There would be little doubt that a large reason for this is the extent of indebtedness of farm households across India. ‘Reliable’ data for the same are available only from the National Sample Survey No. 59 of 2003. In that survey, Andhra topped the charts with more than 80% of farm households being indebted (Around that time, Andhra had also acquired the dubious reputation as the number one farmer suicide state of India). In the same period, 61% of farm households in Kerala, 65% in Karnataka, 51% in Madhya Pradesh, 74% in Tamil Nadu and 55% in Maharashtra were found to be indebted. Things and times have changed since then and independent research now suggests that Maharashtra, Andhra and Karnataka now lead the table in indebtedness of farmers. They also happen to be the top states when it comes to farmer suicides.
Beyond Farmer Suicides
There is a larger picture that is hidden behind these numbers; and that is the shameful neglect of the agriculture sector by the Government of India, and by successive finance ministers of the country, though they all regularly pay lip service to the cause of the farmer. The most telling indicator of this is shockingly declining levels of investment in this crucial sector. One particular set of data shows how pathetic the situation is. During 1980-81, the share of Gross Capital Formation (GCF) in agriculture out of total GCF was just about 18%. Now, 18% for a sector on which close to two thirds of the total population depend on livelihoods is bad enough. What happens subsequently is worse. The percentage keeps falling steadily since then and by the end of the 20th century, it is a pathetic 5.8% (See Chart). Even as the Indian farmer has suffered ignominy after ignominy, the government has kept on reducing investments in agriculture. By the time, the UPA came to power in 2004, there was a lot of talk of turning things around. And, during the Eleventh Five Year Plan (2007-12), there was talk of a substantial increase in investments in agriculture. The two finance ministers since 2004, P. Chidambaram and Pranab Mukherjee have used every Budget speech they have given to announce more and more fancy schemes for the farmer and the agriculture sector. In fact, it was proudly announced that the allocation for agriculture and allied sectors in the 11th Five Year Plan was raised to Rs.50,924 crores, up from Rs.21,068 crore during the 10th Five Year Plan. Yet, the mid term review of the 11th Five Year Plan officially admits that the share of agriculture and allied sectors in total plan allocation has not budged a millimeter from the 2.4% it was in earlier five year plans. So much for the government claims about really caring for the farmer and trying its best to bring about a transformation in Indian agriculture.
There are some more shocking facts that I would like to highlight about agriculture. The first is the abysmal performance of India as compared to other countries when it comes to productivity. Even the top states of the country in terms of productivity, Punjab and Haryana, perform very badly when compared to China and quite pathetically when it comes to countries like South Korea, Japan, Australia and the United States, to name just a few countries (See Chart). But let’s not confine ourselves to the usual comparisons and go on a spree of belittling India by merely comparing it with other countries that have delivered performances that should make our politicians and policy makers hang their heads in shame. Let us look only at statistics from within India to understand why agriculture is facing such an unprecedented crisis.
We all knew that the Green Revolution was a reality by the 1970s and India had finally broken out of the famine trap by then. We also know how politicians, policy makers and analysts keep reminding us of the wonders of Green Revolution and how it made India self sufficient when it comes to food. That much is true. But what is hardly ever talked about in policy circles and the media – barring some honorable exceptions – is how Green Revolution is history and how all the fruits of that endeavour have already been frittered away. Between 1980 and 1990, the average annual growth in the per hectare yield of wheat was a commendable – if not spectacular – 3.1%. During the period from 1990 to 1999, the growth rate in yield declined heavily to 1.83 %. Worse, between 2000 and 2009, the average annual yield growth rate in wheat crashed to a meager 0.68%. Everybody knows that spectacular growth in wheat production and yield was one of the highlights of the Green Revolution. Even official data now clearly indicates that growth has almost completely tapered off. Rice has not performed much better. During the 1980 to 1990 decade, average annual growth rate in yield was 3.19%; it crashed to 1.34% during the next decade before recovering marginally to 1.61% during 2000-2009. This steady and consistent decline in the growth rate of yields is the principal reason why India lags so miserably behind other major nations when it comes to farm productivity. And it is also the major reason why farm incomes have not been going up in a manner they should.
