Thought Capital | Shankkar Aiyar
BloombergQuintOpinion | September 24, 2016, 11:07 am
They march silently.There are no slogans. There are no speeches. There is no party fiat. There are no leaders. Every week, hundreds of thousands are responding to the clarion call of “Ek Maratha, Lakh Maratha”. Leading the march are young girls and women who present the charter of demands — speedy trial of the Kopardi rape accused, review of the atrocities laws, and quota for Marathas. The show of strength is about getting justice. It is also about reinvention of relevance for a community that feels it has been bypassed.
It is not only Marathas who are pursuing relevance. Last week, Jat leaders met at Meham in Haryana and resolved to renew their stir for a quota– with rallies in Punjab, Rajasthan, Haryana, Uttar Pradesh, and at the Ramlila Grounds in Delhi.
The resolve comes embedded with a threat — of consequences in the forthcoming polls in Uttar Pradesh and in Punjab. In Gujarat, the Patidars, who believe they ousted Anandiben Patel, are planning the next phase of their 14-month agitation for a quota. In Andhra Pradesh, Mudragada Padmanabham is issuing new deadlines for the inclusion of Kapus on the quota bandwagon.
The Marathas, Patidars,Jats, and Kapus are the original political entrepreneurs — leveraging identity for power and economic benefits. They have wielded power and installed chief ministers in their states. The question that begs to be asked is why communities once viewed as “landed” and powerful are agitating for a caste-based quota. The influential communities derive their social status, their prosperity and therefore political power from ownership of land and income thereof. The angst and anger stems from the shrinking of political capital — thanks to the broken state of agriculture.
It would be tempting to dismiss the march of anger and quota calls as just another extension of caste politics. One could also argue that this is a response to the rise of the other backward classes, and appreciation of their political worth. And for sure, not all in these communities own big tracts of land or indeed any land at all. All of these are factors but the principal factor is economic — the deployment of the demand for quota is about restoring political relevance as also about recouping class and influence.
The reality is that the business model of agriculture is collapsing. The breakdown is visible in the big picture and in the granular data. The share of agriculture in India’s $2 trillion economy is no more than 16 percent of GDP — and farming no more than 11 percent. Sure the share of agriculture has shrunk elsewhere too. The scary spectre in India is that this shrinking slice of the GDP hosts over 52 percent of the workforce and 60 percent of the populace. In effect, six of ten people in India live off less than one sixth of the national income.
The granular pictureis equally stark. The per capita net value added for urban India is Rs 1,01,313 and that for rural India is Rs 40,772 as per 2011–12 estimates by the Central Statistical Office (CSO). Indeed, an IIM Ahmedabad study of 2014 (Dholakia et al) reveals deeper distress in rural India and of the rural urban income divide. What is significant is that the rural urban divide is deepest in Maharashtra, Gujarat and Haryana. Urban per capita income in Maharashtra, at Rs 1,68,178, is three times the rural per capita income. More pertinently, there is a huge variation in rural incomes itself within the country — for instance Bihar’s rural per capita income is half of the national average and one fourth that of Haryana. The causal factor is clearly the casual approach to the rural economy.
The poor state ofagriculture owes its genesis to historical factors. India was a net importer of food when it attained independence. Yet policymakers refused to invest in and induct technology in the false belief that it would enrich the rich. If industry was shackled by licence raj, agriculture was trapped in a maze of controls. The Mahalanobis model demanded prices be suppressed — through imports and price controls — so that savings from consumption could be used for industrialisation. This unravelled by the sixties — leading to scarcity and India being dubbed the ship-to-mouth economy, leading eventually to the green revolution.
Agriculture is likeany other enterprise. It requires fixed assets — which in this case would be land, operating capital, choice of and consistency in supply of inputs, and access to markets. The Indian farmer lacks access to credit and when it is available the cost is usurious. Much is made every Budget about credit to farmers but the fact is two-thirds of credit flows from money lenders. Less than a fourth of the total cropped area has access to crop insurance and 52 percent of those dependent on farming are in debt.
The availability offertiliser, seeds, power and water is poor because policy is politicised and administered as if it is a proxy for charity. Output is impacted by poor irrigation — barely half the net sown area of 139 million hectares is irrigated. The freedom to choose buyers or the market is constrained by geography and by policy. Fact is, both the backward and forward linkages are broken and the Indian farmer is stuck with a disrupted supply chain.
The consequences arevisible in output. Three decades after the green revolution and a plethora of acronym-soups, India ranks 90th in the world in per hectare yield for cereals, according to the World Bank.
India’s yield (per hectare) is 2,981 kg compared to 5,886 kg for China. It is illustrative that between 1961 and 2014, per hectare yield in India went up three times from 947 kg to 2,981 kg while that of China went up five times to 5,886 kg. India’s current yield per hectare is the same as the world average in 1997 — or Chinese yield in 1981, and yield in Brazil in 2001.
The intra-state picture is worse. Yields in ten states are lower than the national average. Yield in Maharashtra (per hectare) at 1,043 kg is one fourth that of Punjab which produces 27.4 million tonnes of grains on 5.43 million hectares.
The importance of yield is best appreciated by this simple formula: acreage x yield = output and therefore income. Higher yields would deliver higher incomes and/or open the option of allocating land for other purposes.
The aspiration of8-plus percent growth is not sustainable without the revival of agriculture. The idea of doubling farm income by 2022 is a good place to kickstart the action. The pieces of the jigsaw are visible. Credit, insurance, and subsidies for inputs can be delivered via the Aadhaar-based payment platforms. The idea of Startup India could be deployed for delivering services — soil tests, drip irrigation and hybrid powered farm equipment. The success of e-commerce could be leveraged to create an open access market for perishables. India must also shed paranoia and open up to the idea of contract farming — perhaps as a PPP (public-private partnership) with a robust regulatory mechanism. It will open up access to credit, inputs, and markets, and deliver predictability. To make this happen though India will need to find a champion, another C Subramaniam.
Momentum is massmultiplied by velocity. Over 60 percent of the voter base lives in rural India. It is also home to the largest group of low income households — shorn of definitions over 130 million families live on a monthly income of about Rs 5,000.
Buying power in the rural economy can enable expansion of demand and manufacturing to enable shifting of workers from farms to factories. Consumption drives investment, job creation, and incomes to trigger the virtuous cycle. The agitation for quotas is a clarion call for a renaissance in India’s largest private sector. The quest for sustainable growth calls for leveraging the arithmetic of economics and of politics.
Shankkar Aiyar, political-economy analyst, is the author of Accidental India: A History of the Nation’s Passage through Crisis and Change.
The views expressed here are those of the author’s and do not necessarily represent the views of BloombergQuint or its editorial team.