Economy
Farmed land, food per person declined over 25 years

Key problems with agriculture in India are related to low yields and production. Accordingly, Foodgrain availability also declined from 471.8 grams per capita to 453.6 grams per capita over the last four decades

 

The land available for farming in India, already under decline, is feared to drop further with the Bharatiya Janata Party (BJP)-led government trying to push through a controversial bill that is being criticised in the present format by a host of opposition parties, led by the Congress.
 
The most controversial change proposed is the exemption of five categories of projects - industrial corridors, public-private partnership projects, rural infrastructure, public housing and defence projects - from getting the consent of 70 percent farmers of the area.
 
This is worrisome since cultivated land on India’s farms declined 15 percent over the past 25 years, according to government data analysed by IndiaSpend, reducing foodgrain production and portending new pressures as more land is set to be acquired for industries.
 
While the net sown area includes orchards and crops, the cultivated area covers only crops. Land sown with crops declined from nearly 87 percent in 1987-88 to 72 percent in 2011-12.
 
IndiaSpend’s recent reports have been focusing on the farm crisis in India with case studies of Bundelkhand farmers. It has also reported on the decline in farmers across India.
 
Reasons for the decline in cultivated land include a drop in households owning land in rural India and a decline in the proportion of households dependent on manual labour and farming, says a study by the Foundation for Agrarian Studies, using data from the National Sample Survey Organisation (NSSO) of the Ministry of Statistics and Programme Implementation.
 
To analyse how the drop in cultivated area has affected India’s food sufficiency, availability of foodgrains (cereals and pulses) was matched with the decrease in cultivated land. The decline is clear.
 
Key problems with agriculture in India are related to low yields and production. Accordingly, Foodgrain availability also declined from 471.8 grams per capita to 453.6 grams per capita over the last four decades.
 
But there is a saving grace: Yield. This has been improving over the decades - from 1,023 in kg per hectare in 1980-81 to 2,101 in kg/ha in 2013-14 for food grains, as per data published in the official Economic Survey.
 
For oil seeds it was from 532 kh/ha to 1,153 kg/ha and for cotton from 152 kg/ha to 532 kg/ha. 
 
So, foodgrain yield has almost doubled between 1980-81 and 2013-14, while oilseeds and cotton have also witnessed an increase of 116 percent and 250 percent in yields respectively.
 
Despite its fluctuating farm fortunes, India is among the world’s top producers of food crops, according to the United Nations Food and Agriculture Organization. But it its yields across the spectrum of agricultural products are low.
 
In cereals, for example, it is the third largest producer in the world, and in terms of the yields of top five producers, though, the country ranks fifth. For coarse grains, the ranking is fourth and ifth, respectively. 
 

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COMMENTS

B. Yerram Raju

2 years ago

Thank the farmer who is producing twice the quantum in the midst of regulations from twelve ministries in the Union and at least six in the State strangulating him!!
The Bill should restrict the exemptions only to Defence and classified industrial corridors and this classification should be specified by a gazette notification from States as priorities differ from state to state.

Rating India in India
India's credit-worthiness, poverty level, comparative position in several other indicators and ability to protect against environmental hazards are all decided by outside agencies, which have no independent means to judge us other than data fed by our own agencies within the country. If existing organisations are irreparably incompetent, new ones should replace them fast
 
 
Last week rating agency Moody’s raised India’s outlook to ‘positive’ from ‘stable’ without altering the country’s investment grade, which remains at the last rung at Baa3. The rating agency said that, “India has grown faster than similarly rated peers over the last decade due to favourable demographics, economic diversity, as well as high savings and investment rates. Moody’s expects these structural advantages, supported by relatively benign global commodity prices and liquidity conditions, will keep India’s growth higher than that of its peers over the rating horizon”. This gave comfort to India’s Chief Economic Advisor Arvind Subramanian who said ‘the upgrade validated the direction of Centre’s (Indian government’s) reform programme’ and expressed hope for a bump up in India’s rating. According to him, “It confirms something that we have been saying for some time now that the growth prospects and the macro-economic prospects for the economy are improving.”
 
