Economic survey introduction

Using  district-level  data  on temperature, rainfall and  crop production,  this chapter documents  a long-term trend of  rising temperatures, declining average precipitation,  and  increase  in  extreme  precipitation  events.  A  key  finding—and one  with  significant  implications  as  climate  change  looms—is  that  the  impact  of  temperature and  rainfall is felt  only  in the  extreme;  that is, when  temperatures are  much  higher,  rainfall  significantly  lower,  and  the  number  of   “dry  days” greater,  than  normal.  A  second  key  finding  is  that  these  impacts  are  significantly more adverse  in  unirrigated areas (and  hence  rainfed crops) compared to irrigated areas  (and hence  cereals).  Applying  these  estimates  to projected long-term weather patterns  implies  that  climate  change  could reduce  annual  agricultural incomes  in the  range of  15  percent  to 18  percent  on average,  and up to 20  percent  to 25 percent for unirrigated areas. Minimizing susceptibility  to climate change  requires drastically  extending  irrigation  via  efficient  drip  and  sprinkler  technologies (realizing  “more  crop  for  every  drop”),  and  replacing  untargeted  subsidies  in power and fertilizer by  direct income support. More  broadly, the  cereal-centricity of  policy needs to be reviewed.

INTRODUCTION

6.1 The bounty of  Indian  agriculture romanticized in that  famous Manoj  Kumar song—which  also  underlies the Prime Minister’s goal  of  doubling farmers’ incomes—increasingly runs up against  the  contemporary realities  of Indian  agriculture, and  the  harsher  prospects  of its vulnerability to long-term climate change. 6.2 The  last  few  seasons  have  witnessed  a problem  of  plenty:  farm revenues  declining  for a  number of  crops despite  increasing production and market  prices  falling below  the  Minimum Support  Price  (MSP).  But  in the  medium  to long term, the  ghost  of  Malthus looms over Indian agriculture.  Productivity  will  have  to  be  increased, and  price  and income volatility  reduced,  against the backdrop  of  increasing resource constraints. Shortages  of  water and land, deterioration in soil quality, and  of  course climate change-induced temperature  increases  and  rainfall  variability, are all going to impact agriculture. It is therefore opportune  to analyze the  effects  of  climate  on Indian agriculture. 

Why Agriculture Matters: An Irony 

6.3 First,  and  foremost, agriculture  matters in India for deep reasons, not least  because  the farmer holds a special  place  in Indian hearts  and minds.  The  first  salvo  of  satyagraha  was  fired by  Mahatma Gandhi on behalf  of  farmers,  the indigo farmers exploited  by  colonial rule. Not unlike  in early, Jeffersonian America (Hofstadter, 1955),  history and literature  have  contributed  to the  farmer acquiring mythic  status  in Indian  lore: innocent,  unsullied,  hard-working, in harmony with  nature;  and yet  poor, vulnerable, and the victim,  first  of  the  imperial  masters  and  then  of indigenous  landlords  and middlemen.  Bollywood (and Kollywood  and  Tollywood) has  also  played  a key  role in creating  and reinforcing the  mythology of  the Indian  farmer (for example, in  movies  such as  Mother  India, Do Beegha  Zameen,  Upkaar,  Lagaan, and more recently  Peepli Live). 6.4 Agriculture  also matters  for  economic reasons because  it  still  accounts  for a substantial part  of  GDP  (16  percent)  and employment  (49  percent)1. Poor  agricultural performance can lead  to  inflation,  farmer  distress  and  unrest,  and larger political  and social  disaffection—all  of which can hold back the economy. 6.5 The Nobel Prize winner, Sir Arthur Lewis  (among  others), argued that  economic development  is  always  and everywhere  about getting  people out of  agriculture and of  agriculture becoming over time  a less  important  part of  the economy  (not  in absolute  terms but  as a share of GDP and employment). The reason why agriculture cannot be the  dominant, permanent source  of livelihood  is its productivity  level, and  hence  the living standards it  sustains, can never approach— and have  historically  never approached—those in manufacturing and services.  That,  of  course, means that industrialization  and  urbanization  must provide  those  higher productivity  alternatives to agriculture. But  this  must  happen  along with, and in the  context  of,  rapid  productivity  growth in agriculture, to  produce  greater  food supplies for the  people, provide  rising farm incomes, and permit the accumulation of  human capital.  6.6 At the same time, Dr. Ambedkar  warned about the dangers of  romanticizing rural  India. He  famously  derided  the  village  as “a sink  of localism, a  den of  ignorance, narrow mindedness and communalism,” thereby  expressing a deeper truth—an Indian  social complement  to the Lewisian  economic  insight—that  in the  long run people  need  to  move  and be  moved  out  of agriculture for non-economic reasons. 6.7 So  the irony  is that  the concern  about farmers and  agriculture  today is to ensure that tomorrow  there  are fewer farmers and  farms but more  productive ones.  In  other words, all  good and successful economic  and social development is  about facilitating  this  transition in the  context  of a prosperous  agriculture  and of  rising productivity in agriculture  because  that will also facilitate  good urbanization  and  rising  productivity  in  other sectors of  the economy.