Look at it another way. In the 60 years between 1950 and 2010, food grain production went up by a factor of 4.5. In the same period, production of steel went up by 65 times; the output of cement soared by about 60 times and the generation of electricity went up by more than 140 times (Just for your information, agriculture accounted for 31% of total electricity consumed in India in 1995. By 2008, the share had crashed to 24%). Interestingly, even the consumption of fertilizers – used only in agriculture – went up by more than 70 times in 50 years between 1960 and 2010 (See Chart).
Beyond Farmer Suicides
There is a larger picture that is hidden behind these numbers; and that is the shameful neglect of the agriculture sector by the Government of India, and by successive finance ministers of the country, though they all regularly pay lip service to the cause of the farmer. The most telling indicator of this is shockingly declining levels of investment in this crucial sector. One particular set of data shows how pathetic the situation is. During 1980-81, the share of Gross Capital Formation (GCF) in agriculture out of total GCF was just about 18%. Now, 18% for a sector on which close to two thirds of the total population depend on livelihoods is bad enough. What happens subsequently is worse. The percentage keeps falling steadily since then and by the end of the 20th century, it is a pathetic 5.8% (See Chart). Even as the Indian farmer has suffered ignominy after ignominy, the government has kept on reducing investments in agriculture. By the time, the UPA came to power in 2004, there was a lot of talk of turning things around. And, during the Eleventh Five Year Plan (2007-12), there was talk of a substantial increase in investments in agriculture. The two finance ministers since 2004, P. Chidambaram and Pranab Mukherjee have used every Budget speech they have given to announce more and more fancy schemes for the farmer and the agriculture sector. In fact, it was proudly announced that the allocation for agriculture and allied sectors in the 11th Five Year Plan was raised to Rs.50,924 crores, up from Rs.21,068 crore during the 10th Five Year Plan. Yet, the mid term review of the 11th Five Year Plan officially admits that the share of agriculture and allied sectors in total plan allocation has not budged a millimeter from the 2.4% it was in earlier five year plans. So much for the government claims about really caring for the farmer and trying its best to bring about a transformation in Indian agriculture.
There are some more shocking facts that I would like to highlight about agriculture. The first is the abysmal performance of India as compared to other countries when it comes to productivity. Even the top states of the country in terms of productivity, Punjab and Haryana, perform very badly when compared to China and quite pathetically when it comes to countries like South Korea, Japan, Australia and the United States, to name just a few countries (See Chart). But let’s not confine ourselves to the usual comparisons and go on a spree of belittling India by merely comparing it with other countries that have delivered performances that should make our politicians and policy makers hang their heads in shame. Let us look only at statistics from within India to understand why agriculture is facing such an unprecedented crisis.
We all knew that the Green Revolution was a reality by the 1970s and India had finally broken out of the famine trap by then. We also know how politicians, policy makers and analysts keep reminding us of the wonders of Green Revolution and how it made India self sufficient when it comes to food. That much is true. But what is hardly ever talked about in policy circles and the media – barring some honorable exceptions – is how Green Revolution is history and how all the fruits of that endeavour have already been frittered away. Between 1980 and 1990, the average annual growth in the per hectare yield of wheat was a commendable – if not spectacular – 3.1%. During the period from 1990 to 1999, the growth rate in yield declined heavily to 1.83 %. Worse, between 2000 and 2009, the average annual yield growth rate in wheat crashed to a meager 0.68%. Everybody knows that spectacular growth in wheat production and yield was one of the highlights of the Green Revolution. Even official data now clearly indicates that growth has almost completely tapered off. Rice has not performed much better. During the 1980 to 1990 decade, average annual growth rate in yield was 3.19%; it crashed to 1.34% during the next decade before recovering marginally to 1.61% during 2000-2009. This steady and consistent decline in the growth rate of yields is the principal reason why India lags so miserably behind other major nations when it comes to farm productivity. And it is also the major reason why farm incomes have not been going up in a manner they should.
Look at it another way. In the 60 years between 1950 and 2010, food grain production went up by a factor of 4.5. In the same period, production of steel went up by 65 times; the output of cement soared by about 60 times and the generation of electricity went up by more than 140 times (Just for your information, agriculture accounted for 31% of total electricity consumed in India in 1995. By 2008, the share had crashed to 24%). Interestingly, even the consumption of fertilizers – used only in agriculture – went up by more than 70 times in 50 years between 1960 and 2010 (See Chart).
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
