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June 2014 Vol 58

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C O N T E N T S

YOJANA

Let noble thoughts come to us from all sides Rig Veda

INVESTING TO PROPEL GROWTH IN INDIAN AGRICULTUREAshok Gulati, Surbhi Jain ........................................................................5

DISSECTING AGRICULTURAL PERFORMANCESINCE MID 1990SRamesh Chand .......................................................................................10

BUILDING STATE CAPACITY IN INDIAAjay Shah ...............................................................................................17

DEVELOPING COUNTRIES, AGRICULTUREAND THE WORLD TRADE ORGANIZATIONJ P Singh .................................................................................................24

SHODHYATRA CHILD POET INNOVATES A MACHINETO CLEAN RICE WITHOUT HASSLE ..............................................30

INDIAN AGRICULTURE – A REVIEW OFPOLICY AND PERFORMANCEC S C Sekhar ..........................................................................................32

SPECIAL ARTICLE

UNDERSTANDING RAPE LAW REFORM

Pratiksha Baxi ........................................................................................38

NORTH EAST DIARY NATIONAL HIGHWAYS IN ASSAM ..................................................42

DECONSTRUCTING SOCIAL PROTECTIONAnurag Priyadarshee ..............................................................................44

AGRICULTURAL GROWTH IN INDIA:PERFORMANCE AND PROSPECTSP K Joshi, Anjani Kumar ........................................................................50

INDIAN AGRICULTURE: EMERGING ISSUESAND POLICY PERSPECTIVESSrijit Mishra ...........................................................................................58

BEST PRACTICES ILLUMINATING THE DARK-DENSE FORESTS .............................62



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T he agricultural sector in India is a sight of struggle at many levels. On the theoretical plane, the debate about the role of agriculture in the economic development of thecountry, its relative importance vis a vis the industry and services sector, modes of

financing agricultural development, the changing nature of agrarian relations and associated

polit ical questions give rise to sharply polarised posit ions across the academic spectrum.At the same time, the practical problems like the relative backwardness and lack of basicamenities of health and education in rural areas, migration from agricultural activities tocities etc. also pose a challenge to policy makers and planners.

There is no doubt that the agricultural sector is a critical factor in determining the welfareof the people in the country as a whole. After all, almost half of the total employment in theeconomy is generated in agricultural sector providing sustenance and livelihood to morethan 70 per cent of the people living in the rural area as per the Census 2011 figures. It isa noticeable fact that the share of agriculture in the GDP has shown a marked decline from 51.9 per cent in 1950-51to 13.7 per cent in 2012-13. Clearly, it leads to ‘asymmetry in income and employment’ which generates a skeweddistribution of income between agricultural and non-agricultural sectors and also between rural and urban areas.These trends require a close analysis to understand the forces at work in the agricultural sector and the dynamics of

change therein to gain a foresight into the future of this sector and to formulate the policy roadmap.Indeed agriculture is a vital component of the strategy for the reduction of poverty since the growth originating in

agriculture is known to be twice as effective in reducing poverty compared to the growth originating outside of theagriculture. But India’s record of growth in the agricultural sector leaves much scope for better performance. Thereis no doubt that the growth rate of agriculture has shown an upward trend from 2.15 per cent in the period 1951-52-1965-66 to 3.89 per cent for the period 2005-06 to 2011-12, yet it has not been able to keep pace with the growth rateof other sectors of the economy over the same period. One major reason for the slowdown in the agricultural sector isa sharp decline in (non-subsidy) public investment and input usage in agriculture which has adversely impacted the

profitability of crops. The decline in public investment in agricul ture has been attributed to the expanding subsidieson agriculture. However, this trend has been reversed to some extent since the 9 th Five Year plan. The Gross CapitalFormation in agricultural sector has gone up from 13.9 per cent during the 10 th Plan period to 19 per cent during the11 th plan period. This in part explains the improved agricultural performance over this period.

The challenge of ensuring a vibrant and dynamic agricultural sector capable of sustaining the economic growth inother sectors requires a deeper engagement with the agrarian issue going beyond the economic aspects. There remainmany issues concerning agriculture on which debate is still continuing. It is not clear if the future of agriculture liesin moving towards corporate farming or the ‘land to the tiller ’ model. Similarly, the fragmentation of the land holdingmay have somewhat altered the contours of the conflict in the arena of agriculture but agrarian relations continue tohave significant political implications. Understanding the organic linkage of agriculture to the socio-cultural realityof the rural area can provide us insight into the root cause of conflict and social unrest that haunts many parts of Indiatoday. Daniel Thorner’s classification of the rural population into mazdoor, kisan and malik may have lost some ofits analytical edge so far as the economic understanding of the agricultural sector is concerned but it still retains itsutility if we want to understand the issue in a holistic framework. q

Mazdoor, Kisan and Malik



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R O P E L L I N GGROWTH in agricultureis critical as researchhas revealed that GDPgrowth originating inagriculture is at least

twice as effective in reducing povertyas GDP growth originating outsideagriculture (World DevelopmentReport, 2008). In that sense alone, trueinclusiveness of Indian growth modelcan come true only when agriculturedoes better than what it has done in the

past. This will override all models thattry to achieve inclusiveness throughspecial concessions to a particularcommunity, caste, or class. Whatgrowth rate is needed in agriculture,and what is plausible, to make surethat poverty banishes as fast as possiblein India? Our take is that Indianagriculture has the potential to growat 5 per cent per annum for the nextten years, if one were ready to take

bold policy decisions, and therebycontribute its most important rolein alleviating poverty, hunger andmalnutrition.

Agri-growth Performance sinceEconomic Reforms of 1991

The average annual rate of growthin agriculture & allied sector duringthe entire period (1991-92 to 2013-14) comes at 3.2 per cent – muchlower than the 4.0 per cent targeted

Investing to Propel Growth in Indian Agriculture

CAPITAL FORMATION

Ashok GulatiSurbhi Jain

LEAD ARTICLE

P

Ashok Gulati is Chair Professor-Agriculture in The Indian Council for Research on International Economic Relations (ICRIER). Aneminent agricultural economist, he was the Chairman, Commission for Agricultural Costs & Prices, Govt. of India. Earlier, he was theDirector in Asia for the International Food Policy Research Institute (IFPRI). He had also served as a member of of the EconomicAdvisory Council of the Prime Minister of India. Surbhi Jain is Director, Commission for Agricultural Costs & Prices.

in the recent Plan periods. But it hasfluctuated widely during variousPlan periods (Figure 1). It witnesseda growth rate of 4.8 per cent duringthe Eighth Plan period (1992–97), butthereafter, it saw a downturn towardsthe beginning of the Ninth Plan period(1997–2002) and the Tenth Plan period(2002–07), when the agriculturalgrowth rate came down to 2.5 percent and 2.4 per cent respectively.During the Eleventh Plan (2007-12),agri-GDP growth bounced to 4.1 percent, but then again fell to 3.0 per centin the first two years of the TwelfthPlan (2012-17). On a decadal basis,agri-GDP rate accelerated from anaverage annual rate of 2.9 per centduring the 1990s (1991-92 to 2000-01) to 3.4 per cent during the 2000s(2001-02 to 2013-14), with an overallgrowth for the entire period being3.2 per cent. A significant note hereis that the coefficient of variation(CV), as a measure of volatility, forgrowth in agri-GDP is almost fourtimes than the CV observed in overallGDP growth during this period. Thiscalls for enhanced investments in

irrigation and agri-R&D to not onlyincrease productivity of agriculture but also its stability. Have we investedenough in these areas? Not really.For example, at the beginning ofthe Twelfth Plan, there were 337major and medium irrigation projects

What growth rate is needed in agriculture, and what is plausible,

to make sure that

poverty banishes as fast as possible in India?Our take is that Indian

agriculture has the potential to grow at 5

per cent per annum for the next ten years, if one

were ready to take bold policy decisions, and

thereby contribute its most important role in

alleviating poverty, hunger and malnutrition



6 YOJANA June 2014

requiring an indicative budget ofmore than Rs 4,22,012 crore. Againstthis need, the annual allocation forirrigation is less than Rs 20,000 crore.This speaks of the neglect of investingin development of water resources andits proper management.

G r o w t h a n d I n v e s t m e n t i nAgriculture

Generally, the growth of a sectordepends upon the investments madein that sector, its incremental capital-output ratio (ICOR) and the efficiencyof capital in that sector, a la Harrod-Domar model. Therefore, the keydriver of agri-growth is Gross Capital

Formation in agriculture (AGCF),which is actually investment inagriculture, from both the public and

private sectors, as a percentage toagri-GDP. With an assumed ICORin agriculture at 4:1, to get four percent growth in agriculture, investmentshould be around 16 per cent of agri-GDP. During much of the period from1990-91 onwards till 2007-08, AGCFat all India level was always belowthis threshold. No wonder then that

the average annual rate of agri-GDPhovered around 2-3 per cent. From

Ninth Plan (1997-2002) onwards, areversal in trend has been achievedresulting in increase in this ratio to

13.9 per cent during the Tenth Plan(2002-07) and further to 19.0 per centduring the Eleventh Plan. Thus, as percentage of agri-GDP, AGCF has morethan doubled during the last decade(Figure 2). This is perhaps the biggestchange that has occurred in Indian

agriculture, and if sustained, will bringrich dividends in due course.

It is interesting to note here thatthe public sector accounts for only20 per cent of the total investmentin agricultural sector in India; 80 percent comes from the private sector.In the early 1980s, the shares of the

public and private sectors (includinghousehold sector) in AGCF wereroughly equal, but by the early 2000s,the share of the private sector wasfour times larger than the share ofthe public sector. The private sectorinvestment is complementary to publicinvestment in agriculture but respondsmuch better and faster to the incentivestructures in agriculture. This indicatesthat improved incentives in the formof better returns or better prices have

played a catalytic role in acceleratingagricultural growth during the latterhalf of the 2000s decade.

It may be noted here that publicinvestment in agriculture in Indiaas measured by National AccountsStatistics (NAS) comprises largely ofmajor and medium irrigation projects.The expenditures on R&D, ruralinfrastructure, rural electrification,education etc are accounted under otherheads of investment expenditures.The estimate of public investment inagriculture used here is as reported

by NAS, and therefore somewhatunderestimates the public investments

that are critical to propel growth inagriculture. If we account for these,then AGCF would easily cross muchabove 20 per cent of agri- GDP.With an ICOR of 4:1, this shouldthen comfortably give us 5 per centgrowth in the agricultural sector. Butthe agricultural sector is still having anaverage of 3-4 per cent growth.

What are the constraining factorsto agricultural growth if investments

Figure 1: Comparative Growth in GDP (overall) andGDP (agri) during Plan Periods

Source: Central Statistics Office (CSO). All figures are at 2004-05 prices. The figuresfor 2012-13 and 2013-14 are as per the Advance Estimates of CSO released on 7th February, 2014

Figure 2: AGCF as a Ratio of GDP (agri)

Source: National Accounts Statistics, CSO; Agricultural Statistics at a Glance, variousissues

Note: All Estimates are at 2004-05 prices



YOJANA June 2014 7

are not deficient? Should the overallresources going to agriculture beincreased or is it that the compositionof those resources needs correction?Or is it that the ICOR itself haschanged to say 4.5:1 or even 5:1,with emerging labor scarci ty?

Or that this sector suffers fromdemand constraint? Or are there anyother structural problems that needoverhaul to allow this sector to growsustainably at more than 5 per cent

per annum? Could these be on themarketing side, asking for buildingup of efficient value chains from farmto processor to organized retailers?These are some of the questions thatneed a deeper probe. Here we lookat only the nature and magnitude of

public expenditure on agriculture andhow that can be rationalized to propelgrowth in agri-GDP.

Public Expenditure on Agriculture

The total public expenditure onagriculture (including public investment& input subsidies) as a ratio of GDP(agri) has almost doubled in the lastdecade from 8.6 per cent in 1993-94 to 20.6 per cent in 2009-10. Thiscompares well with international trendsand may be towards a higher side.Thus, it appears that there are sufficient

public resources going to agriculture.But the bane lies in the composition ofthat expenditure - Indian agriculturereceives public resources more in

the form of subsidies than publicinvestments. Almost 80 per cent isin the form of subsidies and only 20

per cent is investment in agriculture(Figure 3).

Subsidies

The three major input subsidiesare (a) fertilizer subsidy that involves

provision at retail prices lower thanthe cost of producing or importingfertilizers, (b) irrigation subsidy given

by charging user charges below theexpenditure on the operation andmaintenance of surface irrigation;and (c) power subsidy through usercharges that are lower than the cost ofsupplying power. Other subsidies may

be in the form of credit subsidy through

an interest subsidy on credit obtainedfrom financial institutions and throughoutright waiver of loans; subsidy oncrop insurance and subsidized salesof seeds. A major proportion of thesesubsidies is accounted by fertilizersubsidy which has shown an increasingtrend in recent years. Fertilizer subsidyhas increased by around five times inthe last ten years from Rs 12,595 crorein 2001-02 to Rs 67,971 crore in 2013-14 (RE) at current prices. However, asa ratio of GDP (agri) it has increasedfrom 2.6 per cent to 3.5 per cent duringthe same period. Additionally, there has

been a hidden element of carryover ofliabilities in these estimates to the tuneof more than Rs 30,000 crore in 2013-

14 as per the Fertilizer Association ofIndia. Increase in the fertilizer subsidyhas been due to increased consumptionof fertilizers which has been largelymet through imports, sharp increasein prices of finished fertilizers & theirinputs in the international market but

stable domestic farm gate fertilizer prices (especially in the case of urea).There are clear indications that thissubsidy has led to imbalanced use of

N, P and K in states like Punjab andHaryana which has deteriorated soilconditions and raised questions on theenvironmental sustainability.

In addition to the input subsidies,food subsidy is provided for makingfood (mainly wheat & rice) availableat affordable prices to a large sectionof the population. It represents the

basi c di rect cost incurred by thecentral government on procurement,stocking and supplying to various food

based safety nets of PDS and otherwelfare schemes. During the last fewyears, food subsidy has increased bymore than ten times from Rs 17,494crore in 2001-02 to Rs 92,000 crorein 2013-14 (RE) at current prices.This is expected to increase furtherwith the extension of National Food

Security Act, 2013. Together, foodand fertilizer subsidies, accounted foran expenditure of more than Rs 1.5lakh crore in 2013-14. In comparison,

publ ic inve st me nt in ag ri cu ltu rewas around Rs 22, 000 crore -onlyone-fourth of this. This is reflectiveof the imbalance between use ofsubsidies & investments as policyinstruments for agricultural growthand poverty alleviation. This needs to

be urgently corrected especially whenthe marginal returns from expenditureon subsidies is much less than that oninvestments.

Marginal Returns h igher onInvestments than on Subsidies

Given fiscal constraints, there isalways a trade-off between allocatingmoney through subs id ies andincreasing investments. Subsidies,unless they are well targeted and arefor a limited period, are not equitable

Source: CSO, Agricultural Statistics at a Glance, Various Issues Note: All Estimates are at 2004-05 prices

Figure 3: Composition of Public Expenditure on Agriculture



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& efficient and crowd-out publicinvestment in agriculture research,irrigation, rural roads and power. Thereis an inherent moral hazard in use ofsubsidized inputs such as fertilizerand water and their excessive useleads to deterioration in the aquifersand soil creating an environmentallyunsustainable system. Investments take

time to fructify but result in sustainableand higher growth. Public investmentespecially in R&D drives technicalchange and productivity growth inagriculture, raising farm incomes andreducing prices for consumers. Thishas been corroborated by research 2 which shows that the marginal returnsin terms of poverty alleviation oraccelerating agricultural growth aremuch lower from input subsidiesthan from investments in rural roadsor agri-R&D or irrigation or evenon health and education (Figure 4).The allocation of public funds tosubsidies for goods such as agriculturalinputs that primarily benefit privateindividuals can divert funds awayfrom public goods and other socially

beneficial expenditures.

The way forward

The above analysis shows thatrationalizing subsidies will not only

help divert budgetary support towardshigher return investment but alsoensure appropriate use of resources,

particularly fertilizers, and also addressthe issue of controlling environmentaldamage. The present scale of subsidyin the agricultural sector poses a highfiscal burden on the central and stategovernments. Also, high agricultural

input subsidies result in inefficientresource allocation; crowding outof public sector investment; anddegradation of the environmentand thus, affecting the agricultural

productivi ty. Agricultural growth and poverty reduction depend crit icallyon investments in rural infrastructure(irrigation, roads, transport etc.) aswell as investments in markets, ruralfinance and research & extension.Thus, this imbalance betweensubsidies and investments needs to

be urgently corrected for sustainablegrowth in Indian agriculture andoverall inclusive growth. Reducinginput subsidies will free publicsector resources for building ofrural infrastructure that can augmentsupplies, raise incomes and increasedemand for agricultural products.We need to move to a system whereall subsidies are targeted and giventhrough conditional cash transfers.

Figure 4: Returns in Agricultural Growth and Poverty Reduction to Investments and Subsidies

Agricultural Growth Poverty Reduction

Source: Fan, Gulati and Thorat 2007

There are technology options —Aadhaar card-linked bank accountsfor instance — that make it possibletoday to deliver subsidies directlyand most efficiently to targetedrecipients.

Will the new Government bite the bullet and contain subs idies whileenhancing investments in a transparentmanner with time bound results?Anyone who has the political art ofreorienting resources from subsidiesto investments will be rewardedhandsomely, in a political economycontext, and which will be a win-winsituation for the country as it willaccelerate agri-growth to above 5 percent, and reduce poverty even faster.

Endnotes

1. Shenggen Fan, Ashok Gulati and

Su k h a d e o T h o r a t , ‘ I n v e s tm e n t s ,Subsidies and Pro-Poor Growth in RuralIndia’, Agricultural Economics 39, 2008.

Reference

Sh e n g g e n Fa n , Ash o k Gu la t iand Sukhadeo Thorat, ‘Investments,Subsidies and Pro-Poor Growth inRural India’, Agricultural Economics 39,2008. q

( E-mail:[email protected]@gmail.com )



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G R I C U L T U R ESECTOR in Ind iaand in many othercountries faced severaltough challenges forcouple of years after

implementation of the WTO agreementon agriculture in year 1995, primarilydue to sharp fall in prices of agriculturalcommodities. The fall in prices ledto perceptible decline in growth ofagricultural output after the mid 1990’swhich had several consequencesincluding widespread agrarian distress.It was a great challenge and formidabletask to arrest the decline and to reversethe slowing growth of agriculturesector. Several initiatives were taken

by the central and state governmentsto address this challenge. The lastnine years (2004-05 to 2012-13)have witnessed impressive revival ofagriculture growth rate even thoughgrowth rate of non agriculture sectordecelerated in recent years. Besidesgrowth per se, the quality of growth hasalso seen considerable improvementand there has been progress relatingto inclusiveness, regional equity,

and nutrition security. Though theseachievements are highly significantand unique in many respects, thereis not adequate appreciation orrealization about these in the country.Many of us seem to be obsessed with

Dissecting Agricultural Performance Since Mid1990s

OVERVIEW

Ramesh Chand

IN-DEPTH

A

The author is Director, National Centre for Agricultural Economics and Policy Research, New Delhi. Earlier he had served as Professorand Head – Agricultural Economics Unit at Institute of Economic Growth, Delhi. He has also been a Visiting Professor at University ofWollongong, NSW Australia (2000); and Visiting Fellow at Institute of Developing Economies, Chiba Shi, Japan (2003). He worked asconsultant for FAO, ESCAP, OECD, World Bank, Indian Institute of Foreign Trade, Delhi and Government of Punjab. He is the authorof a number of books and research papers published in reputed national and international journals.

achievement of green revolution andnot willing to acknowledge the recentaccomplishments as these are notconcentrated on revolution aroundone or two crops, or, concentrated in a

particular geographic region. Second,high food inflation has overshadowed

progress on production front. Properunderstanding of the decline andimprovement in performance ofagriculture since the mid 1990sis very important for shaping thefuture of Indian agriculture. This

paper compares the performance ofagriculture in the recent years withthe preceding decade and providesan update on the achievements of theagriculture sector in recent 10 yearsor so. It also discusses, with evidence,how and when the turnaround inagriculture took place, for developing

pr op er un de rs tand ing of In di a’sagriculture growth story.

