Saturday, June 20, 2009


As 70% of the population in India live in the country side, they form the back bone of our agriculture and food security. The contribution of agricultural sector to the GDP of the country has been sliding down ever since our independence due to massive expansion of education and increasing pace of industrialization. Migration of labor from rural areas to urban centers in large numbers also affects the agricultural front, fraught with dangerous implications. The well thought out National Rural Employment Guarantee Act (NREGA) is precisely designed to address this problem by providing some income to the rural labor during times of drought and agricultural off seasons. Since agricultural wages, fixed by the States are relatively high, there has been a marked preference for rural labor to attend to agricultural operations rather than projects under NREGA. Farm workers get a minimum wage from Rs 65/day in several states to Rs 141 /day in Haryana. In Chandigarh it is Rs 140, in Kerala Rs125, in a few states Rs 100 while in 22 states the minimum daily wage is less than Rs 100 a day.

According GOI, the very purpose of NREGA is to put in place a job guarantee scheme that will provide gainful employment to laborers during the lean period and keep the momentum of rural economic activities with a proviso that it should be implemented during non-farming days. GOI has already spent Rs 40000 crore under NREGA since February 2006 when the scheme started with Rs 26000 crore going towards wages alone. As the scheme is operated by the States, there appears to be lot of flexibility in its implementation. Since wages paid under NREGA are much less than the minimum agricultural wages, there is always a preference for employment in the farms. There is a clamor for increasing the wages under NREGA, under the pretext that cost of living has gone up significantly during the last 2 years but before taking any action the repercussions of such an action must be clearly understood. Pull from NREGA because of higher remuneration should not create a situation where farm activities are adversely affected. The demarcation between season and off season is blurred with irrigation infrastructure steadily expanding making it possible to take two or three crops an year in many regions of the country. There needs to be a serious policy review at the central level to harmonize the wages under NREGA with farm wages which should always be higher to desist massive desertion of farms by agricultural workers due to lure of higher income. It is a pity that one of the senior ministers in the GOI is preaching a policy of fast industrialization to entice rural folks to cities to give them good quality life, forgetting for a moment the disastrous consequences it will have on the food front!

Take the case of USA where 2% of its population are engaged in farming operations, producing the entire food required by the country. This is possible because of large tracts of land owned by the farmers, the advanced technologies deployed by them and availability of migrant labor population from across the border from Mexico, Brazil and other south American countries. Improved seeds, high tech fertilization, efficient pesticides, mechanized tools for cultivation, large stretches of land in contiguity, precise weather prediction system, massive government subsidy for keeping crop prices at remunerative levels, all contributed to make their farming system more entrepreneur friendly. But to assume that an average western farmer gets a high share from the consumer money is a fallacy if what they get for offering their products to marketing giants is critically examined. According to information available, a farmer receives less than 70 cents from $ 4.50 paid by a consumer for a pound of boneless beef ( about 15.5%), 6 cents out of $ 3.0 for a packet of potato chips (2%) and 8 cents out of $ 2.5 for a pound of bread(3.2%). In contrast in India the cooperative sector dairies pay more than 70% to the milk producer and manage procurement, processing and distribution of pasteurized milk with less than Rs 5 per liter. Thus, in spite of the high degree of consumerism prevalent in western societies and their high disposable income, big money is made not by the producer but by the processing and marketing sectors in the name of "value addition".

Indian farmer, a truly innovative creature, suffers not from lack of returns from agriculture as a percentage of the sale proceeds received by him but his problem is the extremely small size of his holdings which does not lend itself to the needs of modern production technology. Big margin does not mean much if quantum of return is small due to the above factor. While NREGA may still maintain the remuneration gap between its schemes and the agricultural activities. the land problem is going to persist unless massive land reforms are undertaken immediately for consolidation, productivity per farmer is significantly increased and rural industrialization is taken up on a contingency footing. It is aptly said what India needs is not urban migration and enlargement of urban areas but urbanization of the rural areas to meet with the aspirations of the rural population in terms of good life similar to their urban brethren.


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