Land reforms and dematerialisation
Indian agriculture is in need of some serious productivity lift. And this is unlikely to happen with average land holdings the size of handkerchiefs. So it is time to do some out-of-the-box thinking, says V Raghunathan.
SUDDENLY, our growing food shortage and threat of having to import foodgrain is front-page news. The fact is that the writing has been on the wall for a while now, even if we have chosen not to heed the script. Consider some basic agricultural statistics. From 1956-57 to 1966-67, the decade before the onset of green revolution, our major grain (rice and wheat) production, starting from a low of 38 million tonnes increased to 41 million tonnes a compounded annual growth rate (CAGR) of 0.75%. For the post-green revolution period, from 1967-68 to 2006-07, the production went up from 59 million tonnes to 169 million tonnes, or a gross CAGR of 2.7%. Net of the population growth rate of about 2.2% for the same four-decade period, this translates to a net CAGR of about 0.5% for rice and wheat production.
What it means is this. Today, nearly four decades after our green revolution, our agriculture sector produces on an average 14 kg of rice and wheat per person per annum or slightly over a kilogram a month (assuming 1,200 million estimated population as on date), and this meagre production is growing at the rate of 0.5% year on year. And this is production. The supply could be a tad lower for many reasons. That should explain why millions of farmers do not even get a single proper meal a day to eat. Imagine the situation if we hadnt had a green revolution!
Despite the significant leap made in productivity and substantial increase in the area under cultivation during the green revolution, 60% of our net sown area still remains at the mercy of the rain god, notwithstanding the billions of crores that have been supposedly spent on various irrigation schemes over the decades. While large tracts of the irrigation canals may exist only on paper, those that did exist at the time of Independence and those that were dug thereafter are today ineffective thanks to our infamous inability to maintain any of our assets. As a consequence, most of our canals are running dry with silt, garbage and sewage choking them.
What is more, about 60% of our farmers own on an average 0.4 hectare of land, while another 20% hold an average of 1.4 hectares. This puts the population of small and marginal farmers at about 80% of the total.
At roughly 2% annual population growth rate in the lower socio-economic strata today, the population doubles every 35-odd years. Given that the rate of increase of new land being brought under cultivation is nearly tapering off, it may be safe to say that the average land ownership may well fall further!
What is self evident from all this is that such meagre landholding by a large majority of the countrys farmers is neither viable nor sustainable for a country with a billion plus mouths to feed. We are already talking of importing grain. And this is cause for worry.
The generation today is unlikely to either recall PL480 days or the sad visit of Indira Gandhi to the US in the mid-sixties, when, according to Ramachandra Guha the historian, a US paper reportedly headlined the visit thus: New Indian leader comes begging (for food). Also according to Guha, Lyndon Johnson, the then American President, despairing of the Indians ever getting their act together, suggested sending 1,000 American workers to teach Indians some farming!
WELL, we may not be the same India today, but nevertheless it is time to do some out-of-the-box thinking for Indian agriculture. Our agriculture is continuing to follow 2000-years-old practices, save for the little blip in the late sixties when the green revolution helped give a smart fillip to agricultural productivity. It is, therefore, clear that our agriculture is in need of some serious productivity lift. And this is unlikely to happen with average land holdings the size of handkerchiefs.
At the same time corporatisation of agriculture is a political no no, as this might remove the farmer from his land. No less important is the social reality that for the marginal farmers, their land is their only wealth. Another reality is that while we have a significant, strong IT and financial sectors, the benefit of these have not really reached the farmers.
So our out-of-the-box thinking must take all these facts into account and arrive at a solution so as to improve our agricultural productivity significantly. Here is an indicative possibility.
The initiative rests upon the idea of dematerialising landholding for the farmer, with a satellite imagery of the farmers land imprinted against his ownership. This is to send a strong signal that the farmers land is not fungible. In the dematerialised form, the ownership of the land always vests with the farmer and no exploiter can take his land away in a hurry. However, he may lease his land through the demat form to a corporate for a specified period, say, five years.
In return, the corporate may: (a) pay the farmer a fixed quarterly lease rental per acre; (b) take him as a shareholder with a certain number of shares allotted against each acre of land; and (c) provide employment to one member of the family per acre at, say, 1.25 times the national minimum wage, to discourage urban migration of labour.
While currently, from an acre of land, thanks to the extremely poor productivity, an average farmer earns less than Rs 15,000 on an average crop of grain, the suggested measure has a potential to increase that earning to 2.5 to three times. The corporate more than makes up for the cost through superior corporate farming practices on large pooled tracts with higher productivity. National demat depositories get more business. The problem of migrating farmers is addressed. Banking network expands. Rural economy begins to pick up. The country grows more grain and prices reflect market economy.
Any takers?
(The author is CEO, GMR Varalakshmi
Foundation)
Any takers?
(The author is CEO, GMR Varalakshmi
Foundation)