Growth Trend and Composition

The country achieved close to 5 per cent average annual rate of growthin agriculture during 8 th Plan (1992-93to 1996-97) and fixed a target of 4.5

per cent growth for the 9th

Plan (1997-2002). Against this target, the actualgrowth rate turned out to be 2.48 percent during the 9 th as well as 10 th Plan.The target growth rate was fixed at 4

per cent for 11 th Plan and the same has

Agricultural development strategy should beexpanded to bring

marketing in its fold toimprove competition,

reduce ef ciency and harness market

innovations. This shouldenable farmers to get

better prices and higher share in prices paid by

end users without addingto in ation. Without this,it will be very dif cult to sustain the agricultural achievements of the last

decade in the coming years



YOJANA June 2014 11

been kept for the 12 th Plan. Unlike the previous two Five Year Plans, the 11 th Plan recorded an average growth rateof 4.06 per cent in the agriculturalGDP. The growth rate during 2012-13, which is the first year of the 12 th Plan has been 1.4 per cent and the

advance estimate for 2013-14, whichis the second year of 12 th Plan, putsthe growth rate at 4.6 per cent. Thegrowth rates reveal that after growingat 2.5 per cent for 10 years, during 9 th and 10 th Plan, agriculture growth inthe subsequent period has acceleratedto 3.5 per cent level. It is interestingto find out precisely in which year theturnaround in growth rate took place,and how the period after turnaroundcompares with the corresponding

period before turnaround.

According to a study done byRamesh Chand and Parappurathu (2012), GDP of agriculture witnesseda structural break in the year 1995-96, which brought down the growthtrajectory, followed by another breakin the year 2004-05, which turned thegrowth path upward. The same canalso be seen from the decadal trendgrowth rates in the agricultural GDP

beginning with the decade 1971-72 to1980-81and ending with the decade

2003-04 to 2012-13 (Fig. 1). Whenten years period is used to estimatetrend growth rates, two clear breaksare observed, one in 1996-97 and

another in 2005-06.

The above evidence clearly pointsout that the performance of agricultureduring the last two decades can bedivided in two phases: phase I from1995-96 to 2005-06 representing a

period of slowdown in agriculture,and, phase II beginning with year2005-06 representing a period ofrecovery and acceleration in growth.Further, a comparison of growthrates achieved during the decade

beginning from 2004-05 is made withthe previous two decades. The dataon GDP of the sector (agriculture and

allied) after 2004-05 is available tillyear 2012-13 i.e. for nine years. Thetrend of growth rates in GDP duringrecent decade (nine years only) atconstant prices and for similar two

previous periods is presented in Fig2. This shows that Indian agriculturemoved on a growth trajectory of 3.15

per cent per annum during 1988-89to 1996-97 which plummeted to 1.92

per cent in the next nine years. Thiswas a very low growth having several

adverse effects on farm economy andlivelihood of farming community and posed a serious threat to the nationalfood security.

Some initiatives were takentowards the end of 10 th Plan andduring 11 th Plan to revive thesector . Consequently, the growthrate accelerated to 3.75 per centduring 2004-05 to 2012-13. It is amatter of pride for the country thatagriculture sector moved back onlong term growth trajectory and nowapproaching targeted growth rate of4 per cent.

Broad based Growth

The increase in growth rate ofagricultural output was not confined toa few segments or commodity groupsor to dominant products. Rather, thegrowth has been experienced acrossthe board. Within the subsectors,crop sector recorded 3.3 per cent and

Fig.1: Growth Trajectory of GDP Agriculture in various decadesfrom 1971-72/1980-81 to 2003-04/2012/13

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

T r e n

d g r o w t h r a t e :

% / y e a r

Decade ending with year

Fig 2: Growth Rate in GDP Agriculture and AlliedSector at 2004-05 Prices

T r e n

d g r o w t h r a t e : %

/ y e a r

0

0.5

1

1.5

2

2.5

3

3.5

4

1 88-89 to

996-97

3.15

1996-97

2004-

1

to

5

20

.92

04-05 to

012-13

3.75



12 YOJANA June 2014

fruits and vegetables recorded 5.3 percent annual rate of growth. Livestockoutput increased at 4.8 per cent perannum while fishery sector recorded4.5 per cent growth rate. The rate ofgrowth in the recent decade has beenhistorical in most cases. Growth rate

of crop sector in recent nine years(2003-04 to 2011-12) has been 75 per cent highe r than the previousdecade (Table 1). The growth rate inlivestock and horticulture growth washigher by 41 per cent and fisheries by48 per cent over the preceding nineyears period.

Performance of Various Crops

Foodgrain production in Indiaincreased from 190 to 206 milliontonne (mt) between 1995-97 and2003-05 registering an increase of16 mt in 8 years. In the next 8 years,foodgrain production increased bymore than 50 mt and reached 257 mt

by 2011-13. Rice, wheat and maizewitnessed a record increase in their

production afte r 2003-05. Maize production in the country was below10 mt till 1995-96 and crossed levelof 21 mt in year 2010-11. Thus, maize

production in the country doubled in15 years.

Pulse production in India stagnatedaround 13 mt for 15 years from 1990-91 to 2005-06. It showed recordgrowth in year 2010-11 with outputclimbing up by 25 per cent in oneyear, from 14.6 mt to 18.2 mt.

Soybean and cotton have shownmiraculous growth with doubling ofoutput in about 8 years. India now

produces 13.4 mt of soybean and 34.6million bales of cotton as against the

production of 7.3 mt of soybean and

15.1 million bales of cotton in 2003-05.Indian agriculture made another verynoteworthy achievement by raisingoutput of sugarcane. Sugarcane

production in India reached close to300 million tonne in year 1999-2000and faced decline thereafter, cane

production recovered in year 2006-07 in a big way. Current level ofsugarcane output is 350 mt and Indiais having large surplus of sugar.

India produced 114 mt of fruitsand vegetables in the mid 1990’s. Innext 8 years, production increasedto 143 mt. Between 2003-05 and

2011-13, production of fruits andvegetables increased to 235mt. Bothvegetable as well fruit productionincreased by more than 60 per centin 8 years after 2003-05 which ismuch higher than the growth in the

previous period. These growth rateshave taken fruit production to 77 mtand vegetable production to 158 mtduring 2011-13.

The increase in production ofonion and potato has been remarkable.Onion production increased from 6.18mt in 2003-05 to 16.9 mt in 2011-13.Production of potato, which increased

by less than 2 mt in 8 years before2003-05 showed an increase of nearly20 mt in recent 8 years.

Trend growth rates in productionof various crops are presented in Table2. The growth rate in many crops wasnegative during 1994-95 to 2003-04,which has been reversed in the recentdecade. In other cases, there has

been sharp acceleration. It is worthmentioning that cotton production

Table 1: Trend growth rate in output of various sub sectors ofAgriculture: (in per cent)

Sub sector 1987-88to

1995-96

1995-96to

2003-04

2003-04to

2011-12Crop sector 2.97 1.87 3.28Livestock 4.10 3.43 4.84Fruits and vegetables 4.29 3.79 5.33Fishery sector 7.22 3.02 4.48

Table 2: Trend Growth Rate in Physical Output ofSelected Crops/groups: (in per cent)

Crop/ group 1994-95 to 2003-04 2003-04 to 2012-13

Foodgrains 0.71 2.66Cereals 0.81 2.61Pulses -0.64 3.31

Rice 0.62 1.99Wheat 1.03 3.60Maize 4.43 5.51Gram -2.37 5.59Pigeonpea 0.14 2.05Oilseeds -1.65 2.47Soybean 3.35 7.61Sugarcane -0.47 4.01Cotton -2.23 10.46Fruits and vegetables 2.64 6.26Vegetables 3.24 6.37Fruits 1.53 6.04Banana 0.92 7.57Mango 0.96 4.44Citrus 4.50 5.34Onion 3.07 12.98Potato 2.90 8.94



YOJANA June 2014 13

positive growth in agriculture, withonly 1.5 per cent annual growth. Inthe North West Himalayan region,agriculture growth rate in Jammu &Kashmir and Uttarakhand was around2 per cent whereas agriculture wasstagnant in the state of Himachal

Pradesh. In West Bengal, agriculturesector was growing at about 2 percent per annum. Agriculture sectorwas found to be shrinking in the stateof Kerala.

Initiatives and Factors Underlyingthe Achievements

Performance of agricul tureimproved in the last decade as a resultof strong policy and institutionalsupport provided to the sector. Themajor contributing factors are:l Improvement in terms of trade

for agriculture in the last 10 yearsand remunerative prices for farm

produce.l Higher use of p roduc t iv i ty

enhancing inputs like fertilizerand quality seed.

l Expansion of irrigation andincrease in agricultural investmentssupported by public sector capitalformation.

l Subs tan t ia l increase in thesupply of institutional credit toagriculture.

Table 3: Trend growth rate in production of Livestock and Fish:(per cent/year)

Product 1994-95 to 2003-04 2003-04 to 2011-12Milk 3.78 4.72Egg 5.69 6.20Marine fish 0.71 2.01

Inland fish 5.55 5.99Total fish 3.04 4.30

followed double digit growth in last10 years while soybean, maize andgram experienced more than 5 percent annual growth. Output of pulses,which was stagnating for quite sometime, also moved on a rising trendwith growth rate of more than 3 percent.

The growth rates in output of

horticultural crops during the decade1994-95 to 2003-04 and 2003-04 to2012-13 reveal grand success of thehorticulture in the second decade.Growth rate in fruits as well asvegetables accelerated from 2.64 percent during 1994-95 and 2003-04to 6.26 per cent during 2003-04 to2012-13. Among vegetables, onion

production recorded almost 13 percent annual growth while potato

pr oduc ti on inc re as ed by 8.9 pe rcent per year. Among various fruits,

highest growth is observed in bananawith 7.57 per cent.

Performance of Livestock andFishery Produce

All livestock and fishery productsshowed higher growth after 2003-04compared to 1994-95 to 2003-04(Table 3). Milk production growthaccelerated after 2003-04, from 3.78

per cent per annum to 4.72 per cent perannum. Growth in production of eggaccelerated from 5.69 to 6.2 per cent.After 2003-04, growth rate in marineas well as inland fishery witnessedacceleration. Output of marine fishincreased by less than 1 per cent ayear during the 10 years period before2003-04. The growth rate picked up to2 per cent in the recent decade. Inlandfish experienced more than 5.5 percent annual increase during 1995-96to 2003-04 which further increased toclose to 6 per cent.

Agricultural Growth at StateLevel

The growth ra te in NSDPagriculture across states varies from(-) 1.15 per cent in Kerala to 5.91

per cent in Chattisgarh (Table 4).The states like Madhya Pradesh,Karnataka, Rajasthan, Jharkhand andChattisgarh achieved more than 5 per

cent annual growth rate in agriculture,and Gujarat, Tamil Nadu, Maharashtraand Andhra Pradesh, exceeded thenational target of agriculture growth.Haryana, recorded close to 4 per centannual growth in NSDP agricultureeven with high level of productivity.In east India, both Assam and Biharrecorded more than 3 per cent annualgrowth.

Uttar Pradesh and Odisha arestill stuck in low growth trap. Thestate of Punjab comes at the bottomin the list of states which recorded

Table 4: Growth rate in NSDP Agriculture during 2004-05 to2011-12 at 2004-05 Prices in Major States: (in per cent)

State Trend growthrate

State Trend growthrate

Chhatisgarh 5.91 Haryana 3.94

Jharkhand 5.76 Assam 3.84

Rajasthan 5.63 Bihar 3.32

Karnataka 5.59 Odisha 2.67

Madhya Pradesh 5.22 Uttar Pradesh 2.33

Jammu & Kashmir 2.04

Andhra Pradesh 4.94 West Bengal 1.98

Maharashtra 4.84 Uttarakhand 1.95

Tamil Nadu 4.21 Punjab 1.49

Gujarat 4.08

Himachal Pradesh -0.09

All India 3.70 Kerala -1.15



14 YOJANA June 2014

l Achievements in technology andstrengthening of extension.

l Initiatives like NFSM, RKVY andBGREI and other missions and

programmes.

Better Pricing

Te r m s o f t r a d e b e t w e e nagriculture and non-agriculture,represented by ratio of implicit pricedeflators of agriculture GDP to non-agriculture GDP, followed a declineof 7 per cent between 1997-98 and2004-05. Thereafter, agricultural

prices received by farmers increasedat a faster rate under the influenceof the subs tan t ia l h ike in theminimum support prices, higherlevel of foodgrain procurement

by go ve rn me nt age nc ies , st rongdomest ic demand and r i se inin te rna t iona l p r ices . Be tween2004-05 and 2011-12, agricultural

pri ces relative to non-agricultural prices have risen by about 30 percent (Fig.3). Thus, better pricingenvironment provided incentive tofarmers to use more and better inputand adopt modern technology.

Higher Use of Material Inputs

Supply of certified or quality seedin the country increased by about 50

per cent between 1997-98 and 2004-05 (Fig. 4). In the next 8 years, theseed supply increased by more than100 per cent. As seed is the carrier oftechnology, the growth in supply of

quality seed has been a major factor

for increase in agriculture productionin recent years. Similarly, use offertilizer which showed a meagerincrease of 14 per cent during 1997-98to 2004-05 increased by 50 per cent innext 7 years, from 18.4 mil lion tonne(mt) of NPK in 2004-05 to close to 28mt in year 2011-12 (Fig 5).

Electr ic i ty Consumption andIrrigation Expansion

Consumption of electricity foragriculture purposes and expansion ofgross irrigated area are closely linked(Fig. 6). Electricity consumptionin agricul ture sector was 85.7thousand GWh in year 1995-96.The consumption increased to 97.2thousand GWh by the year 1998-99

and sharply declined thereafter. It

reached bottom level in year 2001-02and then started increasing slowly.The consumption of electricity inagriculture picked up in year 2006-07 and the upward trend continuedthereafter. The electricity consumptionreached 129 thousand GWh in year2010-11. Between 1998-99 and2005-06, electricity consumption inagriculture declined by 7 per centand in next 5 years, it increased byas much as 43 per cent.

Expansion in gross irrigated areashowed somewhat similar patternas seen in electricity consumptionin agriculture. During the ten years

period from 1995-96 and 2004-05,gross irrigated area increased by 10million hectare from 71.4 millionhectare to 81.1 million hectare. The

provi sional data avai lable for therecent years shows an increase of 8.3million hectare in the next six years.

Conclusions and Lessons

During the last two decades,since mid 1990s, Indian agriculturehas moved through two distinct

phases. The period from mid 1990sto mid 2000s witnessed slowdownof agriculture growth from above3.5 per cent to below 2 per cent.This has been followed by a sharpturnaround in year 2005-06 whichtook agriculture back to above 3.5

per cent growth. The most important

Fig. 3: Terms of Trade between Agriculture and Non-Agriculture

79 127

347

0

50

100

150

200

250

300

350

400

1 9 9 7

- 9 8

1 9 9 8

- 9 9

1 9 9 9

- 0 0

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- 1 1

2 0 1 1

- 1 2

2 0 1 2

- 1 3

S e e

d :

L a

k h

q

u i n

t a

l s

Fig 4: Supply of C ertifed or Quality Seed: (in Lakh quintal)

107.8

100.0

129.8

90

95

100

105

110

115

120

125

130

135

T e r m s o

f t r a

d e



YOJANA June 2014 15

factor for improved and impressive pe rforma nc e of agri cu lt ur e, post2004-05, has been the increase in the

prices received by the farmers. Thiswas a result of hike given to MSP,increase in foodgrain procurement,increase in global agricultural pricesand strong domestic demand forfood. Favourable prices inducedfarmers to use better seed, applyhigher doses of inputs, take bettercare of crops and livestock, adoptimproved technology and methodsof production. This process wasfurther aided by liberal supply of

institutional credit and irrigationexpansion. Slowdown of agriculturegrowth and its recovery in response tochanges in price and non price factorsclearly establish that Indian farmersrespond rather strongly to various

16.218.4

27.6

0

5

10

15

20

25

30

1 9 9 7

- 9 8

1 9 9 8

- 9 9

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- 0 0

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- 1 0

2 0 1 0

- 1 1

2 0 1 1

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N P K : m

i l l i o n t o n n e

Fig 5: Use of Fertilizer in India: NPK: (in million tonne)

85.7 88.6

129.1

71.4

81.1

89.4

60

70

80

90

100

110

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140

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E l e c t r i c i t y c o n s u m p

t i o n a n

d I r r i g a t e d a r e a

Electricity consumption in agriculture000 GWh

Gross irrigated area million hectare

Fig. 6: Progress in Electricity Consumed in Agriculture andExpansion of Irrigation

types of incentives. It also refutesto some extent the argument that theinterest in farming is diminishing.We find the interest depends on

profitabil ity from farming.

S t a t e l e ve l c ompa r i son o fagriculture growth offers usefullessons. With the same set of national

po li ci es and macro envi ronment,some states achieved more than 5

pe r ce nt growth and some couldnot grow even at 3 per cent. Lowgrowth states, particularly UttarPradesh and Odisha, can learn a lotfrom the experience of the states likeChhatisgarh, Jharkhand, Rajasthan,Karnataka, Madhya Pradesh, AndhraPradesh and Maharashtra.

It is a challenge to maintain thegrowth tempo achieved during 2004-

05 to 2013-14. As no country canafford to keep real agricultural pricesrising for a very long time, therefore,ways and means have to be devisedto sustain profitability incentive. Oneway to maintain price or profitabilityincentive for farmers is to increase

their share in final prices paid byconsumers and other end users.The second source is technologyeither through resource saving orthrough increase in productivity. Theagricultural development strategyin the last ten years has focused on

production and MSPs. For a longtime, significant progress has not

been made in agricultural marketslike reforms in market regulation,development of infrastructure, entryof modern capital, and developmentof new models of marketing. Thus,agricultural marketing has not movedto the next stage of development(Ramesh Chand, 2012). Agriculturaldevelopment strategy should beexpanded to bring marketing inits fold to improve competition,reduce eff iciency and harnessmarket innovations. This shouldenable farmers to get better pricesand higher share in prices paid

by en d us ers wi tho ut add ing to

inflation. Without this, it will be verydifficult to sustain the agriculturalachievements of the last decade inthe coming years.

(The paper is drawn from larger work“From Slowdown to Fast Track: IndianAgriculture Since 1995”, by RameshChand, Working Paper 1/2014, NationalCentre for Agricultural Economics andPolicy Research, New Delhi.)

References

Ramesh Chand (2012). DevelopmentPolicies and Agricultural Markets,

Economic and Pol it ical Weekly , Vol.XLVII, No. 52, 53-63, December 29.

R a m e s h C h a n d a n d S h i n o jParapppurathu (2012). Temporal andSpatial Variations in Agricultural Growthand its Determinants. Eco nomic andPolitical Weekly , Vol. XLVII No. 26 & 27:55-64. June, 30. q

( E-mail : [email protected] )



16 YOJANA June 2014

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YOJANA June 2014 17

HERE IS considerableanguish in India todayabout malfunctioningState apparatus. It isimportant to distinguish

between objectives andexecution. Reasonable men maydisagree about whether or not it isuseful for the Indian governmentto run NREGA, or a system ofcapital controls, or censorship ofelectronic media, or traffic lights. Butregardless of the merits of each ofthese objectives, we can agree that weshould have the ability to achieve thedesired outcomes on stated objectives.In previous decades, there was agreat focus on dismantling controls,reversing the license-permit raj and

putting an end to industrial policywhere the government determineswhat industries or technologiesare good. There is, indeed, a needto comprehensively back awayfrom those approaches, which were

pursuing the wrong ob ject ives.However, the challenge today is not

just of deregulation, of stroke-of-the- pen reforms which elimina te laws

and close down existing governmentorganizations. There is no escapingthe role for the State in core publicgoods such as safety. Only the Statecan build the criminal justice system,the defense forces, and manageinternational relations. Only the State

Building State Capacity in India

ROADMAP

Ajay Shah

VISION

T

'The author currently co-leads the Macro/Finance Group at NIPFP in New Delhi. He has held positions at the Centre for MonitoringIndian Economy, Indira Gandhi Institute for Development Research and the Ministry of Finance, and has engaged in academic and

policy-oriented research in the fields of Indian economic growth, open economy macroeconomics, public finance, financial economicsand pensions. He studied at IIT, Bombay and USC, Los Angeles

can build core public goods. Only theState can address the three marketfailures of externalities, market

power and asymmetric information.In these areas, an active State isunambiguously required. Everycivilized country has a capable Statewhich performs these functions andavoids interfering with the freedomsof citizens in any other respect. Thechallenge of State capacity is that of efficiently converting expendituresinto public goods outcomes whileavoiding unintended consequences.

