Pt. Nehru recognized that the average land holding size in\nIndia was too small and most farming was done at subsistence level. Hence, he\ninitiated the co-operative farming <\/em>in\nwhich smaller land holdings were to be pooled together to form larger holdings\nwhere scientific and advanced technological methods could be applied. However,\nThis policy, didn\u2019t really work well. Like other countries which experimented\nwith this, the policy was a failure in most parts of the country (M.S Swaminathan, Jawaharlal Nehru and\nagriculture in independent India[2]<\/strong><\/a>).\n<\/em>China, Vietnam and Korea moved on to a more customized community and household based farming model,<\/em> which rewarded\ncommunities and households that did well, which providing no incentive for\nlaggards. This reward-or-perish model made sure agriculture is seen just as a\n\u2018profession\u2019 with no form of romanticism. Those who did well were rewarded,\nthose who didn\u2019t had to move on to other professions.<\/p>\n\n\n\n Few states that did adopt these policies did well. Most\nnotably, Punjab (which again has a much higher than average land holding size)\nwhich after following these foundation steps moved on to implement higher\nyielding seeds and other such policies under the Green Revolution, became one\nof the richest states in India. However, the problem was Punjab too stopped\nthere. What was forefront of technology in 1980s is not now, lack of\nindustrialization and an educated and skilled younger generation refusing to\ntake up agriculture caused a sad decline in the state. While states that didn\u2019t\nremained laggards. Till date land holdings show a direct correlation to the over\nall GDP and agricultural growth in states. States like Haryana with larger\nholdings have done well (Haryana today is the second richest state in\nper-capita terms in India if we ignore city states like Delhi and Chandigarh,\nand over all punches above it\u2019s weight as a contributor to India\u2019s GDP). On the\nother hand, states like Kerala, West Bengal, which were at the forefront of\nland reforms have had a sad state of affairs in terms of per-hectare yield. On\nthe other hand a, large barren states like Gujarat (with over 70% land\nclassified as arid or semi-arid), agricultural growth has been phenomenal (\ndecadal terms at 9.6% per annum) so much so- some claim it to be the bed rock\nof Modi\u2019s Gujarat Model at its core[3]<\/a>.\n<\/p>\n\n\n\n This policy of larger land holdings corresponding to higher\ngrowth has another dimension to it as well- like this article suggests, it is\nway easier to set up industry in Gujarat, than Bihar[4]<\/a>.\nFor the simple reason, large number of stake holders are involved in sale and\npurchase of land.<\/p>\n\n\n\n While people viewing land redistribution from a social\nequity lens see it differently, I see it in terms of a mathematically flawed\nidea. Forceful distribution of land for agriculture in states such as West\nBengal and Kerala did bring short-term benefits, I fail to see how no one\npredicted the dismal failure we can call them now. In terms of a Game theory<\/em> perspective it simply\nachieved the following-<\/p>\n\n\n\n As stated earlier- WB failed to industrialize, moved from\nbeing the second richest to the 24th richest state in India, and agricultural\nproductivity remained poor with Green revolution completely by-passing the\nstate, operation Barga brought electoral victories to the Left-Front, however\nmade lives more miserable in the long run. In Kerala again, unlike prevailing\nview- it has the largest land area under cultivation, yet agricultural growth\nhas remained stagnant for very long[5]<\/a>\n.<\/p>\n\n\n\n Unlike what politicians want us to believe, India produces more grains and food stock, <\/em>than it\nneeds. That\u2019s right. FCI and various central and state government godowns are\nperennially overflowing. Large amount of produced grains and other items rot\naway or are eaten by pests[6]<\/a>.