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CREATE INTEGRAL ECONOMY

Farming, Jobs, Pvt Sector…

By Shivaji Sarkar

 

India needs some quick solutions. It needs more jobs, a free and low-cost banking, a growing industry and a thriving farm sector. To say that India cannot do it won’t be right. This is the world’s highest growing economy, even if we take the slide to 5.7 per cent growth. It hides, however, some of the disturbing trends.

 

Many are now blaming demonetisation for the slowdown. But we find that the pace had slowed down over the years or at best it had been lopsided. Since 1970s GDP has been growing exponentially but so has been the distress — fewer jobs and increasing rural displacement. It can be attributed to decelerating agricultural growth since 1980s.

 

Policy makers in their enthusiasm to entice people away from agriculture started laying less attention to the sector, if not ignoring it. While the rest of the economy was growing, agriculture was winding down with the green revolution losing the push it required. The then Planning Commission and high-ups in the government had viewed that investment in the farm sector was a waste as in their opinion people needed to be weaned away from it and jobs in industry and other sectors had to be created.

 

The policy increased penury in the farm sector. Farmers themselves were reduced to marginal labourers and productivity started falling. The annual rate of farm growth at constant prices in the 1980s was 4.24 per cent. It reduced to 3.17 per cent in the 1990s and to 2.37 per cent in the first decade of 21st century.

 

The Economic Survey 2016-17 Volume 2 states that agriculture is characterised by instability on incomes owing to various types of risks related to production, markets and prices. It says growth rates of agriculture have been fluctuating at 1.5 per cent in 2012-13, 5.6 per cent in 2013-14, (-) 0.2 per cent in 2014-15, 0.7 per cent in 2015-16 and 4.9 per cent in 2016-17. The major fact stated is the dependence on rainfall and the survey attributes this for fall in 2014 to 2016. This speaks volumes. The occasional growth is due to the efforts of the farmers, when they can. The society had done little to add to it.

 

This becomes more pronounced if we look at the 54 per cent GDP growth between 2005 and 2012. The period created only 3 per cent – or net 1.5 crore jobs while every year over one crore jobseekers were added to the list. The maximum distress was in the rural and farm sectors, with severe under-employment, the survey notes.

 

The country will add over 8 crore net new job seekers by 2025. Even if the growth increases to 7 to 8 per cent not more than 3 crore jobs would be created. Mere growth does not create jobs. It requires investment and capacity to pay by the industry or the manufacturers, where most jobs are to be created. This lopsided stress again leaves the largest private sector, agriculture, into a perennial situation of neglect. 

Agriculture, official data say, employs 54 per cent of the population, or approximately 70 crore people at 14 per cent contribution to GDP. It means the largest number of people subsist on the minimum GDP. It has to change in an area when we rightly or wrongly are in a spree to promote private investment. 

Let the nation accept that agriculture will remain the largest employer and reorient the policies. It raises brouhaha over approximately Rs 75,000 crore farm loan waivers in UP, Maharashtra and Punjab though it does not mind about almost Rs 12 lakh crore bank NPAs to about less than 100 large corporate. Loan waiver is bad economy but the banks do not lose, it is paid by the government. The NPA is simple loot of the money put in by poor depositors. Both stress the economy and add to banking and administrative costs. 

This exactly happened post demonetisation. The banks have excess liquidity of Rs 2500 billion (Rs 2.5 lakh crore) as on June 2017, according to the Survey 2. Other estimates put it at Rs 4 to 5 lakh crore. Managing and paying interest on it is draining the banks. It is said to cost the banking system and RBI about Rs 16,000 to Rs 24,000 crore a year. 

It does not estimate that a large part in the farm sector, kept in households or small businesses that transacted in cash, that was away from the banks but legally transacted is stressing the formal banking. It also affected farm and rural and informal sector. Lack of cash has hit its operations. So if the people associated with farming and informal sector do not thrive, the hope that the rest of the economy would boom is wild expectation. With almost 70 crore people having sub-standard living, the nation cannot expect to achieve the proverbial moksha. 

India has to plan for adding 8 crore jobs by 2025. No investment in any formal, government, large corporate projects can create that many jobs. The stress of the government is fine through a number of schemes from start up to make in India, but it has to include the farm, informal and the large small sector. The government has to give up the idea that it could manage everything everywhere. 

It has to be the facilitator for an economy that would be different from what the world pursues. The IMF-World Bank model would not do it nor a modified version of the Mamohanomics. India needs an out of the box model. It has to reverse the economic process. Instead of revolving around large industries, large projects, highways, fast trains, fast cars, it has to make a fresh start with the village of Mahatma Gandhi and Deen Dayal Upadhyaya to the fore. So far the planning has been urban centric and it has neither helped the cities nor the villages nor the industry. 

The Survey 2 says NITI Ayog has set up a task force to address deficiencies in the existing data on unemployment and create a road map. It is a good admission. The solution has to be different and the Ayog must change tack. 

In this 70th year of Independence, the nation has to look for a new economic paradigm. It has to begin from the informal sector, farms and the villages. The focus on shifting villagers must change. The nation through an intense discussion must create an integral economy that would be a precursor to integral humanism and all-round job growth. —INFA

 

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