India has fairly sophisticatedthinking and policy discussion on thequestion of what government shoulddo. The binding constraint todaylies in State capacity, which may

be defined as the ability to convertobjectives + resources into outcomes.As Pritchett (2009) says, `I arguethat India is today an ailing state, anation-state in which the head, thatis the elite institutions at the national(and in some states) level remainsound and functional but that this headis no longer reliably connected via

nerves and sinews to its own limbs’.All protagonists in the public policydebate should be able to agree onthe need to solve the implementationshortfall which affects the Indian State.As an example, consider the field ofinfrastructure. The old debate about

...an active Stateis unambiguously

required. Every civilized

country has a capableState which performs these functions and

avoids interfering with the freedoms of citizens

in any other respect.The challenge of State

capacity is that of

ef ciently convertingexpenditures into public goods outcomes while avoiding unintended

consequences



18 YOJANA June 2014

infrastructure was about public versus private production of infrastructureservices. The bulk of infrastructurecan indeed be constructed andoperated by private firms but thedesired outcomes are obtained onlyif the government delivers on the

functions of planning, contractingand regulating. There is no escapingthe problems of State capacity, inachieving government structuresto make internally consistent plansfor infrastructure, to execute soundcontracts that shape the behavior of

private firms in the right ways, and toregulate private firms once projectshave been completed. Almost all the

problems of Indian infrastructuretoday can be traced to deficiencies ofthe State in planning, contracting andregulation. When there are infirmitiesin planning, contracting or regulating,PPP contracting can give outcomesthat are worse than the erstwhile State-centric approaches.

Most people agree that thegovernment should embark oneliminating salmonella in the supplychain of eggs and meat. But oncesuch an objective is agreed upon andadequately resourced, the questionarises about how government should beorganized so as to translate objectivesand resources into outcomes. This isthe defining bottleneck in India today.In this article, we ponder over some

thoughts on how to construct Statecapacity.

The Black Box View

At the simplest, every organizationcan be viewed as possessing aleadership which utilizes certain

resources in order to ach ievecertain objectives. The organizationwill perform when two tests aresatisfied. First ,is the leadership ofthe organization in full control of theway in which resources are utilized.Second, is whether the leadershipis accountable. An accountableleadership which is in control ofthe organization will respond tofailures and make changes on theway things are done so as to achievethe desired outcome. This motivates

an exploration of accountability andoperational autonomy.

Accountability through Elections,Legislature and Judiciary

I n e ve r y w e l l f unc t i on ingdemocracy, there is a `long routeof accountab i l i ty ’ tha t worksthrough elections, legislature and

judiciary. The ruling administrat ionis accountable in general elections.There is a weak mechanism throughwhich the performance of a ministryaffects the job security of the minister.The legislature exerts checks and

balances upon the executive (Kapurand Mehta, 2006). The judiciary

prevents transgressions of the rule oflaw to the extent that this is enabledthrough well drafted laws.

However, this `long route ofaccountability’ is a diffused form ofaccountability. The persons working inone Ministry or in a public body oftenfeel little pressure from the coming

general elections or Parliament. Aslong as laws are not visibly violated,the judiciary is quite respectful ofexecutive discretion, particularlythrough the `expert body doctrine’.Improvements in the working of thelegislature and the judiciary willundoubtedly improve accountabilityand thus increase State capacity. Inthis article, we treat the working of thelegislature and the judiciary as given,and focus on strategies for public

administration that are conducive toobtaining performance. These ideascan be valuable for all three: thelegislature, executive and judiciary.

Principles for assigning roles andfunctions

To a maximal extent, need clearproblem statements that can beassigned outside departments ofgovernment

To improve accountability, wemust sharpen the problem statement.For example, a precise problemstatement such as `Deliver 24 hourwater supply at stated engineeringcharacteristics of purity and pressure’makes possible contracting-out fromthe Principal (government) to anAgent (a water utility). The Agent can

then have no interest in the process ofwinning the next elections. It focuseson one sub-problem, that is coded intoits contract. It is held accountable fordelivering on that one problem. Public

bodies work better when there is a

sharp and clear problem statement.As an example, a central bank can beorganized around an inflation target.

The Agent, the central bank, isgiven the objective of delivering 4

per cent CPI inf lation and certa instrictures are imposed upon failure.This generates accountability. Incontrast, if the objectives of a central

bank are poorly stated, this creates anenvironment of failure.

The bulk of infrastructure canindeed be constructed and operated

by private rms but the desiredoutcomes are obtained only if

the government delivers on the

functions of planning, contractingand regulating. There is no escaping

the problems of State capacity, inachieving government structures

to make internally consistent plansfor infrastructure, to execute soundcontracts that shape the behaviorof private rms in the right ways,and to regulate private rms once

projects have been completed.

Within the main structure ofgovernment, the strategy musthence be one of identifying allpossible sub-problems where

contracting-out can be done toan Agent either to a private rmor to a public body. This would

leave the minimum possible set ofproblems where contracting-out isnot feasible left to be performedby government itself, where weare down to the long route of

accountability.



YOJANA June 2014 19

The fundamental principle ofmanagement is that there must bean objective, the performance must

be measured, and success/ fail ureshould have consequences. This isinfeasible within the main structureof government. Within the main

structure of government, the strategymust hence be one of identifyingall possible sub-problems wherecontracting-out can be done to anAgent either to a private firm or toa public body. This would leave theminimum possible set of problemswhere contracting-out is not feasibleleft to be performed by governmentitself, where we are down to the longroute of accountability. Politics in thereal world is inevitably an arena ofcomplex, imprecise and conflictingobjectives. Writing down preciseobjectives is not easy. The job of public

administration in the departments ofgovernment is one of sifting throughthe fog and emerging with a list of

precise problem statements, which canthen be contracted out, thus leaving aslittle as possible to be done within themain structure of government. In theinternational discourse, contracting-out is better from the viewpoint ofaccountability. In addition, in India,contracting-out is better as the humanresource and management problemsare greatest in core government and

can be eased in external organizationswhether in the public or privatesectors.

Poli t ica l considera t ions mustprecede the contracting-out

When the Principal writes downa clear objective that the Agent must

perform, poli ti ca l cons ider at ionsmust be taken into account before

phrasing the objective.As an example, political considerations are legitimateconsiderations in planning the highwaysystem. For this reason, the planningfunction of determining what highwaysare to be built should be placedunder political control e.g. within aMinistry.

Once a decision has been made

,say to build an expressway fromBombay to Calcutta, this can behanded out to a public body suchas NHAI which can do contractingand then to a private firm whichcan build the highway. If the Agentis given a political objective e.g.if NHAI is tasked with choosingwhat highways to build, this willcreate conflicts in management anddiffuse accountability. Politicianswill legitimately interfere in theworking of the Agent. Accountabilitywill be lost as the leadership of theAgent will be able to say that theirwork was undermined by politicalinterference.

Poli t ical object ives requiredecisions by elected representativesof the people. Politicians are the ones

best equipped to hear rival interestgroups and make political decisions,as they are the ones accountable inelections. These decisions shouldtake place close to the Cabinet andcan generally not be contracted out.Problem statements that are contractedout either to a public body or to a

private firm should be precisely statedand should only require technicalinputs in translating the objective intoexecution. Bureaucrats and technicalexperts should not dabble in politicsand vice versa. One example of strategyis found in Srikrishna (2013) whichexplicitly identifies and places political

functions with the government andnot with regulators where operationalautonomy is desired.

Going from a Khap Panchayat tothe rule of law requires preciseobjectives and narrow powers

In a feudal environment, variousinterest groups lobby with the Stateto obtain help. The powers of theState have no limits. State structureshave discretion about the purposes towhich the coercive power of the Stateis applied. As an analogy, a person goesto a khap panchayat of powerful villageelders with a grievance, and the khap

panchayat chooses whether or not touse its power in order to help him.

From a public choice theory perspect ive, we see poli ticians and bureaucrats as self-interested actors.When there is vagueness of objectivesand powers, this sets the stage fornon-performance, where vagueness isused to pursue personal objectives. Afeudal lord pursues his own interestsabove the interests of anyone else.As an example, when a firm or anindustry faces competitive pressure, itis quite common in India to approachgovernment or regulators and ask for

help. The instinct of helping friends,or obtaining IOUs by helping powerful people, is ingrained in everyone. Alltoo often, help is given by relaxingrules for the industry which is doing

badly or making li fe diffi cult fornew technology which is creatingcompetitive pressure. These are feudalmethods; they are khap panchayatmechanisms; they interfere with theworking of competitive markets. Theyhave no place in modern India.

Politicians are the ones bestequipped to hear rival interest

groups and make political decisions,as they are the ones accountable

in elections. These decisions shouldtake place close to the Cabinet and

can generally not be contractedout. Problem statements thatare contracted out either to a

public body or to a private rmshould be precisely stated andshould only require technical

inputs in translating the objectiveinto execution. Bureaucrats and

technical experts should not dabblein politics and vice versa.

An essential feature of the rule of

law is the establishment of publicadministration structures throughwhich executive discretion in

helping a supplicant in open endedways is removed. This requires anew wave of well drafted laws

which have precise objectives andonly authorize coercive power tothe minimum extent required toachieve those precise objectives.



20 YOJANA June 2014

An essential feature of the ruleof law is the establishment of publicadministration structures throughwhich executive discretion in helpinga supplicant in open ended ways isremoved. This requires a new wave ofwell drafted laws which have precise

objectives and only authorize coercive power to the minimum extent requiredto achieve those precise objectives.

As an example, Section 11B of theSEBI Act features astonishing powersfor the pursuit of an astonishinglyvague objective:

... if after making or causing to be made an enqui ry, the Board issatisfied that it is necessary, - (i) inthe interest of investors, or orderlydevelopment of securities market;or (ii) to prevent the aairs of any

intermediary or other persons referredto in section 12 being conducted ina manner detrimental to the interestsof investors or securities market;it may issue such directions, - (a)to any person or class of personsreferred to in section 12, or associatedwith the securities market; or (b) toany company in respect of mattersspecified in section 11A, as may beappropriate in the interests of investorsin securities and the securities market.With this section, the managementof SEBI has been given powers to

pursue the vague objective of `theinterest of investors’. In keepingwith the predictions of public choicetheory, SEBI has vigorously usedSection 11B in writing regulationsand in writing orders. The presenceof 11B in the SEBI Act has supported

the feudal mindset at SEBI, wheresupplicants come into SEBI andarticulate grievances.

A new wave of well drafted laws,on the lines of Srikrishna (2013), arerequired, which articulate preciseobjectives, give the executive theminimum possible powers throughwhich those object ives can beachieved, and hold the executiveaccountable for performance. A seachange in perspective is required, from

thinking of the executive as a feudalauthority armed with vast powers,to thinking about the executive as

being held accountable for converting pre cisely stated ob jective s int ooutcomes, under an environment ofthe rule of law.

The law is a contract between thePrincipal and the Agent

T h e r e a r e t h r e e d i f f e r e n tmechanisms for contracting out:1. Contracting-out to a private firm

through a contract between thePrincipal and the Agent, which isthereafter adjudicated under theIndian Contract Act of 1872.

2. Contracting-out to a public bodythat is established by executiveorder.

3. Contracting out to a public body thatis established by an Act.

In each case, there is a legalinstrument (the contract, the executive

order, or the Act). The principlesarticulated in this article should shapethis legal instrument under all threecases.

Principles pertaining to publicbodies

Every public body must have a clearobjective

It does not suffice to require thatthe problem statements placed with

public bodies be well specified. Inaddition, every public body musthave clarity of purpose. Even ifsub-problems P1 and P2 are well-

posed, if both are placed in the sameorganization, there is the possibilityof a loss of accountability when these

sub-problems are conflicting or ifone objective overwhelms another. Itis all too easy for the Agent to claimthat it failed on objective P1 as itwas pursuing objective P2, and thatit failed on objective P2 as it was

pursuing objective P1.

As an example, RBI has beengiven the objectives of monetary

policy, investment banking for thegovernment and banking regulation.This arrangement suffers from conflicts

of interest. It is possible to do well onthe investment banking objective bydistorting banking regulation andmonetary policy. It is possible todo well on the banking regulation

objective by distorting monetary policy and investment banking. Thisleads to a loss of accountabilityas failure and the action can beexplained away on the grounds thatother objectives were being pursued.The reverse problem arises whenmultiple government agencies are

placed in charge of the same problem.This leads to a balkanization of law

A new wave of well drafted laws,on the lines of Srikrishna (2013),

are required, which articulateprecise objectives, give the

executive the minimum possiblepowers through which those

objectives can be achieved, andhold the executive accountablefor performance. A sea change

in perspective is required, fromthinking of the executive as a

feudal authority armed with vastpowers, to thinking about the

executive as being held accountablefor converting precisely stated

objectives into outcomes, under anenvironment of the rule of law.

The board should not be a show-piece: All important decisions

should take place at the board.Shareholders should not

meddle in the working of theorganization other than through

the appointment process of theboard, and the working of the

board. Second, the board shouldhave a majority of independentdirectors, to prevent excessive

in uence of insiders, who have anincentive to be lazy and cover upmistakes. Third, the board shouldwork in an adversarial way, with

repeated recourse to formal votingin resolving con iicts.



YOJANA June 2014 21

and regulation, diffuses accountabilityand generates extreme legal risk forthe private sector. Sound design oforganization structures in governmentneeds to avoid this problem also.Hence, two distinct perspectives arerequired. At the level of the Principal

(government), the task is that oftranslating the overall objective of public goods and addressing marketfailures into a large number of concretesub-problems which can be contractedout with sharp accountability. At thelevel of each Agent, when more than

one objective is present, it is importantto confirm that the objectives andaccountability of the organization areclearly established.

Apply good governance principles tothe working of public bodies

In the private sector, we knowthe three key principles of soundgovernance. First, all power shouldvest with the board. The board shouldnot be a show-piece: All importantdecisions should take place at the

board. Shareholders should not meddlein the working of the organization otherthan through the appointment processof the board, and the working of the

board. Second, the board should havea majority of independent directors, to

prevent excessive influence of insiders,who have an incentive to be lazy andcover up mistakes. Third, the boardshould work in an adversarial way, withrepeated recourse to formal voting inresolving confliicts.

These principles are equallyrelevant for public bodies and can beadapted into the public sector settingas four rules:1. All important decisions should

take place at the board; thereshould be no centre of power other

than the board. The governmentshould not meddle in the workingof the public body other thanthrough the appointment process,and the positions taken in boarddiscussions by nominees of thegovernment.

2. In most situations, public bodieswill work better when independentexperts are in a majority in the

board.3. All decisions should be taken

through a formal process of votingwith public disclosure of the votingrecord.

4. The board of a public body shouldwork under full transparency: (i)Publication of agenda papers atleastone week before the board meeting;(ii) Live streaming video from the

board meeting; (iii) Publication ofthe minutes of the board meetingimmediately after the meeting.

The application of these four

rules in a public body will yieldsuperior thinking and decisionmaking of a kind that is hard to inducewithin a government department.This is one reason why contracting-out of well specified problems to

public bodies (or private firms, by adepartment of government is alwayssuperior to performing those tasksinternally.

High operational flexibility and highindependence for public bodies

Public bodies in India have lowoperational flexibility with restrictionsupon the human resource process,methods of contracting and financialrules. They also have low independencein the sense of being subject to back-seat driving by Ministries.

Under present conditions, the casefor operational flexibility of public

bodies is a controversial issue. On onehand, the leadership of public bodies

argues that the lack of operationalf l e x ib i l i t y a nd i nde pe nde nc ehampers their ability to deliver

performance. On the other hand, inan environment where objectivesand accountability mechanisms arenot clearly defined, and sweeping

powers are given, there are importantrisks in having operational flexibilityand independence in the hands ofunelected bureaucrats. There is animportant difference between aMinistry headed by a person who hasno job security as opposed to a public

body headed by an unelected personwho has no risk of losing his job.

Some argue that the lack ofoperational flexibility on humanresource policies and in contracting is

a mechanism through which politiciansare kept in check. At the same time,the danger of abuse of these powers isentirely about the lack of accountability.If the objectives are clear, the powers

are controlled, and the accountabilitymechanisms are adequate, there need

be no restrict ions upon operationalflexibility. As an example, a private

firm in a competitive market is heldaccountable by the clear objective ofobtaining prods. In this environment,extreme operational autonomy isappropriate.

There are strong connections be tween the themes of clar it y ofobjective, accountability mechanisms,o p e r a t i o n a l f l e x i b i l i t y a n dindependence. All four elementsshould be seen as a package deal.

High performing public bodies arethose which feature a blend of

high clarity of purpose, precise andlimited powers, high accountability

mechanisms, high independenceand high operational exibility.These features should be seen

as a package deal. Independenceand operational exibility are an

essential feature of performance bypublic bodies but only when powers

are limited, and there is strongaccountability for a clear objective.

There are strong connectionsbetween the themes of clarity

of objective, accountabilitymechanisms, operational exibility

and independence. All fourelements should be seen as a

package deal. It is only safe togive operational exibility andindependence to the leadership ofa public body which has clarity of

objectives and ample accountabilitymechanisms; otherwise the power

will be abused.



22 YOJANA June 2014

It is only safe to give operationalflexibility and independence to theleadership of a public body whichhas clarity of objectives and ampleaccountability mechanisms; otherwisethe power will be abused. Conversely,it is only when there is operational

flexibility and independence that theleadership can be held accountable,otherwise the leadership will have

plausible deniabil ity in explainingaway failure.

In Section 4.1, it was argued thatthe Ministry must identify all sub-

problems where contracting-out isfeasible, and keep within itself allthe messy problems which cannot becontracted out. The Ministry will thus

be the arena of diffused accountability.T he w or k ing o f gove r nme n tdepartments hence requires elaboraterules that constrain recruitment,compensation, power to contract,

procurement procedures, etc.

When public bodies are establishedthrough the above seven principles,the environment is quite different.The public body has clear objectives.It has a board that is dominated

by independent experts; dec isionsare not captured by insiders. Allimportant decisions are made by the

board under conditions of extremetransparency. Most important, theclar i ty of object ives generatesaccountability which prods the boardforward towards performance.

Under these conditions, there isa case for much greater operationalflexibility for public bodies onmatters of human resource policies,contracting, financial rules, etc. Ifa HR policy document is debatedand approved by the board, under

conditions of full transparency, thisis likely to be an HR policy documentthat is well suited to the groundrealities faced by the organization infulfilling its objectives.

High performing public bodiesare those which feature a blend ofhigh clarity of purpose, precise andlimited powers, high accountabilitymechanisms, high independence andhigh operational flexibility. These

features should be seen as a packagedeal. Independence and operationalflexibility are an essential featureof performance by public bodies butonly when powers are limited, andthere is strong accountability for aclear objective.

Principles pertaining to use ofprivate Agents

When feasible, private Agents arebest

As a general principle, when theAgent can be a private firm, this isalways better than having a public

body as the Agent, as the problemof public administration ends once ahigh quality contract is arrived at. Acomplex contract is required whichgives revenues to the firm in a way that

is sensitive to its performance .Apartfrom that, there is no complexity inthe internal management of the firm.On the other hand, when the Agent isa public body, the problems of publicadministration have shifted but not

been solved.

For certain problems the Agent canonly be a public body

When the Agent has to beempowered to use the coercive

power of the State (e.g. financial

regulation) it is difficult to placethis in a private firm. When thisis done (e.g. with exchanges that

perform regulation and supervisionroles), it needs to be accompanied

by strictures on the ownership andgovernance of the Agent.Anotherexample is a contracting function suchas that performed by NHAI. It is hardto design an incentive-compatiblecontract through which the contractingfunction can be placed upon a privateAgent.

When the Agent is only requiredto perform certain service functions(e.g. operating a road, distributingelectricity, teaching in a classroom),where coercion is not required, andthe outcome is easily measured, theAgent can generally be a privatefirm.

Conclusion

The defining problem in India isthat of constructing State capacity.

The present structures of the IndianState are a palimpsest of a colonialmemory overlaid by a socialistobjective overlaid by the pressuresof participatory democracy in amarket economy. In order to constructState capacity, it is important to take

three steps back from the presentarrangement and apply eight principlesas discussed in the article.

T h e a p p l i c a t i o n o f t h e s e pri nciples will focus on the workof departments and ministries ofgovernment upon political objectivesand upon legislation. Departmentswould identify sub-problems thatcan be contracted out, either to a

publ ic body or to a pr ivate fi rm.The focus would be on drafting highquality legal instruments, eitherexecutive orders (for creation of non-statutory public bodies) or laws (forcreation of statutory public bodies)or contracts (with private firms).Once this contracting-out is done,the Agent would have considerableflexibility in pursuing well specifiedtechnical (not political) objectives,and be held accountable for deliveringoutcomes.

