Saturday, March 17, 2012


One of the severest criticisms about the latest Budget presented by the Finance Minister is that the much hyped poor "aam aadmi" is again left fending for himself while corporate sector continues to receive government's priority attention. Many reforms have been set in motion to free the manufacturing sector from unnecessary bureaucratic control, interference and messing up but the much awaited agricultural reforms and smooth backward linkages for the food processing industry have not received the attention due to it. The Budget takes care of just increasing food production on a short term basis to prevent serious shortages of food, in stead of any long term strategy to lay a firm foundation for the farming sector. It looks more like a fire fighting operation which is bound to fail no matter how much money is pumped into the prevalent archival farm management system. Here is a take on this issue articulated by some news media.

"Removing supply-side constraints - a major cause of food inflation - is among the five focus areas that Mukherjee outlined in his speech. Steps likely to follow include importing food in small amounts during occasional shortages to keep supplies up, taking perishables out of government regulation, avoiding multiple taxation of food items and increasing inter-state trade. Foreign Direct Investment in multi-brand, which would have been the biggest farm-sector reform, is still stalled amid political opposition. "Agriculture will continue to be a priority for the government," Mukherjee said. Total funds for the department of agriculture have gone up to Rs 20,208 crore in 2012-13 from Rs 17,123 crore last year, up 18%. As it takes farmers to grow food, but scientists to show them how, the new budget has set aside Rs 200 crore for boosting research in the field of agricultural technology. Kisan credit cards for farmers are being upgraded to smart cards that can be used in ATMs. However, despite all the positive factors, the big miss continues to be big-ticket reforms, which alone can deliver high farm growth. The country's contrast with China is stark, which began with reforms in agriculture, not industry. India freed industry first, but remains cagey about opening up its farm sector. Without reforms, agriculture cannot do anything more than just feed the nation".

It is truly said that a paltry Rs 200 crore for R & D to upgrade farm technologies for achieving quantum jump in land productivity cannot be expected to yield much positive results. The realization that subsidies do not work in motivating farmers but good infrastructure and correct inputs, both for production and marketing only can make agricultural system vibrant and strong, has not yet dawned on the government. As every body knows China is where it is to day, is largely due to agricultural reforms and with such a strong agricultural base it is a power to reckon with in the global arena. If with all the subsidies amounting to trillions of rupees during the last few years, India still cannot stop the farmer suicides taking place across the farm belt, there is no way it can reach a position any where near China.


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