India is a victim of foreign domination even today when it comes to assessment of the country’s self-esteem. Our credit-worthiness, poverty level, comparative position in several other human development indicators and ability to protect against environmental hazards are all decided by outside agencies, which have no independent means to judge us other than data fed by our own agencies within the country.
 
It is comforting to see that a change in approach in Delhi through various initiatives including the effort to promote slogans like ‘Make in India’ acceptance of the need for infusing professionalism in governance and better financial sector management have started yielding results.
 
Successive governors at the Reserve Bank of India (RBI) have expressed their concern about reliable current data to base their policy decisions. These are areas where perceptible improvements can be made without ‘huge’ financial investment. 
 
Now that National Institution for Transforming India (NITI) Aayog has relatively less responsibilities, it could be entrusted with the task of making existing organisations responsible for compilation of statistics and rating the country in relation to other countries with reference to different parameters factoring in purchase power parity and aggregate resources availability and institutions like banks using internationally acceptable standards. If existing organisations are irreparably incompetent, new ones should replace them fast.
 
Global rating agencies have a habit of running with the hare and chasing with the hound! Moody’s capsuled its own positive note with a warning that India’s rating can be upgraded only if evidence emerge in the coming months that efforts to enhance growth and stabilise economic and institutional reforms are succeeding. There will be a downgrade, if economic, fiscal and institutional strengthening appears unlikely, or banking system metrics remain weak or balance of payments risks rises, it said. Such stances, which are regular ingredients in ‘global’ rating agencies, prompted me to make the following averments a couple of years back:
 
“…Time is opportune for India to think in terms of setting up a rating agency of international standard, which will understand the country and advice stakeholders about the health of domestic financial institutions and provide crucial input to the financial institutions and governments abroad with which India has dealings. Agencies like Standard & Poor’s (S&P) and Moody’s are doing their work within their limitation and even they would be benefited if an internationally acceptable rating agency comes into being in India.”(Page 15, Banking, Reforms & Corruption by MG Warrier).
 

IMF view

In response to a recent observation by the chief of International Monetary Fund (IMF) while in India, to the effect that ‘when adjusting for differences in purchasing prices between economies, India’s GDP will exceed that of Japan and Germany combined. Indian output will also exceed the combined output of the three next largest emerging market economies-Russia, Brazil and Indonesia’, 
 
I had commented that ‘India’s toiling masses, entrepreneurs and the availability of resources within the country have not changed overnight and what forced some ‘celebrities’ and international rating agencies turn positive on India was the prevailing confidence of Indian people, infused by the political and financial sector leadership provided by Prime Minister Narendra Modi and RBI Governor Dr Raghuram Rajan. 
 
In this context, I had recalled the following stanza from Gita:
 
“Uddharedaatmanaatmanam Naatmanamavasaadayet
Aatmaiva hyatmano Bandhuraatmaiva Ripuraatmanah”
 
(One should lift oneself by one’s own efforts and should not degrade oneself; for one’s own self is one’s friend, and one’s own self is one’s enemy.)
(Bhagavadgita, 6.5)
 

Aid and poverty alleviation

Misleading comparisons are not a unique feature of releases from rating agencies. Data usually is doctored, edited, or misquoted while presenting poverty figures or while preparing documents to make presentations on social responsibility initiatives. Just to give one example, the Gates Foundation 2014 Annual Letter mentioned the names of 11 countries, which were former recipients of foreign aid that have grown so much that they receive little aid today. A cross check showed that the 11 countries listed as former recipients of aid together had a population of just 51 crore and about 25% of this population under poverty line.
 
Back in India, (a country with a population of 125 crore of which 30% still remain below the poverty line), NITI Aayog has taken a stand not to estimate its own poverty line. Still, poverty elimination (as has been achieved only in Singapore with a population of 56 lakhs on this part of the globe) there is a need to have a nationally accepted method to arrive at poverty line- even if the line for different geographical regions within India may vary- and that method having the sanction of NITI Aayog and GOI. This is because several government schemes for poverty alleviation (now poverty elimination) relate the eligibility criteria to poverty line.
 
