World Bank offers recipe for reviving Indian agriculture

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{image-business world pic copy01_16022008.jpg}New Delhi, Feb 16: The World Bank has called for a slew of steps to revive Indian agriculture, including stepping up investments in the sector, crop insurance for farmers in a bigger measure, more realistic charges for water and power, reducing environmental footprints of intense agriculture and creating greater opportunities in the non-farm sector to absorb displaced agricultural labour.

The World Development Report released here yesterday says greater investment in agriculture, in transforming economies like India, was crucial for the welfare of 600 million rural poor, mostly in Asia. The Report has its theme, 'Agriculture for Development' and its highlights were presented by its co-author Alain de Janvry. Dr Janvry said there was considerable mis-spending on agriculture in India, with investments accounting for only 25 per cent of public expenditure, while subsidies took up 75 per cent. The Report says that a major priority for transforming economies should be to reduce the environmental footprint of intense agriculture. Many countries are dealing with growing water scarcity, which is exacerbated by water and electricity subsidies.

''In India, more than one-fifth of groundwater aquifers are over-exploited in three of the four green revolution States (Punjab, Harayana and Tamil Nadu), disproportionately affecting small holders and damaging drinking water.'' The Report says that more realistic charges for water and power would not only help correct incentives to use water efficiently, but would also enable the agencies that provide these resources to better cover their operations and maintenance costs and improve the quality of water delivery.

''The return on investment is 5 to 10 times more than the return on subsidies,'' Dr Ashok Gulati of the International Food Policy Research Institute (IFPRI) said. ''But it is a political question,'' he added. Dr Gulati said recently a suggestion was made to Finance Minister P Chidambaram to change the method of delivering fertiliser subsidies to coupons for small farmers, so that the subsidies reach those they were meant for. WDR 2008 is exclusively devoted to agriculture after a gap of 25 years.

It says that the international goal of halving extreme poverty and hunger by 2015 will not be reached unless neglect and under-investment in the agricultural and rural sectors over the past 20 years is reversed. The Report says agriculture can provide pathways out of poverty for millions of rural poor who would be left behind in transforming economies. It says one way out is through a high-value agricultural revolution. Incentives to diversify into high-value horticulture, fish and dairy products via pricing reforms and an overhaul of the subsidy support for cereals offer an opportunity to diversify farming systems. Regarding the large number of farmer suicides in India, Dr Janvry said the way out was crop insurance.

The Report says in transforming economies such as India and China, agriculture contributed an average seven per cent to growth in GDP between 1995 and 2003, though the sector accounts for about 13 per cent of the economy and employs just over half the labour force. It says that productivity of farm labour in India was a major area of concern, this being lower than in China or Bangladesh.

Dr Janvry said China and Bangladesh have done better in moving farm labour to the non-farm rural economy, and India needs to replicate these examples. He said a key challenge relating to Indian agriculture was the increase in the number of small farmers as landholdings get increasingly get fragmented.

The other points for reviving India's agriculture are, focus on taking farm labour out of agriculture and use agriculture for environmental conservation, focus on food security, Trade policies should help reduce price instability, improving efficiency of value chains and increasing value addition in agri--businesses, giving farmers access to productive assets, recasting agriculture in the new environment of globalisation, rising prices, growing domestic demand and greater private sector involvement and improving investment climate for rural non-farm business and job schemes in rural areas.


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