Elusive optimisation?

In various articles from ‘The Planning Series’ so far, we have discussed and analysed the performance of the economy in each of the plans. We also did an assessment of the five-year plans and discussed the setting up of NITI Aayog in 2015, and how it may be better suited to the development needs of India because of a changed India and a changed world. We will now turn our attention to a more detailed analysis of how various sectors fared through the plans. We begin with the Agriculture and Allied Sector (AAS).

Broad objectives

When the first five-year plan began, Indian agriculture was largely traditional, with most farmers having small holdings and mostly dependent on rainfall. Not only were farmers in debt to the village moneylender, there was no knowledge of good farming practices, including use of good seeds and fertilisers. As a result, the productivity of land and labour was low. Keeping this in view, the Planning Commission set out the following broad objectives for the agriculture sector:

* Increasing agriculture production;

* Increasing productivity through the use of better seeds, fertilisers and expanding irrigation;

* Addressing the issue of disguised unemployment in agriculture by reducing population pressure on land and shifting surplus and underemployed people to non-agriculture sectors;

* Agriculture growth as an important poverty alleviation measure, since such growth ensures food security and has a multiplier effect on the whole economy.

The general strategy used to meet these objectives were: the community development programme; expansion of irrigation; use of high-yielding variety of seeds, fertilisers and pesticides; setting up of agro-based industry and horticulture units; removal of intermediaries; land reforms; and increasing rural credit to reduce dependence on informal money lenders.

There were a number of economic models and theories that justified this emphasis on agriculture. Ragnar Nurkse’s thesis was that surplus labour in agriculture should shift to industry. This would not only raise productivity in agriculture but also encourage industrialisation. While the thesis had a sound logic, it was thought to be too simplistic for the Indian setting. Similarly, there was the Arthur Lewis model, in which there were two sectors — the subsistence or agriculture sector and the capitalist or industrial sector. There is a shift of excess labour from agriculture to industry as a result of which, there is improved productivity in both the sectors.

Performance through the plans

The connotation of the term AAS varied through the plans. In the first three plans, it included agriculture, horticulture, animal husbandry, and irrigation and flood control. In the later plans, irrigation and flood control was removed and rural development and special area programmes were added. We are taking all these sectors in the discussion below.

Table 1 shows the share of AAS in the total outlay, and table 2 shows the growth rate in this sector.

It is evident from table 1 that the share of AAS in total outlay has declined steadily from a high of 31 per cent in the first plan to about 17 per cent in the twelfth plan. Similarly, table 2 reveals that the growth rates in AAS have left much to be desired and have served to pull down the overall GDP growth rates.

When the first plan was launched in 1951, India was facing food scarcity and, structurally, agriculture was in a bad shape. The size of land holdings was small, dependence on rainfall for irrigation was widespread, and there was no knowledge of good farming practices like high yielding seeds and fertilisers. On top of this, 70 per cent of the population was dependent on agriculture, which led to widespread unemployment (both actual and disguised). Accordingly, the first plan set a target to increase food production, and the target of 62 million tonnes of foodgrains was exceeded and actual production was 67 million tonnes. In the second plan, the focus shifted to basic and heavy industry, and the share of AAS fell to 20 per cent and growth rate was about 3 per cent. In the third plan, ambitious targets for foodgrains were fixed, and the Intensive Agricultural District Programme (IADP) was started in 1961. High-yielding varieties of seeds were introduced after that. However, there was a serious drought in 1965-66 and agricultural targets could not be met. In fact, actual output of most crops was lower than that in the second plan and the government was forced to import foodgrains in the last year of the third plan. As we know, this was followed by a plan holiday during 1966-69. Interestingly, the annual plans also saw the initial steps of the green revolution in 1968-69.

The fourth plan was a repeat of the previous plan, and the agricultural production and growth targets were not met. As for the fifth plan, even though it was interrupted, foodgrain production targets were met (132 million tonnes were produced against a target of 125 million tonnes). The sixth plan was a success with actual growth being 4.3 per cent against a target of 3.8 per cent. Foodgrains production also touched a high of 152 million tonnes in 1983-84. This period is also sometimes referred to as the second green revolution, where the emphasis shifted from HYV seeds of wheat and rice to expansion of input supplies and agriculture extension.

The seventh, eighth and ninth plans had a target of around 4 per cent in AAS. While the seventh plan could not meet the growth targets for AAS, it did achieve the production targets of foodgrains, oilseeds, cotton, and sugarcane. The eighth plan was a success in respect to growth and production targets (except for foodgrains where output was 190 million tonnes against the target of 210 million tonnes). The ninth plan could not achieve either the growth or production targets: in fact, oilseeds and cotton experienced a negative rate of growth. Production targets for foodgrains, oilseeds, cotton and sugarcane were not met.

In the tenth plan, there was no fixed production target for the first time. While foodgrains production saw a modest rise from 213 million tonnes at the end of ninth plan to 216 million tonnes in the tenth plan, oilseeds production rose from 21 million tonnes to 24 million tonnes. Sugarcane and oilseeds production was however very impressive in the tenth plan: sugarcane grew from 297 million tonnes to 345 million tonnes and cotton grew from 10 million bales to 23 million bales.

In the eleventh plan, the AAS sector achieved a growth rate of 3.6 per cent as against a target of 4 per cent. The AAS was an important focus of the eleventh plan because of its stress on ‘faster and inclusive growth’. High growth in AAS would also be a direct attack on poverty and unemployment since a large proportion of the population still depended on the sector. In the twelfth plan also, a target growth rate of 4 per cent was set for the AAS sector. With the setting up of NITI Aayog in 2015, there was no systematic evaluation of the twelfth plan, but foodgrain production touched a high of 265 million tonnes during this plan.

While the AAS sector targets were not met in most of the plans, production rose in absolute numbers since the first plan. It rose by 5 times in case of foodgrains, by 7 times in case of oilseeds, 6.3 times for sugarcane, and 12 times for cotton. Real progress was also made in improved yields since the first plan: from 7.1 quintals per hectare to 24.2 quintals per hectare for rice, 6.6 quintals to 30.8 quintals for wheat, 5.2 quintals to 11.5 quintals for oilseeds, 34 tonnes to 70 tonnes for sugarcane, and 95 kgs to 532 kgs for cotton. While these gains in yield were impressive, they were still short of international yields. For example, similar numbers for China for rice and wheat in 2012 were 68 quintals per hectare (against 24.3 quintals for India) and 50 quintals per hectare (against 30.8 quintals for India) respectively.

Conclusion

While a lot of progress has been made through the five-year plans in AAS sectors, many challenges remain. One of the most obvious and pressing challenges is the continued low levels of growth. This leads to the migration of under-skilled rural youth to urban areas, where, again, providing them jobs is a huge challenge. The other constraints are: continued dependence on monsoons, limited use of the latest technology, underinvestment in AAS sectors, which all lead to low growth levels. These issues have to be addressed urgently if the AAS sectors have to contribute to overall growth of the economy and for the general welfare of the farmers and the people dependent on AAS sectors.

The writer is Addl. Chief Secretary, Dept of Mass Extension Education and Library Services, Govt of West Bengal.