References

Burman, A., Shah, A., Rajagopal, A.,21 April 2014. Capital controls against FDIin aviation: An example of bad governancein India. Ajay Shah’s blog. URL http://ajayshahblog.blogspot.in/2014/04/ capital-controls-against-fdi-in-retail.html

Kapur, D., Mehta, P. B., January 2006.The Indian Parliament as an institution ofaccountability. Democracy, Governanceand Human Rights Programme

Paper 23, United Nations ResearchInstitute for Social Development. Pritchett,

L., May 2009. Is India a ailing state?Detours on the four lane highway tomodernisation. Tech. rep., Kennedy Schoolof Government, Harvard University.

Srikrishna, B. N., March 2013.Report of the Financial Sector LegislativeReforms Commission , vo lume 1and 2. Commission report, Departmento f E c o n o m ic Aa i r s , M in i s t r y o fFinance. q




24 YOJANA June 2014

N T E R N AT I O N A LTRADE remains robustdespite the slow-downin the global economys i n c e t h e 2 0 0 8financial crisis. Global

merchandise exports in 2012 were$17.3 trillion and the developingworld accounted for 42 per cent ofthese exports. Exports outstripped

production: world Merchandise exportsgrew by 3.5 per cent annually inthe 2005-12 period, while worldmerchandise production grew by 2.0in the same period. India fared even

better: total merchandise exports grew10.5 per cent annually in the 2005-12

period although the year 2012 didregister a negative growth of -0.5 percent .

High technology and services areoften regarded as growth drivers forthe global economy. Nevertheless,‘down-stream’ commodities suchas agriculture products and clothingcontinue to be salient in their own right,and may even benefit from revolutionsin technology. Agriculture benefitsfrom provision of infrastructuralservices such as transportation and

banking, and clothing industry isrevolutionized with computer aideddesign and manufacturing. Agriculturemade up 9.2 per cent of globalmerchandise exports in 2012 and

Developing Countries, Agriculture and the WorldTrade Organization

TRADE POLICIES

J P Singh

INTERNATIONAL

I

The author is Professor of Global Affairs and Cultural Studies, and Distinguished Senior Fellow at the School of Public Policy at GeorgeMason University, USA. He has authored a number of books and scholarly articles on global political economy focusing on issues ofglobal governance and development, cultural economics, socio-economic impact of information technologies, and global diplomacyand deliberations. Professor Singh has also advised international organizations such as UNESCO, the World Bank and the World TradeOrganization.

agricultural exports grew by 10 percent annually in the 2005-12 period(WTO 2013: 60-61). India is theeighth biggest exporter of agricultural

products, including the United Statesand the European Union. The annual

per cent age rate increase in India’sagricultural exports was 22 per centand India accounted for 2.6 per centof total world agricultural exportsin 2012. Agriculture is not only animportant export commodity but alsoone growing alongside India’s well-known comparative advantage inservices exports.

Agricultural exports offer unique

opportunities to developing countries,including India, but they also poseimportant challenges in balancingdomestic and international priorities and

pressures. Three are discussed below.First, there are challenges to prioritizingagriculture in increasingly diversifieddomestic economies. Second, theessay turns to the difficult domestic

political economy of agricultural trade policy, keeping in mind the role of participation and consultation amongdiverse stakeholders. Third, the essaydiscusses the political economy of globalchallenges including internationalnegotiations and developed country

protectionism. Countries like Indiamust strike a careful balance between

being services versus agricultura l

...these new issues must be reckoned against the growing share of

the developing world ininternational trade both in traditional merchandise,

such as agricultural products, but also in high- technology driven services.

In such cases, the developedworld can neither exclude nor be preachy towards

the developing world. The number of positive options

for the developing world to participate effectively in the

international trade system continues to increase



YOJANA June 2014 25

exporters, and challenging developed

world protectionism while addressingdemand to liberalize their own marketsin agriculture.

Economic Diversity, InternationalTrade and Agriculture

The World Trade Organization andits predecessor, the General Agreementon Tariffs and Trade (GATT), werefounded post World War II to increaseglobal trade and make it rule-based.

Nevertheless, GATT was an agreementamong great powers such as the USAand UK and despite their membership,excluded the voices of the developingworld.

The historic position of thedeveloping world in internationaltrade was to seek price supports for its

agricultural products, to guard against

price decreases and ‘infant industry’ protections to allow growth for itsmanufacturing industries. The chiefexport from the developing worldwas agricultural products but poorcountries often faced declining termsof trade due to the price elasticity ofagricultural products, higher exportsdid not necessarily result in biggerearnings due to falling prices. Theeconomist Jagdish Bhagwati (1958)called this phenomenon “immiserizinggrowth” where the falling terms of trade

negatively impacted the overall growthrate. Furthermore, expensive importsdrained foreign exchange reserves evenas the developing world undertookimport substitution industrialization to

produce similar or substitute productsdomestically.

The agricultural profile of thedeveloping world was thus checkeredwith either falling terms of trade ordependent upon preferential accessin the developed world. Preferentialaccess, begun initially as extension ofcolonial commodity networks, became

almost synonymous with agriculturalexports from the developing world.The current groups known as African,Caribbean and Pacific (ACP) countriesis heavily dependent upon preferentialaccess for its agricultural products.Over time, this guaranteed preferentialaccess has not allowed for productionefficiencies and diversification andmany ACP countries now often facecompetition from other developingcountries that want these special

protections ended. Ecuador thus fought

successfully against the EuropeanUnion preferential access for bananaschiefly from ACP countries in theearly 2000s resulting in a final victorythrough dispute settlement at the WTOin 2005.

The current rise in agriculturalexports from the developing worldmentioned above must be understood ina slightly different context than the oldtrading system of preferential and duty-free access. First, the top agricultural

exporters from the developing worldinclude countries that have eitherchallenged the old protectionist systemof preferential access (such as Brazil),or countries that are now part of freetrade coalitions in agriculture suchas Argentina in the Cairns Groupof agriculture named after a groupof 19 developed and developingcountries that met in Cairns, Australiain 1986. The second feature of thenew agricultural profile is that manydeveloping countries have already

successfully diversified into industrialand services products, while beingagricultural exporters.

India’s case as a leading agriculturaland services exporter is illustrative. AtGATT’s Uruguay Round of trade talks(1986-94), India initially opposedthe services liberalization agendathat the U.S. and Western Europe

proposed (Singh 2008). However,the General Agreement on Trade in

Table 1Growth in the Volume of Merchandise Exports and

Production, 2005-2012

2005-12

World Merchandise Exports 3.5Agricultural Products 4.0

Fuels and Mining Products 2.0Manufactures 4.0World Merchandise Production 2.0

Agriculture 2.0Mining 1.0Manufacturing 2.5

World GDP 2.0India: Growth in Exports 10.5India: Growth in Imports 13.5

Source: World Trade Organization, In te rn at io na l Trad e St at is ti cs , 20 13 . Geneva.Page 19

Table 2Share of Agricultural Products in Trade in Merchandise by Region, 2012

Exports Imports

World 9.2 9.2

North America 10.9 6.6South and Central America 27.4 8.6

Europe 10.3 10.1

Commonwealth of Independent States (CIS) 8.2 12.2

Africa 9.1 16.2

Middle East 2.2 12.6

Asia 6.8 8.7Source: World Trade Organization, International Trade Statistics, 2013 .Geneva. Page 61



26 YOJANA June 2014

Services (GATS), which emerged fromthe negotiations, proved beneficialto India’s services exports rangingfrom offshore services, audio-visual(Films and Television), Tourism, totelecommunications. (Tables 4 & 5).As the sixth largest services exporter,with 3.32 per cent share of total worldexports in services, India seems to haveleapfrogged from an agricultural to aservices economy without sacrificingagriculture, which continues to beimportant in its trade profile.

In the immediate post-colonial era,the developing world had few exportoptions and relied almost entirely on

preferential access for its agricultural products. The current era is different;many countries from the developingworld now have a comparativeadvantage in manufactured goods orservices. Competitive agriculturalexporters from the developing worldmust also be distinguished from thosethat rely heavily on preferential access(APC), the free-trade oriented Cairnsgroup fighting against agricultural

protectionism in the developed anddeveloping worlds, and the “in-

between” countr ies like India tha t possess comparative advantage in afew agricultural commodities but alsohave huge protections in place for theirdomestic agriculture.

Political Economy of Agriculture andTrade Policies

The political economy of agriculturegenerally features intense lobbyingand complex politics given the size orentrenchment of agricultural lobbiesin various countries. The strength ofthe cotton or the sugar lobbies in theUnited States explains the subsidiesthese sectors receive in successive farm

bills. Empirical analyses tend to showthat as countries become developed,they switch from taxes on agriculturalexports to subsidizing them. Thewelfare costs of tariffs and subsidiesin agriculture are substantial andestimated to be between $100 billion to$300 billion per year by 2015 (WorldBank 2007: 103). Trade liberalizationwould increase agricultural prices by5.5 per cent. Developing countries,in particular, maintain the lower pricesfor various reasons: food security,

rural livelihoods, rural employment, or plain old protectionism. Nevertheless,higher prices would also benefitdeveloping world exports such ascotton from West Africa that cannotcompete with the subsidized U.S.cotton.

Trade policies for agriculturein the developing world followedhistorical patterns such as imperial

preferences for colonial era products.Furthermore, senior bureaucrats fromtrade or finance ministries generallyshaped other policies at the centralgovernment level. In most parts ofthe developing world, agriculture wasgiven a second place to industry in the

post-colonial era. As noted above,industry was emphasized. Therewas even suspicion that advice fromdeveloped countries such as the U.S.to emphasize agricultural productionwas designed to keep India poor (Das2000: 128).

Prime Minister Jawaharlal Nehrudeclared in 1957: “Now India, weare bound to be industrialized, we aretrying to be industrialized, we must beindustrialized.” It was not until thefall in ruling party’s support startingin the late 1960s that agricultural wasreprioritized, albeit now the GreenRevolution helped with productivity.

In the current era, balance amongindustry, services, and agriculturesectors is necessary for strategizingtrade policies. This is difficult for

pluralist countries such as India facing pressures from various constituencies.India now has comparative advantagein agricultural products such as meat,oilseeds, rice, sugar, and tea but thegrowth drivers also lie elsewhere inservices and industry. Striking the right

balance can be hard with more thantwo-thirds of the national employmentin agriculture.

The story of consultations in Indiafor agricultural trade policy beforethe launch of the Doha Round oftrade talks at the WTO in November2001 is instructive. At the conclusionof the Uruguay Round, many stategovernments filed a protest and even a

petition in the Supreme Court arguing

Table 3Leading Exporters of Agricultural Products

(billion dollars and per centage)Value Share in World

Exports2005-12: Annualper centage Rate

European Union (27) 613 37.0 7

Extra-EU (27) exports 163 9.8 10United States 172 10.4 11Brazil 86 5.2 14

China 66 4.0 13Canada 63 3.8 6Indonesia 45 2.7 18Argentina 43 2.6 12India 42 2.6 22Thailand 42 2.5 13Australia 38 2.3 9Malaysia 34 2.0 14Russian Federation 32 1.9 12Vietnam 25 1.5 19 New Zealand 24 1.4 9Mexico 23 1.4 9Above 15 1349 81.4

Source: World Trade Organization, In te rn at io na l Tra de St at is ti cs , 20 13 . Geneva.Page 67



YOJANA June 2014 27

that the central government had noauthority to negotiate an agreementon agriculture as this was a statesubject. Therefore, prior to the DohaRound the central government initiatedconsultations among ministries andvarious levels of government and civilsociety. At the central governmentlevel, these included the Ministry ofCommerce and Industry (MOCI),the Ministry of Agriculture (MOA),and the Ministry of External Affairs(MEA). The central government alsoexecuted several regional or state-level consultations with politiciansand farmers and brought in civilsociety and think-tank experts. Whatemerged was something startling:contrary to the prior thrust toward

protectionism, these consultations alsorevealed that India did not only havedefensive (protectionist) interests butalso competitive (offensive) interests(Priyadarshi 2005).

An in te res t ing example ofstakeholder participation and balancingvarious interests also comes fromArgentina. Prior to the UruguayRound, Argentina initially joinedseveral developing countries in seeking

protections on agriculture and openingmarkets in industry. Consultations,

however, demonstrated to tradeofficials that Argentina’s comparativeadvantage was in agricultural productssuch as beef exports and the country

joined the Cairns Group in 1986.

Involving stakeholders in trade policy formulation is laborious andcan deepen divisions after they voicetheir concerns. Equally, though, theconsultations can point out unexpecteddevelopments and also help to informthe participants about difficult choicesthat policymakers must make at theglobal level.

International Negotiations and theWTO

Global negotiations are often called

two-level games. Level I internationalnegotiators must also negotiate andkeep in touch with level II domesticconstituencies, often through complexchains and relays (Putnam 1988).Organizations like WTO are oftenvilified for ignoring grassroots

pressures but this could be equal lytrue of level I negotiators who aresupposed to represent these pressures.The last sub-section attended to levelII pressures. This section turns to levelI negotiations

The deve loping wor ld hasemployed a number of negotiationtactics effectively at the WTO toaddress complex pressures and trade-offs. First, it has argued collectivelythrough various types of coalitionalstrength (WTO 2014). Apart from

the APC coalition mentioned earlier,coalitional pressures have come fromcountries like India and Brazil at theG-20 meetings in a forum that extends

beyond trade negotiations. India’sstance backing heavy subsidies for foodsecurity at WTO’s Bali negotiations inDecember 2013 received support fromcoalitional groups such as the G33.More recently, though, the Cairnsgroup has also criticized countriessuch as India for trade distortingsubsidies in agriculture, which thegroup argued rose from $8.2 billionin 2001 to $37.6 billion in 2008(Financial Times 2014). Second,the developing world has soughtinstitutional linkages and trade-offsin international negotiations. Oftenthis has involved opening markets forservices and industry for agriculture

but more recently, it has also involvedtrade-offs within agriculture on

particular products.

Future of Agricultural TradePolicies

Agricultural trade policy is nowfar more complex than developingcountries merely facing immiserizinggrowth through trade, or the subsidiesand high tariffs existing only in thedeveloped world. Agricultural tradeliberalization must be balanced againstvarious needs inside and outside ofthe agricultural sector (Ingo and Nash2004). The era of viewing agricultural

trade liberalization as a universal evilor strength may be over.

Carefully calibrated agriculturaltrade policy from the developing worldentails participation and consultationsat the domestic level and use ofeffective negotiations tactics at theglobal level. Participation does notresolve the political fights at home butit allows stakeholders to glimpse thedifficulties politicians face and, in the

Table 4India: Trade in Commercial Services

Billions dollars and percentage

Value Share Annual percentage Change

2005 2012 2005-12

Transportations Services 17.1 1.0 1.9 17Travel 17.8 1.1 1.6 13Other Commercial 103.8 3.1 4.4 15

Source: World Trade Organization, International Trade Statistics, 2013. Geneva. Pages 144-15

Table 5India: Rank in World Trade

Exports Imports

Merchandise 19 11Excluding intra-EU trade 14 7

Commercial Services 6 7

Excluding intra-EU trade 4 5

Source: World Trade Organization, Country Profiles: www.wto.org/statistics



28 YOJANA June 2014

best of circumstances, to suggest ways that allows trade policy to move forward.

At the international level, the developed world will notreadily grant access to its agricultural markets. If anything,facing pressures from the developing world has made thedeveloped world turn to preferential trade agreementswhere it can either exclude the developing world (as inthe ongoing U.S.-EU Transatlantic Trade and InvestmentPartnerships) or the series of bilateral accords involving adeveloping country where it has fewer negotiation optionsagainst a developed country.

Nevertheless, these new issues must be reckonedagainst the growing share of the developing world ininternational trade both in traditional merchandise, such asagricultural products, but also in high-technology drivenservices. In such cases, the developed world can neitherexclude nor be preachy towards the developing world.The number of positive options for the developing worldto participate effectively in the international trade systemcontinues to increase.

References

Bhagwati, Jagdish. 1958. “Immiserizing Growth: AGeometrical Note.” Review of Economic Studies . Volume 25:201-205.

Das, Gurcharan. 2000. India Unbound: From Independenceto the Global Information Age . New Delhi: Penguin.

Financial Times . April 11, 2014. “World Trade OrganizationTakes on Food Security Conundrum.”

Ingco, Merlina D. and John D. Nash. 2004. Agriculture

and the WTO: Creating a Trading System for Development.Washington, DC : The World Bank

Priyadarshi, Shishir. 2005. “Decision-making Processesin India: the Case of the Agriculture Negotiations.” In PeterGallagher, Patrick Low and Andrew L. Stoler. Editors. Managingthe Challenges of WTO Participati on: 45 Case Studies .Cambridge: Cambridge University Press.

Putnam, Robert. 1988. “Diplomacy and Domestic Politics:the Logic of Two-Level Games.” International Organization 42: 427-60.

Singh, J. P. (2008). Negotiation and the Global Information Economy . Cambridge: Cambridge University Press.

The World Bank. 2007. World Development Report 2008: Agricul ture for Development . Washington, DC: The WorldBank.

World Trade Organization. 2014. “Groups in the Agriculture Negotiations.” http:/ /www.wto.org/english/tratop_e/agric_e/negoti_groups_e.htm Accessed May 12, 2014.

World Trade Organization. 2013. International TradeStatistics, 2013 . Geneva. q

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30 YOJANA June 2014

“AMANNA AAPKI iskadar poori ho jaye, Kisapno ki duniya haqueeqath o j a ye , H o a a pkamuqaddar itna roshan, Kiaameen kehne se pehle hardua kabool ho jaye.”

Sajid (15) is a sensitive andcompassionate child. Seeing his motherhassled while cleaning rice every day,he thought of making a device to helpher. His automatic electric machineseparates broken rice grains and other

physical impurities from unbrokenrice grains.

An uphill task

While getting the idea was easy, putting it together was not. Saj idwondered what kind of machine coulddo this work. He had his eurekamoment a few days later while at aflour mill. He was fascinated by themachine’s rhythmic motion where

wheat grains fed from the top wereground into flour that accumulated atthe bottom. Watching the ‘atta chakki’,he visualized another machine whererice put in from the top comes outcleaned from the bottom.

“I was excited because I now knewwhat to do. But I was not sure if I couldmake such a machine with my limitedknowledge of science,” he shares.Money was also a problem. Their onlyincome came from his father’s mobiletailoring shop, which was essentially asewing machine placed on a pushcart.

It was just enough to support a familythat also included Sajid’s younger sisterand an elder brother who was mentallychallenged.

Making the Rice Cleaner

But these difficulties did not put

him off. Inexperienced but full ofoptimism, he set about making therice cleaner. To save costs, he pickedup used parts from a neighbourhoodscrap shop.

The biggest challenge was gettingthe correct motion for separating theimpurities from the rice. He chuckles

Child Poet Innovates a Machine to CleanRice without Hassle

SHODHYATRA

T Mohd. Sajid Ansari

it until she herself saw the machineworking. My family and neighboursknew I was trying something, but noone paid any attention till it was ready.So everyone was excited to see it inaction,” he mentions.

Around this time, Sajid cameto know of IGNITE competitionorganized by NIF. He entered and wonan award for the rice grain cleaner.At the award function, everyone wascharmed with his poetic skills. NIFfacilitated development of a compact

prototype of the rice grain cleanerthrough a design institution. This wasalso showcased at the Innovations’Exhibition organized by NIF at theRashtrapati Bhavan in 2012, whereit was highly appreciated. A patentapplication (1075/KOL/2011) inSajid’s name has also been filed by

NIF.

P o e t r y O p e n i n g D o o r s t oEducation

While performing at a statefunction, he recited an emotional poemon education. It moved the Governorsufficiently to secure his admission ina well-known school in the area on fullscholarship. The poem went somethinglike this:

Jab Hum Padenge, Aage Badenge,Zile ka naam roshan karenge,School mein papa naam likha deejiye,Bujhe hue deep ko jala deejiye,School mein papa naam likhadeejiye.

His next project is a machine thatwill make easy the otherwise tediousmanual process of sifting sand used inconstruction. His father feels confidentthat his son will go on to do much

bigger things.

as he recalls, “I first used four motorsof 12 volts each and connected themdirectly to 220 volts. But all the motors

burnt out. I realized that they were tooweak for the power supply. So next timeI used eight motors, reasoning that iffour people cannot lift the weight, whynot use eight!” Of course, these also

burnt until addition of a transformerfinally got the system running. Manychanges and trials later, the rice grain

cleaner was ready for testing. It was aworking model that used electricity toseparate physical impurities from rice.It could clean up to three kilograms inan hour. Presenting the machine to hismother was an emotional moment forhim. “My mother just could not believe

CorrigendumIn the May issue of Yojana, on the cover page, the correct spelling of the name of the author of the special article is Bharat Ramaswami. In the article ,'CompositeDevelopment Index; An Explanatory Note' by the author, a paragraph had been left out. The article may be read in conjunction with the paragraph-“The purposeof this article is primarily expository. I served as a member of this committee and I found that a superficial familiarity was the source of much criticism. So myhope is that this note will serve as the basis for more informed critiques." The error is regretted.