International comparisons, fear of loss of image, if the number of those below poverty line goes up during a particular period, total disconnect of poverty line or comparable indicator for different countries with purchasing power parity and several other constraints make poverty estimation highly subjective and sometimes prejudiced in India. Economists and consultants help policy makers in such situations by creating confusion with figures. There cannot be a better method than the one based on spending capacity and purchasing power of the rupee.
 
Once NITI Aayog decides on the poverty line for the purpose of extending benefits under central schemes, some agency should estimate and publish information about Indians living below poverty line and proportion of the population with (a) capacity to spend double the expenditure ceiling for poverty line (b) capacity to spend four times the ceiling (c) capacity to spend eight times the ceiling and (d) others. Such estimation will help policy makers to revisit some of the concepts on which poverty alleviation and financial inclusion efforts are based.
 

Epilogue

It is agonising to see the dependence of the Indian elite, which waits for a Prime Minister to speak from the ramparts of Red Fort to take cleanliness and toilet facilities for all seriously or to move forward in the direction of indigenous minting of coins or producing quality paper and ink inside India for printing currency notes. Successive RBI Governors have expressed their concern about reliable current data to base their policy decisions. These are areas where perceptible improvements can be made without ‘huge’ financial investment. 
 
Now that NITI Aayog has relatively less responsibilities, this body could be entrusted with the task of making existing organisations responsible for compilation of statistics and rating the country in relation to other countries with reference to different parameters factoring in purchase power parity and aggregate resources availability and institutions like banks using internationally acceptable standards. If existing organisations are irreparably incompetent, new ones should replace them fast.
 
(MG Warrier is former general manager, RBI, Mumbai and author of the 2014 book “Banking, Reforms & Corruption: Development Issues in 21st Century India”.)

User

COMMENTS

B. Yerram Raju

2 years ago

Poverty in India is now 25% of the population and in some States like Andhra Pradesh, Telangana and Tamil nadu it is much less - around 15-20%. But the social sector expenditure in the budget and free bytes cross 40% of annual state budget allocations. Can NITI AAOG monitor such allocations and expenditures and bring to bear on the governments the need for rethinking and restructuring their expenditures on providing better infrastructure in education, health, sanitation and safe drinking water? These are the areas requiring rating in India. External rating will automatically improve.

MG Warrier

2 years ago

Raju and Balakrishnan have raised certain very relevant issues in the comments here. This morning a friend was wondering, if the going is good as is being made out, why the Rupee is getting weaker. I think, like media stories can change the public perception about governance, the views being expressed by several bodies and their spokespersons affect the 'rating' of India by investors and other countries. It is in this context, a case for a more factual self-appraisal within India based on more reliable data and assessment of resources availability is being made out.

R Balakrishnan

2 years ago

The current credit rating is FAIR. And it is a relative ranking. With the kind of continuous CAD, dependence on NRI remittances, Oil price vulnerability, extent of external debt, an investment grade rating reflects a positive approach by the agencies. India has been a defaulter in the past and staying in Investment grade is no joke. Imagine if the currency were fully convertible.. Would this rating even hold?

B. Yerram Raju

2 years ago

Indian economy for the moment is cynosure of the global eye. The author has rightly called for clean data to be the focus for policy correction and redefining poverty in the emerging context. Although the architect of the Constitution, Baba Saheb Ambedkar desired that the policy of reservations should be relooked after a decade, we are continuing and enhancing the fold because it is politically convenient. Engineering, Medicine, Teaching are professions that should attract only merit for the economy to generate highly productive future generation promoting technology, good health for all and knowledge. We have created a false sense of security in reservation policy. The economically weaker sections need redefinition to ensure that the benefits of growth result in human development indices. Growth has to pare with human development.

