`Irrigation, the key'

Interview with Dr. B.L. Mungekar, member, Planning Commission.

Dr. B.L. Mungekar, a member of the Planning Commission, is a specialist in agricultural economics. He has specifically studied the economic problems of Maharashtra. Excerpts from an interview he gave Frontline:

How viable is agriculture in its present form? In the next 10 years, will it be viable for the small farmer or will corporate farming squeeze him out? More importantly, is it the government's intention to let corporate farming take over?

This question has been agitating me for the last 30 years. A minimum 75 per cent of farmers are small and marginal. No credit, no irrigation, no marketing facilities, totally disorganised, no political lobby of their own. Even in a democracy you need a political bargaining power. Making these farmers viable is a stupendous proposition in India's political context.

But it is essential.

Yes, and that brings in the role of the corporate sector. First, we should strengthen the cooperative movement of the small and marginal farmers. We should work on a model of cooperative socialism. Nowadays it is a bad word, but I believe strongly in socialism... and by this I mean the happiness and welfare of the largest number of people. If there is some room to involve industry in this, then I support that too. What is important is to manage the industry-agriculture relationship. We fail in the management and then we blame the institution.

I am categorical about this. Going for any policy in which farmers' interests are subservient to anything will be most undesirable.

But are we not going that way?

No. We talk of viability. Viability requires technology, management, marketing, packaging and advertising. The state and the farmers may not be able to manage all this on their own. Bring in industry. Without allowing it to make agriculture an appendage... let them give inputs. I repeat that this is my second choice - the first is still cooperative socialism.

When people talk of corporate farming, I stand stubbornly for the ownership of land, for all time to come, to remain with the farmer. Let farmers contribute their land, use their family as labour... let there be contract farming, but land is to be with the farmer. I am not speaking up for contract farming per se, but between contract and corporate farming I will agree to contract farming. In corporate farming, the land and resources are acquired by industry. Even in contract farming there should be strict conditions. Farmers should have a share in the produce.

So, specifically, what is the best way for Maharashtra to go?

To make agriculture viable, particularly in Maharashtra, will require several urgent policy measures. Credit must come to farmers at a reasonable rate of interest, in sufficient quantity and at the appropriate time. It should come from the institutional sources of credit such as nationalised banks, cooperative banks and NABARD [National Bank for Agriculture and Rural Development]. Farmers must be able to get rid of private moneylenders. I had gone to Vidarbha before the Prime Minister visited and there was ample evidence to show that the exorbitant interest rates, along with the inability of farmers to repay loans, were the primary cause for the suicides.

The other thing that Maharashtra needs to do is take a serious step to increase crop productivity. Cotton productivity is virtually stagnant and there is no significant research to increase it. Thirdly, there is no proper marketing mechanism. Again, in the case of cotton, the monopoly cotton procurement scheme was stopped four years ago. Farmers depend upon market forces. There was tremendous protection to cotton growers under the scheme. This resulted in accumulated losses since its inception in 1974, to the extent of Rs.4,500 crores to Rs.5,000 crores. The Agriculture Prices Commission suggested that its continuation would be unviable, yet some mechanism has to be created to compensate the farmers.

The fourth and possibly most important requirement is the expansion of irrigation. Maharashtra's [area under] irrigation was 10.5 per cent in 1960. Today it is barely 16 per cent. Maharashtra has taken nearly 46 years to increase the extent of irrigation by a six-percentage point.

As you move away from Mumbai and other urban areas in the State you see less and less signs of prosperity. Why is there so much rural poverty in Maharashtra?

Maharashtra's development model is defective. It is primarily an urban industrial-led development model. This despite the fact that about 60 per cent of the State's people are engaged in agriculture; 19 per cent of the State GDP and 60 per cent the people depend on agriculture. This means the per capita income in agriculture is disproportionately low. What is the result of this? Despite Maharashtra's per capita income being the third highest in the country, the lopsided development means that rural poverty in the State is as high as or maybe one or two percentage points lower than the rural poverty in Bihar and Orissa. It is because the urban industrial development model has not succeeded in reaching the benefits of economic growth to the different regions and sections of society.

Maharashtra's problem of poverty is a structural problem, a problem of the structure of the economy.

What can be done to change this?

Irrigation. Irrigation. Irrigation. Sixty to 70 major and medium irrigation projects in the State are incomplete. The Planning Commission has recommended that the State government should take urgent steps to complete these projects. Otherwise the money that has already been spent will be wasted and there is no point in starting new projects. Innovative measures are required for resource mobilisation for financing irrigation projects.

Look at Andhra Pradesh. They have made a Rs.20,000-crore annual plan, of which about half is for irrigation. This is a State that is smaller and certainly not as developed as Maharashtra. I would expect the Maharashtra government to show courage and economic innovativeness and go in for such major financial projects.

There has been a long-term crisis in Maharashtra's agriculture. It will be very difficult to resolve it through conventional means.

Coercive tactics are used to `persuade' farmers to move away from sustainable cheaper practices. For instance, many sugar farmers are forced to cultivate only cane when they would like to practise intercropping.

What you say is right. Maharashtra's agriculture has become a monocrop.This has its own implications but let us accept one thing. Notwithstanding all the criticism, sugar factories were a pioneering effort. But yes, diversification in agriculture is essential. Just compare western Maharashtra with Vidarbha. There is some diversification in the western region. So if sugar prices fall then farmers have milk or soya or floriculture to fall back on. But in Vidarbha if cotton fails everything fails. When we talk of viability of agriculture it is not only crop production but also diversification that is important. That way, if one crop fails then it won't affect the entire State or even the entire national economy.

So it is a safety net. But this does not seem to extend to the small farmer. Sugar factories are closed down because they are unviable. That is good but what happens to the small farmer who has been made dependant on that factory. Where is the stability?

This stability will have to be provided by an external agency - the government. At the same time farmers should be encouraged to develop their own internal security measures such as seed banks. These are very important measures. Even the poorest possible marginal farmers can save something from their meagre crop - in fact they used to do this. It mitigates the distress in times of crisis. The safety nets will come partly from the loan and partly from internal measures. As far as government-provided safety nets are concerned, administrative mechanisms will have to be very efficient and vigilant. Regretfully, they are not as effective as they should be.

You had once said, "The market economy is irrelevant for those who cannot join the market". It sums up the situation of the majority of people who are without a safety net.

When I say that I do not discredit market economics - these are indispensable but we have to realise that there is not just an economic side to markets. There is a social side too. As an economic institution, it decides what to produce, how much, how to price it.... But then the role of the market in a stratified economy, where a large number of people do not have the means of production, no credit, no higher education, no gainful employment... . In such an economy, the use of the market should be extremely careful and diligent. That is what I mean when I say that economic decisions cannot be pre-emptive positions.