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32 YOJANA June 2014

N THIS essay we analyzeI nd i a n a g r i c u l t u r a l

pol icy and i ts eff ecton agricultural growthover t ime. Firs t theanalytical framework

is presented followed by a detailedaccount of policy evolution andgrowth performance.

T h e e v o l u t i o n o f I n d i a nagricultural policy may be analyzedin the context of the role of agriculturein the development process and thefactors affecting agricultural growth.In the development process of acountry, agriculture serves mainly

three functions i) to provide initialsurpluses for other sectors of theeconomy ii) to provide wage goodsto the industrial sector iii) to promotegrowth through forward linkages(provide inputs to industrial sector)and backward linkages (use outputsfrom industrial sector in agriculture).The first and the third functionsrequire a robust overall agriculturalgrowth whereas the second requiresadequate food supplies. Therefore,for sustained economic growth,

bo th over al l ag ri cu lt ur al gr owthand growth in food production areindispensable.

Factors that affect agriculturalgrowth can be broadly categorizedinto the following – natural (climatic),

Indian Agriculture – A Review of Policy andPerformance

EVALUATION

C S C Sekhar

WIDE-ANGLE

I

The author is Associate Professor at the Institute of Economic Growth, Delhi with research interests in agricultural markets, priceformation, international agricultural trade and political economy & governance. He was earlier a Fulbright-Nehru Senior Fellow at IowaState University, IA, USA and was also associated with ICRIER, Delhi. He has contributed research papers to prestigious national andinternational journals. He is also a consultant to international organizations such as UNCTAD, IFPRI and OXFAM.

technological, economic, institutionaland policy factors. (For a debate on

policy versus technology fatigue,see Narayanmoorthy (2007), Behera

and Mishra (2007) Agriculturaldevelopment depends on an inter-playof all these factors. Natural factorsinclude soils, rainfall and temperatureamong others. Technological factorsinclude seeds, machinery, pest-

protection and fertilizing technologyavailable in the country. The thirdset of factors is economic in nature.Profitability of agriculture vis-a-vis other sectors influences privateinvestment in agriculture and similarlyrelative profitability of different cropsdetermines the inter-crop allocation ofland and other resources. The fourthset of factors is institutions – whichis a much less-understood concept.Institutions include both formal(created by the law or de jure) andinformal (de facto) rules of the gamethat determine interaction amongthe economic agents. The FoodCorporation of India (FCI), whichcarries procurement operations andthe village level moneylender who

provides basic credit to the farmerscan be thought of as two examplesof formal and informal institutionsrespectively. Institutions are the maindeterminants of transaction costs.

The last set of factors relate to policy, which can influence almost

India managed to attain foodself-suf ciency through a

combination of technology- policy-institution framework. However, other functions of

agriculture, namely providing surpluses and forward and backward linkages to non- agricultural sectors have

largely remained unrealized. A policy reorientation to

increase rural industrialization and skill improvement of the

rural labour force is needed to move labour out of agriculture

and increase productivity in agriculture. A better access of farmers to input and output

markets, technology and ruralinfrastructure are needed



34 YOJANA June 2014

complete elimination of large-scalefamines due to natural (droughts)or man-made (failure of distributionnetwork) causes.

The third phase (1981-1991)saw the spread of HYV technologyto regions other than north-westIndia. This period is the best phaseof Indian agriculture as growth wasachieved with inter-regional equity.With self-sufficiency in food grains,focus shifted in this phase to oilseedsand pulses in which growth hadlagged behind. Technology Missionin Oilseeds and Pulses (TMOP) wasstarted in 1986. These policy initiativesresulted in very impressive increasein production of oilseeds. However,the costs of this increase were quite

substantial in terms of resource useinefficiency as indicated by resourcecost ratios much in excess of 1 formajor oilseeds. Production of foodgrains continued to rise and control offood trade and operation of the publicdistribution system continued duringthis period.

The fourth phase (1992-2004) ismarked by the launching of macroeconomic reforms in 1991 and importliberalization in edible oils sector

in 1994. This phase can be furthersubdivided into two sub-phases 1992to 1997 and 1997 to 2004. In thefirst sub-phase, the macro economicreforms resulted in reduction of theanti-agricultural bias. The secondsub-phase witnessed a sharp declinein agricultural growth, as a result ofthe reduction in capital investmentand decline in farm profitability.The anti-agricultural bias decreasedconsiderably since the early 1990s.This is mainly because of a steadydec l ine in the manufac tur ing

pr ot ec ti on an d co rr ect io n of th eexchange rate regime as a resultof macroeconomic reforms. The

peak tariffs on industria l productscame down from 300 per cent in1991-92 to 30 per cent in 2002.Similarly, import controls werewithdrawn in 1991-92 virtually onall goods. One of the effects of thesestructural adjustment measures was

improvement in the terms of trade(ToT) for agriculture. The indexof terms of trade (1990-91=100)remained above 100 during the entire

pe ri od si nc e 1990 (A gr icu ltur alStatistics at a Glance, 2011). As aresult of this improvement in the ToT

private sector gross capital formationin agriculture (GCFA) increased from11424 crores in 1990-91 (1993-94

pric es ) to 14931 crores in 2000-01. The rate of growth in 90s (2.5

per cent) was also higher than inthe 80s (2.0 per cent). While theimprovement in ToT, had a slight

posit ive effect on private investmentin agriculture, rising fiscal deficits,on the other hand, contributed to adecline in public investment. The

public investment of 7130 crores in1981-82 fell to 4992 crores in 1990-91 and further to rupees 4520 croresin 2000-01. As a result, developmentof infrastructure like irrigation,rural electrification, rural roadsand markets suffered. This declineshowed very adverse effect on the

performance of agriculture in thecountry in the 1990s. The averagegrowth rate of agricultural GDP fellto 3.1 per cent in the 1990’s (1991-92to 2001-02) as compared to 3.5 per

cent during the 1980s (Table 1). Thegrowth rate of production of principalcrops has come down from 3.19 percent per annum during 80s to 2.28

per cent in 90s.

This continued neglect of publicinvestment in agriculture startedmanifesting in the form of a severe

crisis by the late-1990s (see Chandet al. 2007). The average growth rateof agriculture during the pre-greenrevolution period (phase 1) was 2.1 percent , which accelerated to 3 per centand 3.5 per cent respectively in thenext two phases. However, the growth

rate fell drastically to 2.2 per centduring 1997-2004, which was almostequal to the pre-green revolution phase.Ironically this was the period whennon-agricultural GDP was growingat 7 per cent per annum, leading tolarge inter-sectoral disparities. Thisslowdown in agriculture was mainly

because of sharp deceleration/declinein public investment and input usagein agriculture, which is linked todecline in profitability of most crops.The complementarity between publicinvestment and private investment aswell as input usage, led to this severecrisis in agriculture.

What can be said about the successof India’s agricultural policies uptothis point? India’s performance overallwas undoubtedly impressive. Foodgrain production increased manifoldand the country turned from being anet importer in 1951 to a net exporterin 2013. Irrigation increased from11 per cent (of net sown area) to45 per cent during this period.Fertiliser consumption rose fromnegligible quantities to 141 kg per/hectare during the same period.Before mid sixties, increase in acreagewas principally responsible for theincrease in production. After the greenrevolution, the increase in yield was

Table 1

Average Growth Rates of Agri-GDP and GDP at Factor Cost

Periods Agri-GDP S.D. GDP S.D.1951-52 to 1965-66 2.15 5.25 3.58 3.16

1966-67 to 1980-81 3.03 7.59 3.66 3.88

1981-82 to 1991-92 3.45 5.15 5.04 2.43

1992-93 to 2004-05 3.14 3.99 6.18 1.43

2005-06 to 2011-12 3.89 2.42 8.46 1.42

Source: Economic Survey 2012-13

Note: 1) The growth rates are averages of annual growth rates.

2) S.D. refers to standard deviation of the growth rates



YOJANA June 2014 35

substantial and across the board forall crops. The biggest achievement isthe virtual elimination of large-scalefamines in the country.

On the negative side, the subsidieson power, fertiliser and food grewrapidly. This current expenditure onsubsidies led to decline in publicinvestment in agriculture. As a resultthe gross capital formation by the

public sector in agriculture declinedsharply after 1980. Inter-regional andinter-sectoral disparities widenedover time. Farming became unviableand a severe crisis ensued from 1997.The major limitation of the growth

process is that the country could notachieve universal economic accessto food even three decades after the

country became self-sufficient in food production.

Recent Initiatives

In the last phase (2005-2013) fewefforts have been made to addressthese issues – arresting the declinein investment in agriculture, makingfarming viable and improving farmers’income, increasing food productionand providing economic access tofood to large sections of population.

Rashtriya Krishi Vikas Yojana(RKVY) was started in 2007 mainlywith the objectives of incentivizingstates to increase investment inagriculture (because agriculture is astate subject) and use this investmentto address felt-needs of the farmers.To meet these two objectives, it has

been made mandatory for states tomaintain or increase their trend growthin expenditure on agriculture (as a

proportion of total expenditure), and

also make district agricultural plans(DAP) through a bottom-up planning process for the ent ire sta te. Stateshave to meet both these requirementsto be able to access RKVY funds.The initial results show improvementin the growth rate of GCFA after the

program as compared to the preceding period. The agr i-GDP growth rat ehas also been higher and more stableduring this period (Fig 1 and Fig 2).However, people’s participation in

preparation of dis trict agricultural plans has been minimal.

The second major program isaimed to increase food production bythe end of the 11 th FYP. The NationalFood Security Mission (NFSM) waslaunched in 2007 with the limitedobjective of increasing the productionof rice, wheat and pulses by 10, 8 and2 million tonnes respectively by theend of the 11 th FYP. The program, likethe green revolution period, focusedon select districts across the countryfor each crop. Results indicate thatthe program has managed to achievethe targeted production for each ofthe crops.

The third programme is the National Food Security Act (NFSA),with the main objective of providingeconomic access to food. Under this

program an enti tl ement of 35 kgof food-grain per month per AAYhousehold and 25 kg per month per

priority household (to be decided bythe state governments) at a price of3/2/1 for rice/wheat/millets for threeyears have been created. In all, about75 per cent of the rural and 50 per centof the urban population is covered.Another feature of the program is

provision of other benefits such asmaternal and child support, supportto destitute and homeless. The mainconcerns about the program relate to

Figure 1

Figure 2Capital Formation in Agriculture and Agri-GDP Growth:

Before and After RKVY

8



36 YOJANA June 2014

sufficiency of domestic production,level of procurement needed, likelyimpact on market prices, feasibilityof imports in case of productionshortfalls, level of subsidy outgo andinefficiency of PDS.

Recent studies suggest that thecurrent levels of production and

procurement are adequate to meetthe requirements of the program.Also, the subsidy outgo is also onlymarginally higher. These studies alsoindicate an improvement in the PDSin several states (Khera 2011a and2011b). However, the concerns aboutmarket prices appear valid in the lightof the persistent cereal price inflationin the recent past. Also, viability ofimports is open to question, giventhe market structure and uncertaintyabout food availability at affordable

prices in the international markets(Sekhar 2008). This issue is veryimportant for large countries likeIndia.

Role of Policy and other Factors inDifferent Phases

In the first phase (1950-1964),agriculture was mainly driven bythe natural factors. In the second

phase (1965-1980), breakthroughin technology in the form of highyielding varieties helped the policyefforts by making the economicsfavourable to food production. Thestate also created formal institutionssuch as CACP, FCI and NDDB toimplement these policies. Therefore,there was a perfect blend of economic-technological-institutional-policyfactors in this phase, which resultedin the high growth performancewitnessed.

In the third phase, the spread ofHYV technology to other parts ofthe country ensured continuation ofgrowth. However, there was no newtechnological breakthrough duringthis phase. As a result, the focussectors during this phase – pulsesand edible oils – witnessed growthmainly through state support withoutefficiency improvements. When the

state support was withdrawn to edibleoil sector in the mid 1990s, growth

performance slackened. There wasanother problem during this phaserelated to the capture of benefits byinterest groups. The green revolutionregions, which benefited from the

initial state support in the 1960s,continued to exert pressure on thecentral government for continuanceof support. This resulted in decline in

public investment for agriculture, asresources were diverted to subsidieson food, fer t i l izer, power andirrigation. This crowding-out of publicinvestment by the current expenditureon subsidies led to gradual declinein growth in the 1990s, eventuallyturning into a major crisis by 1997.

The subsequent debates and popula r di scourse on the decl inein public investment and failure toattain economic access to food, ledto corrective actions on the policyfront. Civil society and media playeda prominent role in this. The launch ofRKVY, NFSM and NFSA are someof the results of this discourse. Theattempt in these programs is to createthe necessary institutional and policyframework to make agriculture viable

to farmers and also to increase physicaland economic access to food.

Conclusion

India managed to attain food self-sufficiency through a combinationof technology-policy-institutionframework. However, other functionsof agriculture, namely providingsurpluses and forward and backwardlinkages to non-agricultural sectorshave largely remained unrealized.

A policy reorientation to increaserural industrialization and skillimprovement of the rural labourforce is needed to move labour out ofagriculture and increase productivityin agriculture. A better access offarmers to input and output markets,technology and rural infrastructureare needed. Initial results of the recentinitiatives such as RKVY and NFSMappear satisfactory. These initiatives

may be supplemented by incentivizing pr iva te se ct or to in ve st more inagriculture. Although, National FoodSecurity Act is beneficial to provideeconomic access in the short-run, moresustainable policies of improving ruralincomes through livelihood security

need to be adopted.References

Behera, Bhagirath and Pulak Mishra(2007), “Acceleration of AgriculturalGrowth in India: Suggestive PolicyFramework”, Economic and PoliticalWeekly, Vol. 42, No. 42 (Oct. 20 - 26,2007), pp. 4268-4271

Chand, Ramesh, S. S. Raju and L.M. Pandey (2007), “Growth Crisis inAgriculture: Severity and Options at

Nationa l and Stat e Levels”, Economicand Political Weekly, Vol. 42, No. 26 (Jun.30 - Jul. 6, 2007), pp. 2528-2533

N a r a y a n a m o o r t h y, A ( 2 0 0 7 ) :‘Deceleration in Agricultural Growth:Technology Fatigue or Policy Fatigue?’,Economic and Political Weekly, Vol 42,

No 25, June 23. pp.2376-2379

GoI, Agricultural Statistics at a Glance(various issues), Directorate of Economicsand Statistics, Department of Agriculture

and Cooperation, Ministry of Agriculture,Government of India

GoI, Economic Survey (variousissues), Ministry of Finance, Governmentof India

Khera, Reetika (2001a), “Trendsin Diversion of Grain from the PublicDistribution System”, Economic andPolitical Weekly, Vol 46, No. 26. SpecialArticle, 21 May, 2011

Khera, Reetika (2001b) “Revival ofthe Public Distribution System: Evidenceand Explanations”, Economic and PoliticalWeekly, Vol 46, No. 44-45, Special Article,

November, 2011

Sekhar(2008), “World Rice Crisis – Issues and Opt ions”, Economic andPolitical Weekly, June 28, 2008, pp. 13-17.

q




YOJANA June 2014 37

Y E

- 4 5 / 2 0 1 4



38 YOJANA June 2014

NOWN VARIOUSLY Nirbhaya , Braveheart or Damini , the 23-year-old physiotherapistwho died two weeksafter the brutal gang

rape in a moving bus in December2 0 1 2 i n s p i r e d a m a s s s c a l emovement against sexual violence.This unprecedented moment ofmobilisation and protest is by farone of the most important chaptersin the history of political movementsagainst rape. It is important sincer a pe a c q u i r e d a ne w c r i t i c a ldiscursivity, no longer confined tothe conversations within the women’smovement or amongst legal experts.The protestors included loud voicesof dissent, which named rape as anact of power, not sex. As a form ofgendered and sexualised violence,rape and other forms of sexualassault, found powerful critique.This was a protest, which drewattention to the continuum of violencefrom the everyday forms of sexualharassment to the aggravated formsof sexual assault. The vocabulary of

protest was not singular, changingits grounds as more voices debatedabout what needs to change in varioussites of protests in real and virtualworlds. The protesters also critiquedthe normalisation of “rape culture” orthe institutionalisation of techniques,

Understanding Rape Law Reform

LEGAL REFORMS

Pratiksha Baxi

SPECIAL ARTICLE

K

The author is an Associate Professor at the Centre for the Study of Law and Governance, Jawaharlal Nehru University, New Delhi whereshe teaches sociology of law. Her research interests include sociology of law, gender studies, judicial reform and feminist legal theory.She has also been involved in public campaigns against violence against women in India. Dr. Baxi has recently published a book entitledPublic Secrets of Law: Rape Trials in India (OUP, 2014)

which normalise rape and evencelebrate sexual violence. Theyinsisted that resisting law as rapeculture means resisting the politics,which institutes public amnesia aboutthe voices of suffering.

Ret r ibu t ive Pub l ic 1 : Dea thPenalty

During the protests, we sawthe emergence of many kinds of

publics. There were many speechesand writing against the emergenceof a retributive public, where thecry for death penalty or castration

be ca me a voca bu la ry of pr ot es t.

While the demand for death penalty isa symptom of collective melancholiaand anger, capital punishment doesnot help rape survivors. Many casesof rape and murder have been metwith capital punishment, without

producing any effect of deterrence.Judges are prone to mitigate thesentence, awarding lesser than themandatory minimum sentence.Further, it is possible that far morewomen will be killed, mutilated,

burnt or terrorised after sexual assault

if all rape cases were to attract thedeath penal ty.

The demand for death penalty restson the idea that rape reduces womento living corpses, assuming that rapesurvivors are marked permanently by

This unprecedented moment of mobilisation and protest

is by far one of the mostimportant chapters in the

history of political movements against rape. It is important since rape acquired a new

critical discursivity, no longercon ned to the conversationswithin the women’s movement

or amongst legal experts.The protestors included

loud voices of dissent, which named rape as an act of

power, not sex. As a form of gendered and sexualised

violence, rape and other forms of sexual assault, found

powerful critique



YOJANA June 2014 39

shame and stigma. It participates inthe social and juridical assumptionthat a raped survivor has no future,since no man would want to marrysuch a woman. To insist on death

penalty because women are livingcorpses after rape means we deny

women who survive such violencethe means to live a life of dignityon their own terms. This is what thecall for death penalty does. Ratherthan argue for death penalty, we mustcreate safer conditions of testimony,

protesting and speaking out .

Retributive public 2: Castration

Castration acquired a retributivecurrency not witnessed in earlier pro tests agains t sexual assaul t.How do we trace the emergence ofcastration as an alternative to death

pe na lt y or li fe se nt ence wi thou t parole or remission? State responseto protests against sexual violencerecommending forcible castration,whether physical or chemical ,although each form produces differentkinds of desiring and brutalised

bodies, is regressive for a numberof reasons. It is regressive sincethis form of punishment amountsto cruel and degrading treatmentof incarcerated bodies, amountingto torture, as per international andconstitutional law. Further, suchforms of punishment legitimatemutilation of body parts by non-stateactors, as a technique of punishmentand terror. Most importantly, forciblecastration does not displace the

desire to hate, maim, assault and/kill women. Such medicalization of

punishment would have the effectof enhancing misogynistic violence,since sexual violence is not contingenton being biologically male or usingthe penis as a weapon. The idea that

the penis is a weapon negates thematerial and symbolic realities ofsexual violence. Rapacious men usesexualised violence to communicatea message to all women and somemen—a language of communicationviolently coded in the expression“teaching a lesson”.

There are several ways of tracingthe genealogies of castration as aresponse to sexual violence, whichmobilises public protest. Perfected in

Nazi concentration camps, castrationhas historically been a fascist tool foreliminating the Jews, gays, gypsies,mentally challenged, in the name of“reforming” deviant sex offendersamongst other unwanted and despised

populat ions. In the Nazi regime ifcastration became the apparatus ofterror to “cure” aberrant desires, italso offered an occasion for the policeto label many more men as “aberrant”,to castrate them—creating a reign ofsexual terror.

