to historic data, agricultural growth has much more impact on poverty reduction than any other activity like industrial growth. So, it is time government got its focus back into the factors that once ensured this recovery phase.”

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