Editorial

<>Agrarian Sector Taking Center Stage in Indian Economy
N. Talwar

One of the key features of the current economic discourse in India is the importance of agriculture. Agriculture is not only appearing as the sector that provides food and raw materials for industry but is also redefining the consumer spending of the rural households and in turn driving the manufacturing sector. Agro industries and food processing are the hub of entrepreneurial activity of small capitalists as well as big business houses and multinationals. Financial sector, farm input sector (fertilizer, tractors and combines, seeds and pesticides etc.) and traders are looking for opportunities to expand with an expanding agrarian sector.

<>In his speech to the joint sitting of the budget session of the Parliament last February, President of India said:

Rural India should be seen as a growth engine and public investment is required in the area of rural infrastructure to unleash its growth potential. My Government proposes to undertake a major plan for rebuilding rural India called “Bharat Nirman”. This will be a time-bound business plan for building rural infrastructure in the areas of irrigation, roads, housing, water supply, electrification and telecommunication connectivity.

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He was followed by the Finance minister, who, in his budget speech announced that 80bn rupees ($1.8bn) will be spent on building rural infrastructure and flow of funds to agriculture will be increased by 30%. <>

The approach the government of India is taking towards agrarian sector was eloquently summarized by Prof. Jeffrey Sachs of Columbia University who wrote on the eve of the budget session in February 2005 as follows:

The government (of India) should not be running industrial companies or hotels or banks and insurance companies. But if you turn to agriculture, there is no doubt in my mind that the government has a role in promoting basic scientific research in improved crop varieties, biotechnology, in helping agricultural expansion so that farmers get the information they need in order to adopt modern technology. Governments have a role in liberalizing markets and helping ensure that India's competitive farmers have access to foreign markets, in providing basic rural infrastructure, such as roads to villages and electrification.... The advancements in health and education, in rural infrastructure and agricultural productivity that are being talked about right now aren't concessions to a left wing agenda or a painful compromise. These were investments that should have been made in the last ten years but weren't made".

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What is most striking is that land ownership, especially by the tillers, is no more broached in the discussion of agrarian question by the government, the UPA partners or the policy advisors. The entire agrarian question is presented as if capitalist ownership of land is a fait accompli and growth is the only objective. Input costs and labor costs are the variables to produce agricultural goods for the market. President's "Bharat Nirman" announcement, his "Vision 2020" blueprint, Finance minister's budget proposals and policy statements place major emphasis on input to capitalist agriculture. Irrigation, electrification, fertilizer and pesticide, information technology to aid soil-nutrient and water management, climate modeling etc. are presented as input costs to improve farm productivity and state is called upon to bear these expenses, akin to public sector paradigm of the 1950's India. Food processing, cold storage, transport, etc. would help agricultural output to be market driven and private-public investment in these areas are being proposed. The state is taking up new taxation policy, including VAT to create an integrated market and also pay for the state investment. Rise of capitalist monopolies in wholesale and retail trade is already underway and the policies are meant to accelerate that process as well. <>

Closer scrutiny of farm income and farm productivity around the country shows that ownership of the land by the tillers is far from a closed chapter in India. In fact, those areas of the country where land distribution problem has been addressed to some extent (see article on West Bengal in this issue), there has been an increase in farm productivity and vice versa. Where outright capitalist farming has been adopted, such as in Punjab and AP, the farm sector has lagged in profitability behind the non-farm sector, causing new investment to dry up and affect productivity.

Wherever tiller has gotten possession of the land he or she tills, productivity gains have been accompanied by new capital infusion as well as intensification of labor of the land proprietor. The surplus value generated through the intensification of the labor of the tiller has become the main reason for his or her increased indebtedness. Agricultural input owners, lending institutions, traders and governments (though tax policy) have stepped up their demands for a share of the wealth produced by the tiller because of any gains in productivity. The surplus generated by the agrarian sector has once again become a major component of the domestic capital accumulation (reflected in the national savings rate) on which Indian industrialists and big business houses are basing their ambitions for world power status.

It is important to recognize that it will be in the interest of the farmers and rural farm workers to stop this integration of agriculture to market mechanisms and "growth" as it will deepen their exploitation by the agro-monopolies and agro-financiers. The rural households, who have not yet succeeded in throwing off the oppression by landlords, will be ruined further by the demand of capital to transform not just the agricultural produce but the families engaged in agriculture to commodities, stripping them of the ability to even resist such onslaught because of lack of any organization in the villages. Already farmers suicides are on the rise and only one can imagine what will happen when crop failure due to water scarcity or unexpected pest attacks could expose entire regions of rural India to capital's mercy. In fact, it is in the interest of all the people of India to take a stand against this approach to agriculture and insist that productivity increase be tied up with the solution of the land ownership question first.