In India, the forgotten memoriesof forcible sterilisation duringthe Emergency haunt any call forforced castration. Emma Tarlo’s,Unsettling Memories: Narratives ofthe Emergency in Delhi critiques suchstates of emergencies, which destroythe reproductive futures of unwanted

popula tions, crea ti ng in it s waketerrible legacy of the state’s monopolyover the reproductive and sexed body.The political unconscious that raisesthe demand for castration in relation tosexual offenders represses, as SophyJoseph reminds us of yet anothergenealogy by pointing out that textssuch as the Manusmriti prescribedcastration as a tool of humiliationand punishment of dalit men forsex with, or rape of an upper castewoman. If we trace the genealogy ofthe debate on castration to these texts,we find a clear articulation of what

castration meant for a phallocentricand caste based response to sexualviolence. For Brahmanical patriarchy,to use Uma Chakravarti’s term, theregulation of sexuality is central.Caste manifests its dominance andterror by normalising sexual violence

on “lower” caste women, whileassigning degrading punishmentto “lower” caste men who maysexually assault upper caste women.Similarly, humiliating violence isvisited upon those men and women,who transgress caste norms to have asexual relationship, live together and/or marry. The political unconsciousof castration as a form of punishmentin a caste based patriarchy finds lifein texts, which uphold and celebratea phallocentric caste order.

Prohibit the Two-finger Test inRape Cases

Until the 2012-2013 protests,no government took seriously theseveral submissions to get rid of the

colonial, sexist and violent practiceof the two-finger test. Doctorsroutinely perform this test on therape victim to figure out whetherthe hymen is distensible or not.This then leads to the inference thatthe rape survivor is habituated tosex, introducing past sexual historyinto rape trials. Past sexual historywas disallowed in rape trials since2003. However, the two-finger test

by medicalizing consent allows pastsexual history of the raped survivorto prejudice her testimony.

There are several ways of tracingthe genealogies of castration as

a response to sexual violence,which mobilises public protest.

Perfected in Nazi concentrationcamps, castration has historicallybeen a fascist tool for eliminatingthe Jews, gays, gypsies, mentally

challenged, in the name of“reforming” deviant sex offenders

amongst other unwanted anddespised populations.

In India, the forgotten memoriesof forcible sterilisation during

the Emergency haunt any call forforced castration. Emma Tarlo’s,Unsettling Memories: Narratives

of the Emergency in Delhi critiquessuch states of emergencies, whichdestroy the reproductive futures

of unwanted populations, creatingin its wake terrible legacy ofthe state’s monopoly over thereproductive and sexed body.



40 YOJANA June 2014

The Human Rights Watch report Dignity on Trial collated judgements,medical opinions and interviewswith experts to recommend to thegovernment that the two-finger testshould be scrapped in 2010. There isno scientific basis to this test, since no

doctor can determine whether or nota woman has a sexual history, unlessshe chooses to narrate her sexual

biography. The two-finger test findsrepetition in every other medico-legal textbook. These textbooks areused in courtrooms to discredit thesurvivor: “oh, she is habituated, sheis lying about rape”: is a commonrefrain in trial courts. In 2013, theSupreme Court held that ‘medical

procedures should not be carried outin a manner that constitutes cruel,inhuman, or degrading treatmentand health should be of paramountconsideration while dealing withgender-based violence. The Stateis under an obligation to make suchservices available to survivors ofsexual violence. Proper measuresshould be taken to ensure their safetyand there should be no arbitraryor unlawful interference with his

privacy. Thus, in view of the above,undoubtedly, the two finger test andits interpretation violates the right ofrape survivors to privacy, physicaland mental integrity and dignity.Thus, this test, even if the report isaffirmative, cannot ipso facto, begiven ( sic ) rise to presumption ofconsent’. 1 Although the Supreme

Court named the two-finger test asunconstitutional, the governmentdid not ban it until March 2014. Thenational protocol now adopted bythe Central government howeverwill have to be adopted by the Stategovernments.

The Criminal Law AmendmentAct, 2013

Crafted in the background of asharp critique of the Ordinance, the

public cry for death penalty and theunfolding trial of the Delhi gangrape accused, the Criminal Law

Amendment Act of 2013 abandonedits commitment to making rape agender-neutral offence. The Vermacommittee recommendations to makethe category of the survivor genderneutral were rejected in favour ofgender specificity of both survivorsand perpetrators. This meant thatviolence against adult men and sexualminorities is not addressed in law.And later, the Supreme Court wasto overturn the Delhi High Court

judgement in Koushal vs Naz dealinga body blow to the jurisprudence ofdignity.

The defini t ion of rape wasexpanded to include other forms ofnon-penile penetrative sex in any

bo dy or if ice wi thout co ns en t oragainst will—a radical departurefrom the 1983 amendment. Thedefinition of consent was enlargedand it was specified that lack ofmarks of resistance does not amountto consent. The 2013 amendmentnow specifies that ‘consent meansan unequivocal voluntary agreementwhen the woman by words, gesturesor any form of verbal or non-verbal

communicat ion, communicateswillingness to participate in thespecific sexual act’, ‘provided thata woman who does not physicallyresist to the act of penetration shallnot by the reason only of that fact,

be regarded as consenti ng to thesexual activity’. This is a significantamendment.

Does this mean that rape (sexualassault is not a juridical category) is

no longer thought of as a crime of property (women being the sexual property of their men)? To an extent but not entirely : marital rape was notcriminalised. Hence, rape of wivesabove the age of 15 is not a crime.The 2013 amendment recognised

that rape of a separated wife is notlimited to a situation where the wifeis separated by juridical decree, asin the 1983 amendment. In otherwords, the rape law is not applicableto wives older than 15, althoughthe child sexual assault law passedin 2012 (POCSO) is applicable tochild wives between 15-18. The ageof consent was raised to 18—thismeans that consensual sex betweenyoung adults between the age of 16and 18 is now statutory rape. Thisraises concern about the use of therape law to regulate consensual sexand relationships of love, whichtransgress caste and communitynorms.

In 2013 , newer ca tegor iesof aggravated rape have beenintroduced. These include: rape bya relative, guardian, or teacher of,or a person in a position of trustor authority [s. 376 (2) (f)], rapeof a woman during communal orsectarian violence [s. 376 (2) (g)],rape of a woman incapable of givingconsent [s. 376 (2) (j)], rape of awoman when the accused is in a

posi tion of domination and cont rolover her [s. 376 (2) (k)], when awoman suffers from a physical ormental disability [s. 376 (2) (l)],when grievous bodily harm is causedor the woman is maimed, disfiguredor her life is endangered [s. 376 (2)

Crafted in the background of a

sharp critique of the Ordinance, thepublic cry for death penalty and the

unfolding trial of the Delhi gangrape accused, the Criminal Law

Amendment Act of 2013 abandonedits commitment to making rape agender-neutral offence. The Verma

committee recommendations tomake the category of the survivorgender neutral were rejected in

favour of gender speci city of bothsurvivors and perpetrators.

The de nition of rape wasexpanded to include other formsof non-penile penetrative sex in

any body ori ce without consent oragainst will—a radical departurefrom the 1983 amendment. The

de nition of consent was enlargedand it was speci ed that lack

of marks of resistance does notamount to consent.



YOJANA June 2014 41

(m)], or she is raped repeatedly [s.376 (2) (n)]. Further, the amendmentdefines as an aggravated offence,rape of children until the age of 16[s. 376 (2) (i)], as compared to theearlier 12 years. Section 376 (2) (c)makes it an aggravated offence if

any member of the army forces inan area deployed by the Central orState government commits rape on awoman in such area. Section 376 (2)(a) further holds that rape by policeofficers as an aggravated offence

by specifying that such a rape wil l be con si de red agg rava ted whe nthe crime is committed, within thelimits of a police station to which

the policeman has been appointedor in the premises of any stationhouse or when the woman is incustody of such a police officeror his subordinate. The minimum

punishment for these offences is tenyears and the maximum extends tolife imprisonment, where life meanstill the remainder of the convict’snatural life. A new section 376 Awas added which held that whenrape causes death or the rape vic timis reduced to a persistent vegetativestate then a minimum of twenty yearsimprisonment with a maximum oflife until the remainder of natural lifeor death may be awarded. Section376 D enhanced the punishment forgang rape to a minimum sentenceof twenty years, which may beextended to life imprisonment forthe remainder of the person’s naturallife. This section specifies that thefine imposed should be sufficient to

cover the victim’s medical expensesand must be paid directly to thevictim. Section 376 E specifies that

puni shme nt fo r re pe at of fe nder swill warrant the life sentence for theremainder of the person’s natural lifeor the death penalty.

Forms of terrifying and mutilatingsexual violence, which have been

paradigmatic to the experiences ofdalit and tribal women, seemed tohave become the norm, and therefore,

became one of the grounds for suchwidespread protest in 2012-13.However, the complex experiencesof prosecuting rape and atrocitydid not inform the debate on lawreform. Those ritualized forms ofsexualized humiliation such as

stripping and parading were notrecognized as specific forms ofhistoric wrong. Rather, following theVerma Committee Report, Section354 B was inserted in the IPC whichcriminalized assault or use of forceto compel any woman to be naked ordisrobe her for a minimum sentenceof three years and a maximumsentence of seven years. This newsection however does not redressthe specificity of the humiliation of

being stripped and paraded in frontof a public, which consumes sucha degrading spectacle. Nor werefurther amendments to strengthenthe prosecution of rape of dalit ortribal women under the PoA Actrecommended during this time.

In 2013, Sect ion 53 A wasinserted in the Indian Evidence Actwhich states that the evidence of thecharacter of the victim or of such

person’s previous sexual experiencewith any person shall not be relevanton the issue of consent or its quality.Further, Section 146 was amended tosubstitute the previous proviso whichstates that under sections 376, 376A,376B, 376C, 376D and 376E IPC(or attempt to commit any of theseoffences) it shall not be permissible toadduce evidence or to put questionsin the cross–examination of thevictim as to the general immoralcharacter, previous sexual experience

of the victim to prove consent or thequality of consent.

Until 2013, disability did notfeature as a ground for amendinglaws of procedure and evidence. The2013 Amendment inserted Section54 A CrPC to specify that in case ofa person identifying the accused ismentally or physically disabled, the

process of identi fication wil l take place under the supervision of theJudicial Magistrate using methods thewitness is comfortable with. Further,Section 154 which now holds that thefirst information given by a womanin rape cases should be recorded

by a woman police offi cer or anywoman officer, specifies that if thevictim is temporarily or permanently

mentally or physically disabled thensuch information shall be recorded by a police officer at the residenceof the complainant or any other place

convenient to the complainant in the presence of an interpreter or specialeducator.

Concluding Remarks

The amended law was, however,

unable to address the perplexingquestion of out of court settlementsand hostile witnesses. The police,CBI, prosecutors, defence lawyersand other agencies of the statecontinue to terrorize rape survivors to“compromise” rape cases, leading tosuicides, murders and acquittals. 2 Thesuicide of the 17 year old in Patialain 2013 is an outcome of the terror ofcompromise—yet there is no attemptto investigate why women are forced

Forms of terrifying and mutilatingsexual violence, which have beenparadigmatic to the experiences

of dalit and tribal women, seemedto have become the norm, andtherefore, became one of thegrounds for such widespread

protest in 2012-13. However, thecomplex experiences of prosecutingrape and atrocity did not inform the

debate on law reform.

Until 2013, disability did notfeature as a ground for amending

laws of procedure and evidence. The2013 Amendment inserted Section54 A CrPC to specify that in case ofa person identifying the accused ismentally or physically disabled, theprocess of identi cation will takeplace under the supervision of theJudicial Magistrate using methodsthe witness is comfortable with.



YOJANA June 2014 43

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44 YOJANA June 2014

OCIAL PROTECTIONor social security has

be come a bu zz wordamong policymakers,

pa rt ic ul arl y in low -inc ome c oun t r i e s ,engaged in designing

measures to reduce poverty. Justificationof social protection is often premisedon the argument that it may not be

possible to address the st ructuralcauses of poverty within the prevalent

political and economic environmentof many low-income countries. Mostimportant structural causes of povertyare associated with unequal distributionof factors of production, mainly, landand capital. Such unequal distributionresults in poor facing a limited supplyof the factors of production making itvery difficult for them to participate inthe process of economic growth. Poorare also unable to adequately access thehealth and educational infrastructuredue to their assetlessness, and thus mostoften fail to build up their capabilities.The situation is compounded dueto continued social exclusion anddiscrimination. Although a sectionof advocates of social protectionacknowledge the structural causes of

poverty, they also argue that absenceof social protection measures andsafety nets for the poor and vulnerable

perpetuates poverty among them. Asthe policymakers find it infeasible tocorrect the distributional aspects of

poverty in the given politico-economic

Deconstructing Social Protection

NEW PARADIGM

Anurag Priyadarshee

SOCIAL-WELFARE

S

The author is currently working as Chief Operating Officer at International Development Enterprises- India (IDEI). He has workedat senior management positions with Government of India as a civil servant, a UN agency, and some of the world's most prominentvoluntary organizations. He did his doctoral research at the University of Manchester, UK, that involved exploring ways and meansto expand and deepen financial markets in India, and link them up with social protection.

environment, they are increasinglyrealizing that availability of social

protec tion measures may he lp inreducing the severity of the poverty

situation to a large extent.What Is Social Protection?

Social protection is generallydescribed to include public actions takenin response to levels of vulnerability,risk and deprivation, which are deemedsocially unacceptable within a givensociety. Such actions also includeinterventions and initiatives thatenhance the social status and rightsof the marginalised. Basic idea ofsocial protection is to use social

means to prevent deprivation, andvulnerability to deprivation. SocialProtection thus, has a strong povertyfocus. Social protection evolved inthe late 1980s and early 1990s as acomprehensive set of programmesto respond to multidimensionalityof poverty. Such a response alsoreflected an increasing recognitionof the perceived inadequacy of socialsafety nets, which were criticised as‘residualist and paternalistic’ (Sabates-Wheeler and Devereux, 2008: 64).

Various social protection measuresare possible and need to be takento reduce and mitigate such risksand vulnerabilities at the levelsof individuals, households, andcommunities. Dreze and Sen (1991)argue that there may be two aspects

..social protection programmes have the potential to alleviate suffering of a large

population in poorer countries in the shorter run,

while also contributing to overall human development

in the longer run. The current challenge,

according to them is tointegrate a variety of

programmes to address

different issues associatedwith poverty at differentlevels simultaneously



YOJANA June 2014 45

of such measures; protection aspectsthat concern protecting the livingstandards and assume paramountimportance at the times of social andeconomic shocks such as famines,and promotional aspects that aimto improve the general l ivingstandards and address deprivation andvulnerabilities. The objectives of oneaspect may be very different from thoseof the other but the implementationstrategies involving them may not

be completely independent of eachother. Moreover, the achievementsin respect of one may feed into theother . For example, success with the

promot ional aspec ts may ease theimplementation of protection aspects(for example, higher incomes maymake individual insurance less painful).Sabates-Wheeler and Devereux(2008: 69) extend such classificationto include the social protection

measures in four categories, namely, provision, preventive, promotive andtransformative measures. Accordingto them, the provision measures aimto reduce and mitigate deprivation,while the preventive measures attemptto prevent the incidence of deprivationand include various poverty alleviationmeasures. Promotive measures focuson improving incomes and capabilities‘through a range of livelihood-enhancing programmes targeted at

both households and individuals’.The transformative measures targetsocial injustice and various kinds ofexclusion.

Social protection programmes can be categorised in three broad groupsof programmes: social insurance,social assistance and labour market

regulations. Social insurance consists of programmes that aim to protect againstcontingencies such as maternity, oldage, sickness, or unemployment. Socialassistance programmes aim to supportthose in poverty, while labour marketregulations ensure basic work standardsand minimum wages for work etc.(Barientos and Hulme, 2008).

According to Munro (2008), ju st if ic at ion of soci al prot ec ti on policies derives tradit ionally fromthree different discourses. The risksand market failures discourse providesreasons of failures in insurance marketsoften due to informational issues,along with the failures in credit,human capital and labour markets to

justify provision of social protection.The rights-based discourse advocates

for social protection to fulfill theobligations to grant legally enforceablesocial and economic rights to its citizenson the part of the State. Needs-baseddiscourse on the other hand, invokes

practical and moral arguments in favourof reducing and alleviating chronic

poverty, and promotes employingsocial protection measures in achievingthat. The constraints that the poorface may have different explanationsresulting in different approachestowards social protection as means ofaddressing such constraints. Thus theoverarching role and purpose of social

protection may be to reduce socialrisk and market failures, satisfactionof basic needs, or contribute to humandevelopment through rights-basedapproach depending upon the strategiesthe policy makers adopt. For example,market failure discourse was largelyresponsible for enhanced social andeconomic roles of the State and thus thegrowth of the modern welfare state.

Social Protection In Low-Income

CountriesSocial protection as a major

attribute of the welfare state hasexisted in the industrially developedcountries in the form of social welfareassistance, insurance, and employmentgeneration and protection. Fallouts ofstructural adjustment programmes,various economic crises, and effects ofglobalisation have motivated the low-income countries too to incorporatesocial protection programmes within

their policy frameworks since theearly 1990s. Social protection in suchcountries is therefore largely focussedon poverty reduction and reliesincreasingly on transfer of incomesin conjunction with employmentgeneration, creation of assets and

provision of basic services.

Formal sector employment declinedin most low-income countries as aresult of structural adjustment policies.Such policies also resulted in decreaseof wages in both public and privatesectors. Thus, the contributory base waseroded for the statutory social insuranceschemes. Structural adjustment policies

further resulted in the massive cuts insocial budgets thus adversely affectingthe government contributions towardssocial insurance. Such schemes weretherefore not as successful in low-income countries as in industrialisedcountries, particularly in case of alarge majority of workers who workedoutside the formal sectors. Theycould not afford to contribute to suchschemes. In many cases, they were alsonot inclined to contribute towards theschemes that were not designed to meettheir specific needs. These schemeswere therefore largely limited to formalsector workers. Due to this reason,the social insurance schemes in low-income countries further skewed the

income distribution in favour of formalsector workers especially becauseof the government subsidies on suchschemes, as corresponding subsidieswere not available to informal sectorworkers. This, in effect, results intransfer of resources from the informalsector workers to formal sector workersthat strengthened the privileges ofespecially the elite in defence andcivil services. A section of scholarsthus advocates for limiting the social

...the provision measures aim toreduce and mitigate deprivation,while the preventive measures

attempt to prevent the incidenceof deprivation and include various

poverty alleviation measures.Promotive measures focus on

improving incomes and capabilities

‘through a range of livelihood-enhancing programmes targeted atboth households and individuals’.

...the overarching role and purposeof social protection may be toreduce social risk and marketfailures, satisfaction of basicneeds, or contribute to humandevelopment through rights-

based approach depending uponthe strategies the policy makers

adopt.



46 YOJANA June 2014

protection privileges and expanding thesocial protection benefits. Structuraladjustment programmes and influenceof neo-liberal discourse also limited thestate’s role in providing health educationservices that adversely affected theinformal sector workers and the poor.Recurrent global economic crisis andeffects of increasing globalisation intrade and services further deterioratedthe economic condition and bargaining

power of the poor in low-incomecountries (for example, Stiglitz, 2002;Basu, 2006).

Social protection in its current formevolved as a political and economicresponse to this situation in low-incomecountries. This explains why although

the social insurance models in low-income countries generally follow the

basic structures of such programmesin industrialised countries, the scopeof social assistance programmes ismuch wider in low-income countries.In addition to protecting the poor fromdeprivation by helping them maintaina certain level of consumption as in

industrialised countries, they aim toenhance their productive capacity

by investing in their human capitaldevelopment and in their physicalasset formation. They further aim tohelp the poor to reduce their socialexclusion by providing them withaccess to basic services and enhancingtheir participation in various social andother institutions. Social assistance isalso sometimes employed to addressthe inequality issues in view of the

widespread poverty in low-incomecountries (Barrientos and Hulme,2008). Other aspects of social protectioninclude empowering the poor andstrengthening their agency to reduceand alleviate their poverty (Sabates-Wheeler and Devereux, 2008).

It is now being increasinglyacknowledged that poverty reduction

policies based on strategies of economicgrowth alone lead to skewed outcomesacross geographical and social spaces..As Dreze and Sen (1991: 10) argue,the issues of ‘widespread, persistentdeprivation’ and the ‘fragility ofindividual security’ in low-incomecountries cannot be adequately dealtwith the ‘standard channels of economicgrowth and social progress’ alone, as isgenerally believed to have been the case

with the high-income countries. Theycontend that such a belief is misplacedas the general improvements in theconditions of living in high-incomecountries have been achieved throughvarious social policies and publicexpenditures in the areas of education,health, employment and food security;rather than through economic growthalone. Moreover, the Gross NationalProduct (GNP) per head measurementsof the prosperity of a nation may not

be a true indicator of the capabilities

enjoyed by its population at large.Such measurements do not take intoaccount the inequalities prevailingin the distribution of incomes andvariations of incomes over time inindividual cases.

