Betting on farming

Bihar's transformation depends crucially on the transformation of agrarian relations. But is it on the policy radar?

AGRICULTURE is Bihar's strength. The State's fertile soil and abundant water resources offer tremendous opportunities for a vibrant agriculture. But the blight of feudal relations is a big obstacle.

In the late 18th century, Bihar came under the notorious Permanent Settlement Act, which by introducing an intermediary layer of parasitic elite in the countryside which imposed a heavy burden on the peasantry. Although Bihar was one of the first States to undertake land reforms, leading to the abolition of the zamindari system after Independence, the landed gentry thwarted any meaningful reform. Alakh Sharma, Director of the Institute of Human Development (IHD), who has conducted several field surveys in the past three decades, observes that "gross violations" of land ceiling laws in the State thwarted progress in agriculture.

Moreover, successive regimes in Bihar have never carried out tenancy reforms, unlike in the neighbouring State of West Bengal, which has undertaken such reforms, most notably through Operation Barga. N.S. Madhavan, Agricultural Production Commissioner, told Frontline that about one-third of the land under cultivation was "under informal leases". He said that the rent-seeking practice of landowners resulted in "very short-term vision, resulting in poor investments in land". Moreover, "informal" leases deny the tenant access to not only credit but also other facilities that may be made available by the state. To make matters worse, minimum wage legislation has hardly ever been implemented in Bihar. This affects not only agricultural workers but also marginal peasants, who invariably have to supplement incomes as agricultural workers.

Several studies show that the nature of feudal relations has not remained static over time. It is now accepted that feudal relations in Bihar are no longer of the classical type, typified by large estates of wealthy landlords on the one hand, and, on the other, by generations of serfs tied in bondage to their landlord. Several field studies, including those conducted by the IHD since the 1980s, show that although landlessness has increased during this period, the proportion of large farms has also reduced significantly. Alakh Sharma points out that during the two decades in this period there were large-scale land transfers from the upper castes (Bhumihars, Brahmins, Rajputs and Kayasths) to the middle castes, particularly Yadavs, Kurmis and Koeris. His studies indicate that remittances by migrants - both by the middle castes and the upper castes - facilitated such transfers. While migrants from among the upper castes sold their land to take up professional careers, invest in businesses or upon employment in the organised sector, remittances by working class migrants from the middle castes facilitated the acquisition of land by these segments.

The other major development in the last two decades has been an increase in tenancy. Studies show that acute land hunger has resulted in poor households increasingly taking land on lease. On the other side of the equation, those who have been leasing out land have been doing so in order to escape the increasing costs associated with agriculture. Although sharecropping, locally referred to as bataidari, is still the most widespread form of leasing, there has also been an increase in fixed-rent leasing. It is evident that acute land hunger and the increase in tenancy impose binding constraints on agriculture, particularly because they hamper investment in agriculture. The slackening of public investment in agriculture has exacerbated the situation.

The current strategy for agriculture appears to rest on two factors. Firstly, since Bihar appears to start from a low base, in a statistical sense, achieving a high rate of growth of 7 per cent, at least in the short term, ought not be difficult. N.S. Madhavan describes this as a move to "harvest the low-hanging fruit first". The second aspect of the strategy appears to rest on the increasing commercialisation of agriculture, particularly through crop diversification, in a move away from foodgrain to cash crops. Litchi and makhana, an aquatic plant rich in protein, have often been cited as potential targets of such diversification. The government is also betting heavily on sugarcane, having approved the establishment of 20 new sugar mills in the State.

However, there are problems with such diversification, which are intimately linked to the nature of agrarian relations in Bihar. The first set of factors relate to the policy regime governing agriculture, which has a bearing on every conceivable aspect of farming, from input prices to the price at which the peasant sells his crop. The second set of issues relate to the process of commercialisation. Studies in Bihar show that there has been growing immiserisation of poor and marginal peasants, who are drawn to the risk-laden business of commercial farming without being offered a safety net by the government.

Munna Paswan, a small farmer who leases land in Madhuban, about 20 km from Patna, told Frontline that he sold his paddy and groundnut to private traders because the cooperative procurement system "is infested with corruption". "The cooperatives buy grain cheap from us and sell it dear to the government, and payments are invariably delayed." It is no wonder that he does not have a view on the Nitish Kumar government's repeal of the Agricultural Produce Marketing Committee (APMC) Act, which is meant to provide free access to private trade in agricultural produce. The Bihar government's emphasis on sugarcane, while removing price support and other measures of state intervention in agricultural markets, can impart volatility to farmers who are taken in by the euphoria to grow sugarcane.

Evidence from field surveys indicates that commercial agriculture has resulted in worsening the plight of the poorer sections of the peasantry. For instance, in Nalanda district, where commercialisation has been apace since the 1970s, the costs associated with irrigation, particularly the use of diesel-powered pump sets, have increased dramatically. Although poor sections of the peasantry have adopted high-yielding varieties of hybrid seeds, used increasing doses of chemical fertilizers, and adopted mechanisation, they have been unable to cope with the increased costs of inputs on the one hand and unremunerative prices on the other. Things have worsened, with fixed-rent rates increasing sharply after the adoption of new technologies.

The emphasis on commercial cultivation rests on the hope that acceleration in agricultural growth can come from an increase in the output of high-value crops. However, this is likely to be unsustainable for two reasons. For one, it is independent of any serious up-front commitment from the state to protect the peasant from volatility. But more importantly, it ignores the serious problems associated with agrarian relations, which have a bearing on the productivity and performance of agriculture.

It is often said that development of an agrarian society requires that people be "pulled out" of agriculture and deployed in industry. However, Bihar's fate is that agriculture has to provide the push towards industrialisation. This requires a transformation of agrarian relations, which are an impediment to increasing productivity and output in agriculture. Coupled with a public works programme, on the lines of an employment guarantee programme, this can lead to substantial increases in the incomes of the vast masses of the poor in the countryside. The consequent increase in demand could then lay the basis for industrialisation. But that appears far-fetched for now.