<\/p>\n\n\n\n The contrasting scenarios of record agricultural\nproduction and grinding poverty illustrate what is described as the \u201cparadox of\nplenty\u201d in the agriculture sector. India wastes around food worth\napproximately $14 billion each year, according to government figures<\/a>.<\/p>\n\n\n\n Let that sink in. $14 Billion as of 2018. Which is more than majority of state government budgets in India. The data on buffer stock vs norm from 2004\u201305 Economic Survey can be found here . For more recent data here is a graph (credits: Wiley online Library).<\/em><\/p>\n\n\n\n Now, for a country as poor and hungry as India, why does\nIndia produce more grain than it needs? And why does hunger persist despite\nthat?<\/p>\n\n\n\n Answering the second question first- there is a problem in supply-chain management. <\/em>Indian agricultural\nand distribution suffers a problem in supply chain, not in production. Lack of\ninfrastructure – roads, transportation, ease of access to a national market,\nlack of market forces etc, make sure forces of supply and demand, availability\nand scarcity are absent.<\/p>\n\n\n\n As for the first question- the simple answer is vote bank. Let\u2019s see both the immediate and long term <\/em><\/strong>implications of this. MSPs push up prices and cause inflation[7]<\/a> [8]<\/a>. Compound this effect by poor infrastructure, this in turn affects both consumer inflation as well as wholesale inflation (<\/em>the former more).<\/p>\n\n\n\n Apart from fiscal irresponsibility, this opens a host of\nproblems- rise of short-term interest rates due to inflation targeting, loss of\ninvestment gains in real terms,<\/strong>\neventual reduction in money supply which means growth suffers, stress on\nexchange rates, low real GDP growth, etc. While nominally income of farmers may\nincrease, little or no gain comes out in real terms or in terms of purchasing\npatterns.<\/p>\n\n\n\n The detrimental effect on development can be understood\nwith a comparison with China. Supply-side economics rests the three legs of the\ndevelopment table on – labour, capital\nand productivity,<\/em> I have written about the latter two above, let\u2019s look at\nthe first one.<\/p>\n\n\n\n During the boom years of China, China experienced wide-spread migration to its industrial and urban centers . Large swarms of migrants who first were part of labour-intensive, low skill industries, gradually moved to more skilled industries provided a much needed boost to China. This migration peaked until China reached middle-income status and the population began aging[9]<\/a>. In India, migration data isn\u2019t available, however, as it turns out, rural to urban migration has either remained stagnant or dipped marginally in certain short time frames (maybe due to seasonal or other cohort reasons) . Inter state migration has remained alarmingly low for a country aspiring to join the ranks of middle income nations[10]<\/a>.<\/p>\n\n\n\n (http:\/\/mohua.gov.in\/upload\/uploadfiles\/files\/1566.pdf<\/a>)<\/p>\n\n\n\n This is alarming. Ruchir Sharma suggested in his book (Breakout Nations<\/em>) nearly 10 years ago\nby understanding actual trends of migration in India- NREGA has prevented this migration by providing rural\nfamilies subsistence level income. Subsidies obstruct market forces.<\/em> As a\nresult, despite poor conditions, large chunk of population still depends on\nfarming.<\/p>\n\n\n\n MSPs and other rhetoric about land holdings along with\nred-tape has made it notoriously difficult to obtain land for industries in\nIndia[11]<\/a>.\nThe lobby makes sure any reform to this is always defeated .<\/p>\n\n\n\n NREGA isn\u2019t the only scheme which acts detrimental to\ndevelopment and the natural cycle of growth. Other hand-outs like farm loan\nwaivers, subsidies, etc, never quite let the reality hit hard. Such schemes act\nas the paracetamol tablet taken in hope\nthat it\u2019d cure one\u2019s tuberculosis. It does push down the fever for a while, but\nthe disease only further spreads its fangs.