It has been observed that the personal needs are higher at the timeof reduced incomes, such as whenan earning member of a household issuffering from ill health. Such incomefluctuations could be more efficientlydealt with if insurance and capital

markets were well functional but that isusually not the case in respect of low-income countries. Even otherwise, highindividual incomes may not necessarilyimply enhanced capabilities especiallyin absence of other social provisionssuch as in the areas of health andeducation. This analysis thus indicatesthat ‘economic growth alone cannot

be relied upon to deal either with the promotion or with the protection ofliving standards’ (Dreze and Sen, 1991:

14). ‘Limitations of private markets ingenerating good living conditions’ mayalso render such strategies of social

protection based on economic growthalone infeasible (Dreze and Sen, 1991:31). Moreover, as Platteau (1991: 163)

points out that, ‘[w]hile market forcesand institutions may help in reducingthe risk of hunger, particularly in sofar as they increase self-reliance bydiversifying sources of income andsupply as well as market outlays, theyalso open the way for new sources ofvulnerability’.

Dreze and Sen (1991: 32) furthercite the experience of China, CostaRica, Cuba, Chile, Jamaica and Sri

Lanka to argue that it is not necessaryto wait for high economic growth to

achieve substantial improvementsin the general living conditions for alarge section of the population throughappropriate public action.

Social Protection In India

Various aspects of social protectionconstituted an important part ofthe agenda of the Indian Freedommovement and the government ofnewly-independent India initiatedseveral social protection programmes.

Structural adjustment policies

further resulted in themassive cuts in social budgetsthus adversely affecting thegovernment contributions

towards social insurance. Suchschemes were therefore not as

successful in low-income countriesas in industrialised countries,particularly in case of a large

majority of workers who worked

outside the formal sectors. Theycould not afford to contribute to

such schemes.

Social protection in its currentform evolved as a political and

economic response to this situationin low-income countries. This

explains why although the socialinsurance models in low-income

countries generally follow the basicstructures of such programmes inindustrialised countries, the scopeof social assistance programmes is

much wider in low-income countries.In addition to protecting the

poor from deprivation by helpingthem maintain a certain level ofconsumption as in industrialised

countries, they aim to enhance theirproductive capacity by investing intheir human capital development

and in their physical assetformation.



50 YOJANA June 2014

Effective system need to be evolved right from basic strategic research

to location-speci c technology development

to ensure adoption of technologies at the

farm level. Technology generation and extension

must be in viewed in continuum. Further, the

spread of agricultural growth to less developed

regions would lead toincrease in the overall

agricultural growth aswell as reduction in rural

poverty in the country

G R I C U L T U R A LDEVELOPMENT has

been a primar y goalof India’s efforts toensure food securityand reduce poverty. In

pursuing this objective, the planning process in the country has initiatedseveral pro-poor policies and reformmeasures in agriculture sector toaccelerate agricultural growth. Publicmeasures directed at agriculturaldevelopment have been focused oncreating infrastructure, spreadingadoption of modern inputs, increasingcredit, enhancing irrigation facilitiesetc. These initiatives have a direct

bearing on agricultural development.In recent years, the emphasis on havinga more desirable composition of GDPgrowth by targeting an average 4 percent per annum growth in agriculturesector has found favour with the

policy makers. The agricultural sectorhas been in the centre of public policydiscourse particularly after the globalfood crisis witnessed in 2008. Earliertoo, the policy debates dominated theconcerns of significant decelerationof agricultural growth during 1990sand the acute livelihood hardshipsof the farming communities andagricultural workers. Consequently,the Eleventh Five Year Plan (2007-2012) has placed heavy emphasis onagriculture and rural development

Agricultural Growth in India: Performance andProspects

SECTORAL ANALYSIS

P K Joshi Anjani Kumar

DEEP PROBE

A

Dr. P.K. Joshi is the Director for South Asia, Consultative Group on International Agricultural Research (CGIAR) . Previous to this, heheld the positions of the Director of the National Academy of Agricultural Research Management, Hyderabad, India, and the Directorof the National Centre for Agricultural Economics and Policy Research, New Delhi. Anjani Kumar is Research Fellow, InternationalFood Policy Research Institute (IFPRI).

and a number of important policymeasures have been initiated toaddress the issues of agrarian distress.These initiatives were taken forward

and further strengthened in the TwelfthFive Year Plan. The performance ofagriculture has shown a promisingtrend in the recent decade and theview of deceleration in agriculturalgrowth has been put aside. This paperdeliberates on the performance ofIndian agriculture and the associatedfactors responsible for agriculturalgrowth.

Contribution of Agriculture toIncome and Employment in India

Indian agriculture has transformedsignificantly during the last sixdecades. These are reflected in thechanging share of agriculture innational economy and employment.Agriculture contributed more than51 per cent of total output of India’seconomy in early 1950s. Its sharehas steadily declined to about 16

per cent in TE 2011-12 (Figure 1).Obviously, the growth of industrialand services sectors have far outpacedthe growth of agricultural sector.Transformation of Indian economyfrom agriculture to non-agriculturesector got a strong push after 1980-81. These changes are not contraryto the processes of economic growthand development experienced in other



YOJANA June 2014 51

developed countries. However, theslow absorption of workforce in thenon-agricultural sector raises concernswhen seen along with the changingstructure of the national gross domestic

product. The asymmetry in incomeand employment shares of agricultural

and non-agricultural sectors created awidening gap between the incomesof agricultural and non-agriculturalworkers. This has become a majorsource for growing rural-urbandivide and inter-sectoral disparities.However, the share of agriculture inemployment, which almost stagnatedaround 70 per cent for first threedecades, declined by 22 per cent in thenext three decades. The opportunitiesin non-agricultural sectors havestarted growing relatively at a faster

rate in the recent years, leading todecline in the share of agriculturein employment by more than 10 percent in the most recent decade. Thelatest estimates reveal that about49 per cent of the total labour forcewas engaged in agricultural sector in2011-12. This offers a ray of hope fordeclining dependence of workforce onagriculture if a similar trend continuesin future.

Growth of Agriculture Sector

Agricultural growth is necessarynot only for attaining high overallgrowth but also for acceleratingthe speed of poverty reduction in adeveloping country like India. Theannual compound growth rates ofagricultural sector have been quitedismal ranging from 2 to 3 per centduring all decades after independence,with exception during the sixties. Itwas 2.6 per cent per annum duringfifties but decelerated to 1.7 per

cent per annum during sixties. Laterit accelerated, touching 3.2 percent per annum, in the nineties andduring 2000-12. It reached to 3.5

per cent against the target of 4 percent per annum. The growth ofagricultural sector remained higherthan the growth rate of populationin the country. However, the non-agricultural sector has grown fasterthan the agriculture and the divergence

between agricultural growth rate and

growth rate of the Indian economycontinue to persist (Figure 2).

Performance of sub-sectors inAgriculture

Crop sector

The growth of crop sub-sector inthe first decade of India’s planning

phase (1950s) was qui te modest (3.1 per cent). The First Five-Year Planaccorded highest priority to agricultureand allocated substantial part of the

plan outlay to this sub-sector. This period witnessed remarkable progressin land reforms, institutional changes,and operationalization of some majorirrigation projects. These initiatives

played an important role in achievinghigher growth of the sector during this

period. The importance and prioritygiven to agriculture was diluted in theSecond and Third Five-Year Plans,and there were occurrence of severedroughts too in the mid-sixties. As aconsequence, the sub-sector witnesseda deceleration during sixties (1.7 percent). This led to severe shortageof foodgrains, and the country wascompelled to import huge quantitiesof foodgrains. The food aid from

the USA came with conditionality,which forced the country to putgreater efforts to increase foodgrain

production. In mid-sixties, a newagricultural development strategy

Source: Base data are from National Accounts Statistics, GOI; NSSO Reports on Employment and Unemployment in India (Various rounds)

0

10

20

30

40

50

60

70

80

TE 1952 TE 1961 TE 1971 TE 1981 TE 1991 TE 2001 TE 2011

GDP Employment

Figure 1: Share of Agriculture in GDP and Employment in India (%)

( P e r

c e n t )

0.0

1.0

2.0

3.0

4.0

5.06.0

7.0

8.0

9.0

10.0

1950-51 to1959-60

1960-61 to1969-70

1970-71 to1979-80

1980-81 to1989-90

1990-91 to1999-00

2000-01 to2011-12

GDP total GDP Agriculture GDP Non-Agriculture

Figure 2: Annual Growth rate in GDP Agriculture and Non-Agriculture, 1950-51 to 2011-12 (%)

( P e r c e n

t )

Source: Base data are from National Accounts Statistics, GOI.



52 YOJANA June 2014

was adopted which emphasized onspreading the adoption of dwarf andhigh-yielding varieties (HYVs) ofwheat and rice. The new strategy

paid dividends and resulted in well-acclaimed ‘green revolution’. Thecrop sub-sector, which was growing

at an annual rate of 1.8 per cent in theseventies, grew at the rate of 2.2 percent in eighties and 3.0 per cent in thenineties. Though the same growth inthe crops was maintained, it fell shortof the targeted growth rate of 4 percent in the eleventh five year plans(Table 1).

The policy support, adoption ofimproved production technologies and

public investment in infrastructure,research and extension contributed

to growth in the crops sub-sector.However, investment on agriculturedeclined throughout the nineties,leading to a s lowdown in theagricultural growth especially in thelate nineties. This led to decelerationin growth of total factor productivity inthe north western region, especially inrice and wheat growing areas (Kumaret al., 2004). In fact, investment onagricultural research, education androad development paid the highestreturns to agricultural GDP and

reduction in rural poverty (Fan, Gulatiand Thorat, 2007). Recognizing theimportance of investment and thecontinuous threat to the productionand lowered factor productivity ofrice and wheat prompted governmentto take corrective measures to reversesuch trends and conscious effortshave been made to raise investmentin agriculture.

Livestock Sector

The growth of livestock sub-sectorwas modest till 1970. It was 1.4 percent per annum in the fifties and aslow as 0.4 per cent per annum in thesixties. An upsurge in growth ratein livestock sector was registered inthe seventies when it rose to 3.9 percent per annum. Livestock sub-sectorgrowth was always higher than cropsub-sector since 1970. This waseven during the heydays of greenrevolution (seventies and eighties);

when the policy emphasis was largelyfocused on the crop sub-sector. Theacceleration continued in the eighties(4.9 per cent) but it slackened in thenineties and after 2000s. Even then,this sub-sector was able to maintaina respectable growth rate close to 4

per cent per annum. The impressive performance of the livestock sectoris attributed to effective governmentinterventions, success of the AnandPattern Cooperatives, and risingdemands for livestock productsin response to rising incomes inurban and rural areas and growingurbanization. The liberalization oflivestock markets, entry for privatesector in marketing and processingof livestock products, improvementin veterinary services, trade friendly

policies (esp. buffalo meat), emphasison improvement in quality andhygiene of the livestock produces etc.gave further fillip to this sub-sector.Future increases in per capita incomeand changing consumption patternswould lead to still higher demand forlivestock products which would givefurther boost to this sector.

Fisheries

Fish sector has been recognizedas a promising source of augmentingincome, generating employmentand improving nutrition. It is alsoan important source of livelihoodfor a large section of economically

backward popu lation. Wi th thechanging consumption patterns,e me rg ing ma r ke t f o r c e s a ndtechnological developments, it hasassumed added importance. On thewhole, the growth of the fisheries sub-sector in India has been remarkable;

growth rate of more than 5 per cent perannum in the eighties and nineties andis attributed to the rapid developmentof aquaculture. This sub-sector is stillregistering an annual growth rate ofmore than 4 per cent per annum.

Changing Contribution of DifferentCommodit ies to Agricul tura lGrowth in India

Crops are the major componentsof agricultural economy and the

performance of agricultural sec torhas been traditionally dependent onthe performance of crops sub-sector.However, the contribution of crop sub-sector has been declining overtime inthe agricultural growth from about 79

per cent during 1970s to 60 per centduring the 2000s. The contribution oflivestock grew almost three times andit accounted for more than one-thirdof the agricultural growth. Withincrops, the share of cereals has gonedown from 43 per cent in the greenrevolution period to merely 13 percent in the recent decades. The mainsource of growth in the crops sectoris the horticultural crops. It accountedfor 47 per cent of the growth in the

Table 1: Annual Growth Rate in Output of Various Sub-sectors ofAgriculture at 1999-00 Prices, 1950-51 to 2011-12

Period Cropsector

Livestock Fisheries Horticulturecrops

Non-Horticulture

crops

Cereals

1950-51 to1959-60

3.06 1.42 5.79 0.74 3.52 3.95

1960-61 to1969-70

1.70 0.41 4.00 4.87 1.09 2.10

1970-71 to1979-80

1.79 3.92 2.90 2.86 1.49 2.40

1980-81 to1989-90

2.24 4.91 5.67 2.63 2.12 2.89

1990-91 to1999-00

3.02 3.79 5.36 5.95 2.07 2.24

2000-01 to2011-12

3.12 4.45 4.06 4.11 2.76 2.12

Source: Base data are from National Accounts Statistics, GOI;



YOJANA June 2014 53

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54 YOJANA June 2014

value of output from crops sector.Among cereals, maize and cotton arethe exceptions and their contributionsto the agricultural growth have

be en in cr eas ing . Di ve rs ifi cat io ntowards high value commodities has

been observed to be a sustainable

source of growth, which providesan opportunity to smallholders toenhance their income and enablethem to escape poverty (Birthal etal. 2014 )

Among livestock products, milkand milk products are the majoritems. However, this sub-sector seemsto be diversified overtime and thecontribution of meat, poultry and eggshas been increasing in the growth ofthis sector. Their contribution in the

growth of this sub-sector increasedfrom about 3 per cent during 1950sto about 30 per cent during 2000-11s. Similarly, in fisheries the inlandfisheries, have emerged as the sourceof fisheries growth. Its contributionto fisheries growth was about 31

per cent during 1960s and 1970s,and now accounting for 83 per centof the fisheries growth during2000-11 (Figure 3).

Regional Trends: Emergence

of New Sources of AgriculturalGrowth in India

With these national trends, thereare wide inter-state variations. Theranking of various states based onthe productivity witnessed significantchanges during this period because of

variations in the growth rate of NSDPagriculture. The growth witnessed

by di fferent stat es varies widely.The sharp variations of agriculturalgrowth across states seem to havealtered the regional growth sourcesof Indian agriculture. During eightiesWest Bengal (14.4 per cent), UttarPradesh (13.8 per cent), Punjab(10.1 per cent), Maharashtra (9.4

per cent), Bihar (8.8 per cent), Tamil Na du (6 .5 pe r ce nt ) and AndhraPradesh (6.4 per cent) were the maincontributors to agricultural growthin India. They together accountedfor about 70 per cent of growth inIndian agriculture during 1980s.During 1990s, Maharashtra emerged

as the biggest contributor to nationalagricultural growth with 13.8 percent contribution, closely followed

by Uttar Pradesh (13.6 per cent) andWest Bengal (13.2 per cent). Twostates, low in agricultural productivity

per ha, Gujarat and Rajastha n,emerged as the major contributorsto agricultural growth during 1990sand each contributed 9 and 7 percent, respectively. Madhya Pradeshis another state whose contribution togrowth in Indian agriculture increasedconsiderably from 4.8 per cent during1980s to 8 per cent during 1990s. Thecontribution from Andhra Pradeshalso increased slightly from 6.4 percent during 1980s to 7.3 per centduring 1990s. The contribution ofBihar in growth of Indian agricultureduring 1990s was nil. The subsequentdecade witnessed Gujarat emergedas the biggest source of national

agricultural growth. It contributedabout 20 per cent of the nationalaverage growth of agriculture. Thecontribution from Madhya Pradeshfurther accelerated and reached to11.7 per cent. Bihar also emerged asone of the major contributor to thenational agricultural growth and itcontributed about 5 per cent to theagricultural growth in India during2000s. However, the contributionfrom Uttar Pradesh and West BengalSource: Base data are from National Accounts Statistics, GOI

-10

0

10

20

30

40

50

60

70

80

90

1950-59 1960-69 1970-79 1980-89 1990-99 2000-11

Crop sector Livestock Forest Fish

Figure 3: Contribution of different sub-sectors in agricultural growth (%)

( P e r c e n t )

Table 2: Contribution of States in the Growth of AgGDP of India

State Agriculture and allied activities

1980-89 1990-99 2000-09Andhra Pradesh 6.4 7.3 10.7Assam 2.3 0.7 1.5Bihar 8.8 0.1 4.7Gujarat -1.9 9.0 19.2Haryana 5.1 2.6 3.2Himachal Pradesh 0.3 0.1 1.3Jammu & Kashmir 0.0 0.0 1.1Karnataka 6.0 9.4 -0.2Kerala 1.8 2.7 3.1Madhya Pradesh 4.8 8.0 11.7Maharashtra 9.4 13.8 10.5Orissa 4.2 1.8 3.1Punjab 10.1 5.2 3.8Rajasthan 6.3 7.0 9.6Tamil Nadu 6.5 5.8 1.6Uttar Pradesh 13.8 13.2 6.5West Bengal 14.4 13.6 6.3

Other State 1.7 -0.3 2.3Source: Base data are from National Accounts Statistics, GOI

Figure 3: Contribution of Different Sub-sectors in Agricultural growth (%)



YOJANA June 2014 55

declined substantially during this period (Table 2).

R e g i o n a l c o n v e r g e n c e o fagriculture is another dimension,which need serious attention of the

policy makers. This is driven partly by the divers ity in the produc tion potential and extensive cul tivationin marginal areas, and partly by

policy priori ty promoting food production regard less of technicalor economic efficiency (Jha, 2004).Several studies have shown that thereare large disparities in agricultural

performance across regions and the primary sector has been att ributedto be the major source of regionaldisparities of inter-state income inIndia. Moreover, the deceleration inagricultural growth in the late 1990srenewed the debate of convergence inagricultural performance across statesin India. The indicators of regionaldisparities exhibit a fluctuating trend.High level of regional disparities inagricultural output and productivityduring the 1980s which taperedoff to some extent during 1990sagain started rising during the recentdecade of 2000s. The persistence ofregional variations poses a challengefor attaining balanced regional

agricultural development.Factors for Agricultural Growth

The wide spread adoption ofhigh-yielding varieties, expansionof irrigation facilities and increasein fertilizer application along withimprovement in rural l i teracy,increase in agricultural credit andimproved infrastructure played a

significant role in the agriculturalgrowth of the country. The use ofmodern inputs increased significantly.During the green revolution of 1970s,the cropped area planted with HYVscereals increased from less than17 per cent in 1970 to 40 per cent

in 1980. The area under HYVscontinued to increase and reached70 per cent of the cropped area by2009-10. Similarly, the cropped areaunder irrigation, increased from23 per cent in 1970 to 34 per centin 1990 and 45 per cent in 2011-12. But the increase has been onlymarginal in recent years. The fertilizerconsumption (NPK) per ha wasmerely 26 kg in 1970, increased to 58kg by 1980-81, to 96 kg in 1991. Thefertilizer consumption in 2011-12 was

about 195 kg/ha (Table 3). It is welldocumented that HYVs, irrigationand fertilizer application have beenmajor engines of productivity growthin Indian agriculture.

The rapid electrification has beenone of the greatest achievements inthe rural India. In 1970, only 34 percent of the villages in rural Indiawere electrified. But in 1995 this

percentage increased to 86 per cent,which rose to 95 per cent in 2014. The

increase in electrification not onlycontributes to agricultural growth, by en co ur ag in g mo re irr ig at ion ,it also contributes to reduction inrural poverty through generationof non-agricultural employmentopportunities (Fan et al. , 1999).The literacy rate in rural India hasincreased steadily from 23 per centin 1970 to 69 per cent in 2011.

Similarly, there has been significantincrease in road density in ruralIndia and considerable enhancementin the flow of agricultural credit.

Prospects for Acceleration ofAgricultural Growth

The continuing primacy ofagriculture as the primary sourceof employment in the Indian ruraleconomy calls for accelerationof agricultural growth. However,the increasing marginalization ofland holdings in most of the Indianstates, accompanied with increasingf ragmenta t ion compounds thechallenges of increasing productivitya nd a c c e l e r a t i ng a g r i c u l t u r a lgrowth. Ensuring sustainability andeconomic viability of smallholdersand improving their competitivenessin production and marketing byfacilitating better access to improvedtechnology, inputs, credit and marketsis crucial for higher and inclusiveagricultural growth. If appropriateinstitutional alternatives are provided,smallholders are as competitive aslarge farms. Options for easy leasingout of land must be encouraged. Thiswould induce several farm familiesto go out of agriculture and makefortunes in other sectors. This wouldalso create an opportunity for othersto raise the size of their holdings byleasing-in land.