Rating whether internal or external, is a function of data and it is a prospect depending on a series of assumptions and models. The country is at a point of inflexion yearning for stability with positive outlook for future.

Even when the call for cleanliness came from the ramparts of Red Fort, there are a number of panchayats, municipalities and corporations unable to take forward the initiative, and in many places dwarfing the citizen's response to the call.

Information hunger has overtaken the belly hunger. Measure of poverty also needs to undergo change. NITI AAYOG has to redirect its focus on scanning the several economic and physical data and confirming it with sample checks continually. In a country with such vast expanse and diversity, reliable sample check is expensive but has to be taken up seriously.

India to grow at 7.5 percent in 2015: Moody's Analytics
According to the ratings agency, low inflation rate has enabled the Reserve Bank of India (RBI) to cut interest rates by 50 basis points in early 2015 which has helped in easing pressure on the private sector
 
A week after it revised its outlook on India to positive from stable, international credit rating major Moody's pegged India's growth at 7.5 percent for 2015.
 
"India's economy is on a cyclical upswing. Forward looking indicators suggest domestic demand is gathering momentum," said Faraz Syed, associate economist, Moody's Analytics. 
 
According to the ratings agency, low inflation rate has enabled the Reserve Bank of India (RBI) to cut interest rates by 50 basis points in early 2015 which has helped in easing pressure on the private sector. 
 
"Lower rates as well as the government's infrastructure and disinvestment programs should provide a boost to domestic-oriented industries," said Syed. 
 
The RBI had cut its repurchase rate by 25 basis points on January 15 and on March 4. 
 
However, RBI Governor Raghuram Rajan, who conducted the first bi-monthly review of the monetary policy for the current fiscal year on April 7, decided to retain the policy rates.
 
The RBI made it clear that it will cut interest rates further only if it sees more robust containment of prices and commercial banks lowering the cost of housing, auto and corporate loans.
 
"Since most banks didn't reduce their lending rates until recently, the full impact of the rate cuts will probably be felt in the second half of 2015. Thus, consumer spending likely will get a bigger boost later this year," Syed said.
 
Rajan has projected a 7.8 percent growth for the current fiscal year, subject to a normal monsoon.
 
The rating agency's analysis suggests that the country's first quarter GDP (gross domestic product) growth will be around 7.3 percent on a year-on-year basis.
 
The growth projections come soon after Moody's had revised India's sovereign ratings outlook to positive from stable. Another ratings agency Fitch had reaffirmed its stable outlook on India. 
 
The think-tank of rich nations, the Organisation for Economic Cooperation and Development (OECD), also endorsed high growth prospects for India. 
 
Similarly, the Asian Development Bank (ADB) has also projected the country's growth at 7.8 percent in 2015-16 and at 8.2 percent in 2016-17.
 
On April 14, the World Bank had forecast India's growth accelerating to 8 percent in the next fiscal.
 
The ratings agency further noted the government's disinvestment plans as being a significant instrument in raising funds for infrastructure creation. 
 
"Funds raised from disinvestments will be spent on developing India's ailing infrastructure. If revenues fall short, we expect the government to cut expenditure to meet its 3.9 percent deficit target for 2015-2016," Syed said.
 
"Lower government spending is a downside risk to our forecast over the coming year," Syed added.
 
For 2015-16 fiscal beginning April, the government has budgeted to collect Rs.69,500 crore through public sector disinvestment.
 
Recently, approximately 5 percent of the Rural Electrification Corp. was sold in early April. The share issue stood oversubscribed by 553 percent.
 
Moody's said that the India's current account deficit (CAD) is expected to remain steady in 2015 thanks to lower oil and gold prices. 
 
India's CAD came down to $8.2 billion -- or 1.6 percent of the gross domestic product -- in the third quarter ended December 2014.
 
With the steep fall in oil prices the subsidy burden has been projected to come down from a high of Rs.1.39 lakh crore for 2013-14 to around Rs.80,000 crore in 2014-15.
 

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