The farm-factory connect -Ashok Gulati

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published Published on Jun 11, 2019   modified Modified on Jun 11, 2019
-The Indian Express

Raising farm productivity is the first step to increasing rural demand and reviving the manufacturing sector

As per the last report of National Statistical Office (NSO) released on May 31, the Gross Value Added (GVA) at basic prices (2011-12 prices) for the fourth quarter (Q4) of 2018-19 has slumped to 5.7 per cent for the overall economy, 3.1 per cent for manufacturing, and -0.1 percent for agriculture, forestry and fishery. However, for the entire financial year, FY19, GVA growth is more respectable — 6.6 per cent for the economy, 6.9 per cent for manufacturing and 2.9 per cent for agriculture.

Incidentally, for the Narendra Modi government’s first five-year stint (2014-15 to 2018-19), agri-GDP grew at 2.9 per cent per annum. Many experts believe that agriculture cannot grow at more than 3 per cent per annum on a sustainable basis. Swaminathan A Aiyar, for example — whose brilliant writings I admire — has recently written that “no country has managed more than 3 per cent agricultural growth over a long period”.

This is not correct. China, for example, registered an agri-GDP growth of 4.5 per cent per annum during 1978-2016, a very long period indeed. In fact, the first thing Chinese government did in 1978, when it started off economic reforms was to reform agriculture. Agri-GDP in China grew at 7.1 per cent per annum during 1978-84, and because the Chinese government also liberated price controls on agri-commodities, farmers’ real incomes increased at 15 per cent per annum. That set the stage for the manufacturing revolution, which was revved up through town and village enterprises (TVEs) to cater to domestic demand from rural areas. The rest is history.

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The Indian Express, 10 June, 2019,

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