Shifting a large chunk of workforcef r om a g r i c u l t u r e by c r e a t i ng

producti ve work opportunit ies inthe non-farm sector is also requiredto check the disturbing trend ofincreasing dispari t ies betweenagricultural and non-agriculturaloccupations. However, acceleratingagricultural growth is crucial toensure food security and enhance thewelfare of the people dependent onagriculture. Pragmatic and plausibleoptions to accelerate agriculturalgrowth need to be harnessed. Thelevel of cropping intensity continuesto be very low in spite of significant

progress in the irrigat ion facilities. InAndhra Pradesh, Gujarat, Karnataka,Maharashtra, Rajasthan, Tamil Nadu,more than one crop is grown on less

Table 3: Technology and, Infrastructure Use in Indian agriculture,1970-71 to -2011-12

Year HYVs (per cent)

Irrigation(per cent)

Fertilizerconsumption

(kg/ha)

Literacyrate

(per cent)

Electrifed

village(per cent)

1970-71 16 22 20 23 201980-81 42 28 39 29 45

1990-91 52 34 88 36 812000-01 55 39 118 47 86

2011-12 70* 45 199 69 95 +

Source: Agricultural Statistics at A Glance (Various years): refers to 2009-10; + in January 2014.



56 YOJANA June 2014

than 30 per cent of the area undercultivation. The low level of croppingintensity indicates the possibilitiesof substant ial enhancement inagricultural output by increasingarea under double cropping.

The fertilizer use has increased inthe country but the inter-state variationin its use is glaring. Fertilizer use inthe recent years is as low as 40-50kg/ha in Assam, Orissa and Rajasthanand as high as 330 kg/ha of net sownarea in Punjab. The agriculturaloutput can be substantially enhanced

by increasing fertil izer applica tionin lagging states. Similar is the storyof use of electricity in agriculture.Consumption of electricity was just11 kWh/ha in Assam, whereas it

exceeded 1,000 kWh/ha in AndhraPradesh, Gujarat, Haryana, Punjaband Tamil Nadu. Increase in electricsupply to agriculture is crucial for

promoting irrigation facilit ies, whichin turn can increase agriculturaloutput.

The coverage of irrigation invarious states varies from 5 to 95 percent. There is a large gap between thecurrent level and the ultimate irrigation

potential (except in Punjab, Haryanaand Rajasthan). Bihar has abundantwater resources, which can cater tothe needs of irrigation requirementseven for further expansion in grosscropped area through an increase incropping intensity. Similarly, UttarPradesh has the potential to raise thelevel of irrigation to 95 per cent. Only5 per cent of GCA in Assam and 32

per cent in Orissa are irrigated though

these states have irrigation potentialto cover 2/3 rd of their gross croppedarea.

The level of productivity of mostof the crops is quite low in mostof the states. However, availableevidence shows that there is a biggap between the level of yield withimproved farm practices in farmers’fields and the actual yield realized

by the farmers. Bridging the exist ingyield gap would enhance agriculturaloutput considerably. For achievingthe existing potential, availabilityof quality seed is the most criticalfactor apart from strengthening thetechnology transfer mechanism.India needs to develop a competitivemarket for seeds by intensifying

the role of public sector and byencouraging private sector in seed business vigorously.

Though input subsidies are criticalfor smallholders in marginal anddeprived areas, there is a need ofreorienting the policies to maximizethe gains to small farmers andincrease efficiencies in its use andconserve natural resources. It isnecessary to emphasize productivity-enhancing interventions and subsidiesshould be geared towards promotinguse of technologies that increase

productivity and enable movementsup the value chain in agricultural

production. Shifting of agricultural processing into rural areas should be paid serious attention. A strongintegration and effective coordinationis required in Research, Educationand Extension. Effective system

need to be evolved right from basicstrategic research to location-specifictechnology development to ensureadoption of technologies at the farmlevel. Technology generation andextension must be in viewed incontinuum. Further, the spread of

agricultural growth to less developedregions would lead to increase inthe overall agricultural growth aswell as reduction in rural povertyin the country. Policy measures likeland reforms, enhanced rural credit,and greater public investment areimportant to promote agriculturalgrowth in less developed regions.

References

Birthal, P S, P K Joshi, DigvijayS Negi and Shaily Agarwal (2014).

Changing sources of growth in Indianagriculture: Implications for regional

priori ties for accele rat ing agr icu ltu ralgrowth. IFPRI Discussion Paper, 716.International Food Policy ResearchInstitute, Washington DC.

Fan, Shenggen, Ashok Gulati andSukhadeo Thorat (2007). Investment,subsidies and pro-poor growth in RuralIndia. IFPRI Discussion Paper, 716.International Food Policy ResearchInstitute, Washington DC.

Jha, Dayanatha (2004). AgriculturalR&D in India : Growth, equity andinstitutional challenges, in Ramesh Chand(ed.) India’s Agricultural Challenges :

Refections on Technology, Policy and Other Issues , Centre for Trade and Development, New Delhi, P. 171-196. q

( E-mail:[email protected] [email protected] )

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58 YOJANA June 2014

he summer of 2014got drenched with theelections euphoria, butfor Indian agricultureall eyes are set on the

prospe ct s of a goodmonsoon. Is there a possibilityof an El Ni no ? Will it lead to adrought like condition and havean adverse impact on agricultural

production? How will this impactthose dependent on agriculture fortheir livelihood? What about farmers'suicides? These questions remindus of the larger agrarian crisis andits interrelated dimensions of anagricultural developmental crisis.The former is about declining shareof the overall pie towards agriculturalsector, poor returns to cultivation, andnutritional deprivation while the latteris about inadequate and inappropriate

planning that led to a decelerationin the growth rate of production and

productivity, and an increase in riskand vulnerability. This also calls foralternative policy thinking.

Agrarian Crisis

The share of agriculture and alliedactivities in gross domestic product atconstant 1999-2000 prices decreasedfrom 41 per cent in 1972-73 to 14.6

per cent in 2009-10 while during thesame period the share of employmentin the sector declined from 73.9 percent to 53.2 per cent. This means

Indian Agriculture: Emerging Issues and PolicyPerspectives

AGRICULTURAL POLICIES

Srijit Mishra

OUTLOOK

T

The author is Associate Professor at the Indira Gandhi Insti tute of Development Research (IGIDR), Mumbai. His research relatesto applied development economics. He was the Subir Chowdhury Fellow 2013-14 at the London School of Economics and PoliticalScience (LSE). He has co-edited the book Agrarian Crisis in India , Oxford University Press (2009) with D. Narasimha Reddy.

that the average returns per workerin agricultural households was lessthan Rs.8. Assuming a 6 per centannual average growth rate, whichis much on the higher side, the percapita per day returns in 2013-14would double to Rs.16. This explainsthe poor returns to cultivation. Withnearly half the population being stilldependent on agriculture, the non-farm opportunities remain limited.

The 2013 Global Hunger Index puts India at a rank of 63 from among78 countries, which is lower than someof the Sub-Saharan countries and allthe other South Asian countries. The

per capi ta per day avai labi li ty offoodgrains, as indicated in the Stateof Indian Agriculture 2012-13 , hasreduced from 510 grams in 1991to 463 grams in 2011. This is alsoreflected in the per capita per daycalorie and protein consumption asthe national sample survey estimatesof 1993-94, 2004-05 and 2009-10suggest. Such an outcome is also

be cau se of a sh ift in the ce re al production and the ir consumptionfrom millets to rice and wheat.There have been recent initiatives toincrease the millets production andtheir consumption.

The manifestation of the agrariancrisis has been identified with farmers'suicides. However, it is symptomaticand its absence does not necessarily

Indian agriculture has been going

through a crisis thatis agrarian as also

agricultural. A way out of this is to

explore context-speci c knowledge-

centric approaches.This, to borrow a

term, has the potential

for an inclusive, sustainable and

food-secure India



YOJANA June 2014 59

pr ec lude ri sk s. A compar ison ofsuicide mortality rates (SMRs, suicidedeaths for 100,000 persons) betweenfarmers and non-farmers suggests thatat the all India level the difference inthe rates diverged the most in 2004(18.8 and 13.6) and then there was

a secular decline in the gap till 2008(16.9 and 14.7) to diverge again in2009, a drought year, and then startedconverging again from 2010 to 2012.However, a closer look at the sixstates with relatively higher incidenceof farmers' suicides indicate that forthe recent three years (2010 to 2012)the rates are diverging in AndhraPradesh, Maharashtra and Kerala and

converging in Chhattisgarh, Karnatakaand Madhya Pradesh. The turnaround

in Chhattisgarh is because it hasstopped reporting farmers' suicidesand instead increased reporting of acategory called self-employed others.In addition, West Bengal did notreport profession-wise suicides datafor 2012. Thus, the convergence thatone observed at the all India level ismore on account of inappropriate andincomplete reporting. In any case, onehas to look up other aspects to identify

possible changes.

Agricultural Developmental CrisisUsing triennium ending data divided

to three sub-periods, 1981-82 to 1993-94, 1993-94 to 2004-05 and 2004-05to 2010-11, an analysis of growthrates computed through a double-kinked exponential curve suggests thatthe growth of agriculture and alliedactivities in the first period (3.3 percent) was statistically significantlyhigher when compared with the second

period (2.7 per cent) and there has beenan increase in the growth rate in therecent period (3.0 per cent). An analysisin terms of value addition points outthat the growth rate in the first periodwas statistically significantly higherthan the second period for cereals (3.3

per cent and 1.0 per cent), pulses (1.5 per cent and -0.03 per cent), oilseeds(6.1 per cent and 0.5 per cent), cotton(4.1 per cent and 1.0 per cent), milk(5.0 per cent and 3.7 per cent) andmeat (5.1 per cent and 2.9 per cent); thegrowth in the third period was higherthan the second period for all the aboveexcept for milk (3.5 per cent) and itwas statistically significantly higherfor pulses (2.5 per cent), oilseeds (4.8

per cent) and cotton (13.7 per cent).The trends observed till 2010-11

have continued till 2013-14, but for asetback in 2012-13 because of delayedonset and deficient rainfall.

Conventionally, in monsoon India,the farmer was exposed to either yieldor price shocks that were supposedto move in opposite directionscounterbalancing each other. Today,the possibility of yield risk increases

because of unavailabil ity of powerthat in turn affects water availabilityat a crucial time, or because of

spurious seeds or due to an increaseincidence of pest attack or becauseof weather changes. Further, becauseof global integration, price volatilityhas increased and price shocks could

be because of higher subsidies in theUnited States or the European Union.And, with these changes the two risksdo not counterbalance each other andthe farmer can also be exposed to boththe shocks in the same season.

Over the years, the farmer is

increasingly relying on the marketfor inputs. The link between groundrealities and publicly funded researchand extension is waning and the farmerdepends on the input-dealer leading toa supplier-induced-demand. Whatis more, the private provisioningof inputs without any regulation toaddress the sale of spurious productsor other market irregularities increasesfarmers' vulnerability. Further, withchanges in technology, the farmers'

current knowledge become redundantand there is deskilling.

Adequate, affordable and timelyavailability of credit would beessential for any enterprise, but thishas been eluding the Indian farmer. Inaddition, agricultural credit is aboutdoing the same things again and againand not linked to horizontal or verticalexpansions. Thus, any shocks arelikely to make debt non-serviceableand this would make the farmerineligible for subsequent loans fromformal sources. This would increasethe reliance on informal sources at agreater interest burden.

Input-intensive cultivation practices bring in risks that go beyond weatherand market uncertainties. There can

be inappropriate fertiliser applicationshaving an adverse impact on soil healthresulting in yield fatigue or pesticideshaving harmful impact on livestockand human health or depletion ofgroundwater among others. A way out

being propagated is an expansion of

the same, that is, to bring more areas

under the input-intensive approach- the look east policy being toutedunder a second green revolution or anevergreen revolution. The argument

put forward in favour of this or othertechnology-driven approach is thatthere is no alternative (TINA).

Alternative Policy Thinking

In practice, multiple alternativesexist (MAE) that is context-specific.

However, a closer look at thesix states with relatively higherincidence of farmers' suicidesindicate that for the recent

three years (2010 to 2012) therates are diverging in Andhra

Pradesh, Maharashtra and Keralaand converging in Chhattisgarh,Karnataka and Madhya Pradesh. Conventionally, in monsoon India,

the farmer was exposed to eitheryield or price shocks that weresupposed to move in opposite

directions counterbalancing eachother. Today, the possibility ofyield risk increases because ofunavailability of power that inturn affects water availabilityat a crucial time, or because of

spurious seeds or due to an increaseincidence of pest attack or because

of weather changes.



60 YOJANA June 2014

It differs across locations and evolvesover time. It questions the one-sizefits all approach. Such thinkingtakes advantage of the variabilityof the natural resource base and thediversity in the production systems.As each crop has a different life

cycle, the diversity spreads out thevulnerability from each episodeof unforeseen climatic events. Inaddition to an integration of differentcrops, the system is also integratedwith livestock production. Thesecould lead to low external inputsustainable agriculture (LEISA). Theapplication or propagation of thisapproach is knowledge centric.

Comparing knowledge-centricMAE to technology-driven TINA, onecan state the following.

MAE is bottom-up where differentknowledge providers will not onlyhave to keep the local specificsin mind, but will have to work intandem with the users. TINA istop-down where the provider of thetechnological-fix, as a solution tosome presumed problem, is consideredhierarchically superior to the user ofthat technology.

MAE is context-specific, requires

an understanding of the systemdynamics and evolving effectivestructures of managing them. TINA iscrop-specific and involves applicationof inputs/technology to enhance

production.

MAE focuses on the production ofa complex system with an importantemphasis on risk reduction. TINAfocuses on a single crop or livestockwith an emphasis on improving

productivity.

MAE understanding of efficiencyis from a system perspect ive.TINA looks into efficiency in thetechnological and economic sensethat is normalised per unit of input.

MAE involves marginal landswith the crop-livestock system spreadover a larger area and in that sense isextensive. TINA is mainly in areaswith better soils and with access towater (preferably through irrigation)and input-intensive.

MAE is about integration of mixedand multiple crops with livestock.TINA is about specialisation thatespouses mono-cropping.

MAE production on private lands

is dependent on commons. TINA pr oduc tio n is in ow ne r-oper ate dlands.

Despite these differences, MAElike TINA, cannot happen on itsown. To promulgate it, one needs thesupport of appropriate knowledge,resources and adequate leveragingwith marketing opportunities andinformation technology. It alsorequires constant monitoring andevaluation.

One of the recent initiatives in-line with MAE is the interventionsin comprehensive pilots through theRevitalizing Rainfed Agriculture

Network (RRA-N) comprising ofa number of civil society groupsspread across the country. Thecomprehensive pilots are spreadacross different agro-ecologicalconditions and focuses on integratingknowledge-centric interventions on

water, soil, seed, livestock, fisheries,credit and institutions among others.They also collaborate with the local-level line departments and othergovernment functionaries, as thatis very essential to scale-up withinthe pilot area. The interventions

that started in Kharif 2012 haveattracted the attention of the PlanningCommission, the Department ofScience and Technology and the Foodand Agriculture Organization. Thisrequires greater research engagementthat will delineate the specificities ineach comprehensive pilot and identifythe similarities across comprehensive

pilots to faci litate their application beyond the pilot areas.

To sum up, Indian agriculture has been going through a crisis that isagrarian as also agricultural. A way outof this is to explore context-specificknowledge-centric approaches. This,to borrow a term, has the potential foran inclusive, sustainable and food-secure India.

(This paper draws from some ofthe recent works by the author. Theyinclude: Technology, Development,and Farmers' Suicides in India: AMisplaced Debate, Visiting FellowsSeminar, Asia Research Centre,

London School of Economics andPolitical Science, 20 March 2014;Agriculture in India: Performance,Challenges and Opportunities (withS Mahendra Dev and VijaylaxmiPandey) in Ashima Goyal editedThe Oxford Handbook of the Indian

Economy in the 21st Century , OxfordUniversity Press (OUP), New Delhi,2014; etc.). q

( E-mail: [email protected] )

To promulgate it, one needsthe support of appropriateknowledge, resources andadequate leveraging with

marketing opportunities andinformation technology. It also

requires constant monitoring andevaluation.

The comprehensive pilots arespread across different agro-

ecological conditions and focuseson integrating knowledge-centric

interventions on water, soil,seed, livestock, sheries, creditand institutions among others.They also collaborate with the

local-level line departments andother government functionaries,as that is very essential to scale-

up within the pilot area. Theinterventions that started in Kharif2012 have attracted the attention

of the Planning Commission,the Department of Science andTechnology and the Food and

Agriculture Organization.



YOJANA June 2014 61

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62 YOJANA June 2014

N THE deep-dark forestsof the Achanakmar tigerreserve in Chhattisgarh,s c a t t e r e d o v e r a nexpanse of 557.55 squarekilometers, wild animals

and humans coexist. As dusk falls, itis time for the wild to emerge, forcingthe humans to lock themselves in.

What is common on both sides of thelocked doors is darkness, for there isno electricity in the villages fallingin the buffer zones of the reserve, orso it used to be.

Today, residents of Bamhani, afar flung village in the AchanakmarTiger Reserve, have moved on fromthe days of sheer darkness, withlit bulbs, charged mobile phones,refrigerators and water-motors

be comi ng incr ea si ng ly common.

The credit for this silent revolutiontranspiring in the dense junglesgoes to the Government and non-Government Organizations as thevillages are now lit up and better still,using natural light.

Jan Swasthya Sahyog, a non-Government organizat ion withexpertise in the field of healthcare,is one of the non-Governmentorganizations that have distributedsolar lights in the area in the last three

years. Besides, the Government’sEnergy Department has also provided power to these villages by instal lingsolar plants. Most of the villages inthis region have street lights as wellas domestic lights through solarenergy.

“From preparing food at night toa walk towards the farm, a minimumquantity of light is always required.Villages with no electricity or heavy

Illuminating the Dark-dense Forests

BEST PRACTICES

solar lights could easily prevent thishazard. Explains Sant Kumar, “Thelight we provide saves energy. Oncethe battery is recharged, it can workfor two days. This light can also becharged in the cloudy season.”

Located amid lush green forests isthe picturesque village of Chiraigoda,with wooden houses constructed far

from one another, this village ishome to the Uraon Adiwasis. “I havetwo solar lights, of which only oneis in good condition. It helps mychildren to study after dark and inthe preparation of food. It has alsomade our night trails easier, helpingus keep a check on our fields. Paddyseeds can be threshed in the lightof a solar bulb. Often, we hang thesolar light on trees to keep the wildanimals at bay,” shares DhaniramEkka, a local adivasi, with evidentsatisfaction.

He adds, “Earlier, we would neverreceive adequate kerosene from theration shop, only a litre a month.Those were difficult times.”

“ T he s e r v i c e p r ov ide d bygovernment solar plants is notsatisfactory as they remain inactive forwant of repairs. Jan Swasthya Sahyog

purchased the plant from a Mumbai based company that has given one

year’s guarantee and if it gets faultyduring the year, the company willeither replace it or repair it. In future,we wish to train a mechanic who canrepair it locally,” shares Sant Ram.

Indeed, as villagers becomecomfortable wisth the new eco-friendly technology, a brighter futurelies ahead for them and the planet.

Charkha Features

I power cuts face far more challengesin their day to day life. Electricityshortage also affects healthcaredirectly. Because, if there is a powercut during one’s dinner, one isunlikely to enjoy one’s meal. Thiswas a major reason why cheap solarlights were provided in the area,”explains Sant Kumar, a Jan Swasthya

Sahyog activist.For the last three years, Jan

Swasthya Sahyog has assisted withmaking solar lights available invillages in Lormi region of MungeliDistrict and Kota region of Bilaspur

district. Though the cost of one solarlight is Rs 500, for health activists it isavailable for Rs 250 and for villagers,at a nominal rate of Rs 100.

The government’s ElectricityDepartment has its own solar plant

in villages with no power supply.Unfortunately, it often remainsswitched off during the monsoonseason as the sun is not visible formany days at a stretch. Ironically,it is that time of year when peopleactually need more power. Adiwasisare used to sleeping on the groundwithout beds or cots ( charpais ) andhence often become victim to snakeor scorpion bites. The presence of



YOJANA June 2014 63

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