Debashish Mitra
Little is known about the country’s agricultural economy and its rural anonymous masses, except as percentage statistics, GDP, or more recently, farmer suicides. Policy-makers, industry leaders, bankers, writers, significant thinkers of urbania, politicians, bureaucrats, consultants, scientists and literally anyone involved with this sector or the country’s economy know farmers this way. And these people command and lead the country and decide its future.
When two questions were put to over 100 persons from these segments — What is India’s total annualised steel output (chosen as a key comparator as there is this misconception that a nation’s global standing and steel production are correlated? And, what is its agricultural output? — no one, sadly, had the correct answer.
India’s annualised steel output is about 80 million tonnes while the country’s agricultural output is over a billion tonnes. It comprises about 280 million tonnes of grain (a probable understatement as it does not include subsistence farming home consumption stocks, which practically every farmer keeps), over 300 million tonnes of fruits and vegetables, 175 million tonnes of milk, plus stocks of sugar, cotton, jute, tea, coffee, spices, poultry, fish (including marine), goatery, piggery, minor forest produce and a number of smaller items such as commercial trees, flowers, honey and medicinal plants, besides all other such products that come from the rural economy.
The total NPAs in the country is estimated to be over Rs 10 lakh crore. Of this, the farm sector accounts for about Rs 68,000 crore, a sum that can easily be written off
This production and its cross-sector and multiproduct growth is happening well under the radar of all those who cry hoarse about the farm sector crisis, doubling of farm incomes and the like. Statistics, such as percentage of waste and contribution to GDP, cloud absolute numbers. For example, if 20 per cent of agricultural output is wasted post-harvest, it amounts to about 200 million tonnes of produce. This could feed several countries on the planet and certainly more than 100 million malnourished children. So where then, is the issue? Is the agro economy and rural India an asset or a liability?
Let us look at some other statistics to figure out where the real crisis is.
The total NPAs in the country is estimated to be over Rs10 lakh crore. Of this, the farm sector accounts for about Rs68,000 crore, a sum that can easily be written off, similar to what UPA 1 and Chidambaram wrote off in 2008. If that sum is seen as an investment, farmers have responded by almost doubling output across products over the last 10 years.
They have achieved this by predominantly primitive, single-crop rainfed farming on small farm holdings amid the lack of mechanisation, water management systems high-yielding varieties of seeds, plant protection tools, and nutrient management, among other things. If modern farming becomes widely adopted, it is likely that India’s agricultural output will cross 2 billion tonnes over the next 6 to 7 years. Is any urban-based decision-maker aware of what this means, and what its consequences could be not addressed?
By contrast, the total borrowing of the steel sector is over Rs3,00,000 crore. Of this, gross NPAs amount to Rs1,15,000 crore, that is, 37 per cent.
The agriculture sector has formal sector debt of about Rs10 lakh crore with NPA of only Rs68,000 crore, that is, 6 per cent. It is pertinent to add that the government is planning to recapitalise Public Sector Banks with a sum close to the entire agriculture sector NPA.
It is also important to point out that growth of micro-credit organisations, who lend upwards of 26 per cent to 28 per cent interest, is happening mainly in rural India. Contrast this with the borrowing of urban lenders at half the cost. For banks, their rate of CASA growth or deposits is much higher in rural areas than urban ones. Doesn’t this amount to transfer of wealth and subsidies for urban India from rural India (daylight robbery in other words)?
Is rural India therefore, an asset? Or a liability?
The writer is an agripreneur working with small, marginal and tribal farmers in remote areas.