Mohan Guruswamy is Chairman and founder of Centre for Policy Alternatives, New Delhi, India. He has over three decades of experience in government, industry and academia. He can be contacted at mohanguru[at]gmail.com.
In his speech to a farmers gathering in the capital last month, PM Narendra Modi advised them to retain a third of their holding for farming, another third for fodder for the cattle and livestock, and the final third to grow timber. He seems to be oblivious of the reality.
The average size of a farm holding is 1.15 ha. Of which the PM wants the farmer to reserve about 0.36 ha for growing crops for sustenance and sale, 0.36 for fodder for livestock, and the rest for growing timber, which will take a quarter of a century to mature. How will the family live and who will feed them?
These things apparently don’t figure in his imagery. He clearly is thinking of the Badal or Pawar kind of farmers who drive imported SUV’s and have huge benami farmland holdings. Besides farming for such folk is just to ascribe income gotten by other means.
The data contained in the 2011 Agriculture Census reveals a stark picture for Bharat. The PM will do well to see it and also to get his Niti Ayog to give him a detailed breakdown describing the present situation. The situation keeps worsening as holdings get further fragmented with every generation.
The average size of operational holding has declined in five years to 1.15ha. to 1.23 ha. in 2005-06. With daughters getting an equal share of ancestral and parental property the share of women ownership has been increasing. This increased from 11.70% in 2005-06 to 12.78% in 2010-11 with the corresponding operated area of 9.33% to 10.34%. This is probably the only silver lining to a very dark cloud.
The small and marginal holdings taken together (below 2.00 ha.) constituted 85.0% in 2010-11 against 83.29% in 2005-06 and the operated area at 44.58% in the current Census as against the corresponding figure of 41.14% in 2005-06. Obviously some consolidation of holdings is taking place, but nevertheless a 2-3% drop every five years will result in a huge expansion of holdings and reduction in average size. Clearly the PM’s advice makes no sense to people with such small holdings that can only allow for subsistence farming.
Instead of telling them what to grow, he should tell his Finance Ministry to think of schemes whereby banks can lend to small farmers for purchase of adjacent holdings. The consolidation of small holdings will improve the scale of economy for the individual farmer and enable farms to become more productive. This should be his next major program.
The semi-medium and medium operational holding (2-10 ha.) in 2010-11 were 14.29% with the operated area at 44.88 percent. The corresponding figures for 2005-06 Census were 15.86% and 47.05%. The large holdings (10.00 ha. & above) were 0.70% of total number of holdings in 2010-11 with a share of 10.59 percent in the operated area as against 0.85% and 11.82% respectively in 2005-06 Census. These are the people who get the maximum of the State’s largesse in the form of free water and electricity, subsidized fertilizer and procurement. Clearly it is these farmers with relatively large holdings who can afford to invest in long gestation timber plantations and in growing fodder for their dairying business. India incidentally is the world’s biggest dairy producer nation. It is from these come the Badals and Pawars.
It doesn’t require much application of mind for the government to realize that the only way the State can better their lives is to reduce their dependence on land for an existence. This means a huge expansion of jobs in sectors that can absorb people with low marketable skills. Construction and the building and rebuilding of rural infrastructure offer a great avenue for such jobs. And we know for sure that the nation can do well with more such assets. Such works create new demands on goods and services, and more disposable incomes can only be good for the economy.
The share of agriculture in GDP has been declining every passing year. What was once over 60% of GDP is now about 13.7%. The livestock sector is also rapidly declining as a percentage of GDP. It is now 3.92%. Despite this precipitous fall in their share of GDP, they still employ the most people – over 50% of employable adults. Since India’s population has almost trebled since 1947, very clearly numbers hugely dwarfs the marginal decline in share.
The 2011 Census tells us that in that year we had a total workforce of 487 million. Half of these, that is about 244 million are in the farm sector and of the rest of these 84% worked in small enterprises in the unorganized sector ranging from being small vendors, to beedi making or diamond polishing workers from home. The organized sector, the ones we are all focused on, the ones who get middle class wages, DA, LTA and medical benefits, compulsory bonus and who work less than eight hours a day for less than 200 days a year, employs just 27.5 million. Of these the government employs 17.3 million. This is the golden and gated nation, which exists and lords it in this vast unorganized and disorganized country. This is the India that every Bharatwasi wants to migrate into.
From 2004-05 to 2011-12, India’s real non-agricultural GDP grew by an average 9.4 per cent per annum, but employment grew only at 3.5 per cent. Services and Manufacturing were the fastest growing sectors at 10.1 per cent and 8.9 per cent respectively. However, they added jobs only at 2.5 per cent and 1.5 per cent respectively. The data clearly indicates that Indian peasants are moving out of agriculture at an accelerated pace since 2004.
The increase in the share of employment has been mainly in the construction sector and to a lesser extent in services. Employment share of manufacturing has increased only marginally. Nevertheless it is clear that people are shifting fro agriculture and one big reason for this is the increasing enrolment of youth between 15 and 24 in educational institutions.
However, agricultural labour does not seem to be absorbed into the expanding manufacturing sector. These expatriates from Bharat are increasingly taking up seasonal casual work to avoid further deterioration in standards of living. The households of these migrant workers are still in the villages. Since the man of the house is now mostly away on work sites, the women increasingly stay away from work to tend to the home.
Clearly this PM too is as divorced from reality as his immediate predecessor. He might want to sound expansive and visionary, but to be credible he must have his feet on the ground and know the reality around him. Instead of delivering irrelevant homilies to small and hence poor farmers, the Prime Minister should be thinking in terms of creating a huge demand for alternative employment, mainly in the construction sector, and his promised hundred new cities is a capital idea.
The question then, is where is the money going to come for this. There is the Chandrababu model, which merely means taking away the land from peasants and giving it to cronies in India and abroad to develop. Or there can be a Narendra Modi model that will envisage diversion of the huge sums given away on unmerited subsidies to the golden 27.5 million or by collecting the few lakh crores of unpaid taxes or by getting countries like China and Japan to subscribe to bonds issued by the government expressly to build a new India.