<\/em><\/p>\n\n\n\n As discussed earlier, absence of a fair market which can\nact as a reality check and a country wide supply-chain and distribution net are\nabsent. This severely constraints the market available to a farmer. Moreover,\nsmall land holdings, lack of capital and obsession with a few crops due to MSP,\ndon\u2019t really give way to smart farming according to the environmental and capital\nconstraints. An example would be preventable droughts in states like Tamil Nadu\nand Maharashtra. Subsidizing crops like rice in Tamil Nadu[12]<\/strong><\/a>\n<\/strong>and incentives for sugar farming in\nMaharashtra[13]<\/strong><\/a> <\/strong>further stress\nout the water resources.<\/p>\n\n\n\n Smaller land holding with little or no return aren’t\nparticularly lucrative for few available micro-finance companies. And in recent\ntimes the credit crunch and poor health of NBFCs[14]<\/a>\nwhich particularly were important in flow of money and credit in rural India\nhas only made things worse . [1]<\/a> https:\/\/www.financialexpress.com\/economy\/small-farm-landholdings-prevent-economies-of-scale\/805043\/<\/a><\/p>\n\n\n\n [2]<\/a> https:\/\/www.jstor.org\/stable\/24092753<\/a><\/p>\n\n\n\n [3]<\/a> https:\/\/economictimes.indiatimes.com\/opinion\/et-commentary\/agriculture-secret-of-modis-success\/articleshow\/4806513.cms?from=mdr<\/a><\/p>\n\n\n\n [4]<\/a> https:\/\/www.equitymaster.com\/dailyreckoning\/detail.asp?date=12\/08\/2015&story=1&title=Why-it-is-easier-to-acquire-land-in-Gujarat–Punjab-than-Bihar-Kerala–Bengal<\/a><\/p>\n\n\n\n [5]<\/a> https:\/\/www.cppr.in\/wp-content\/uploads\/2016\/11\/A-Stagnant-Agriculture-in-Kerala_The-Role-of-the-State.pdf<\/a><\/p>\n\n\n\n [6]<\/a> https:\/\/www.lowyinstitute.org\/the-interpreter\/food-grains-rot-india-while-millions-live-empty-stomachs<\/a><\/p>\n\n\n\n [7]<\/a> https:\/\/rbidocs.rbi.org.in\/rdocs\/AnnualReport\/PDFs\/2ECONOMIC88A5CC5468FA4639A767862F5921304A.PDF<\/a><\/p>\n\n\n\n [8]<\/a> https:\/\/economictimes.indiatimes.com\/news\/economy\/indicators\/higher-msp-may-lead-to-inflation-as-well-as-fiscal-costs-report\/articleshow\/64903998.cms?from=mdr<\/a><\/p>\n\n\n\n [9]<\/a> https:\/\/www.bloomberg.com\/opinion\/articles\/2016-07-19\/has-china-reached-peak-urbanization<\/a><\/p>\n\n\n\n [10]<\/a> https:\/\/www.business-standard.com\/article\/economy-policy\/low-interstate-migration-is-hurting-india-s-growth-and-states-are-to-blame-119082600099_1.html<\/a><\/p>\n\n\n\n [11]<\/a> https:\/\/economictimes.indiatimes.com\/news\/economy\/policy\/land-acquisition-a-difficult-task-in-india-arvind-panagariya\/articleshow\/48306960.cms?from=mdr<\/a><\/p>\n\n\n\n [12]<\/a> https:\/\/www.thehindubusinessline.com\/economy\/agri-business\/shift-to-less-waterintensive-crops-tn-govt-tells-farmers\/article9657248.ece<\/a><\/p>\n\n\n\n [13]<\/a> https:\/\/www.livemint.com\/Politics\/XlpuWzSnQh6eWYo1fInVqI\/Farm-sectors-irony-water-guzzler-cane-in-the-time-of-droug.html<\/a><\/p>\n\n\n\n [14]<\/a> https:\/\/www.businesstoday.in\/opinion\/columns\/nbfc-crisis-domino-effect-on-indian-economy-ilfs-scam-gdp-growth\/story\/378109.html<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" The contrasting scenarios of record agricultural production and grinding poverty illustrate what is described as the \u201cparadox of plenty\u201d in the agriculture sector. India wastes around food worth approximately $14 billion each year, according to government figures.<\/p>\n","protected":false},"author":60,"featured_media":30,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","footnotes":""},"categories":[4,3],"tags":[198,113,179,265],"class_list":["post-89545","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-agriculture","category-indian-economy","tag-indian-agriculture","tag-rural-distress","tag-rural-distress-in-india","tag-rural-livelihood"],"yoast_head":"\n![\"\"](\"https:\/\/thepubliceconomist.com\/wp-content\/uploads\/2020\/02\/1.jpg\")
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