Ramasubbareddy

Elusive Inclusive Growth
Gap in Per Capita income ratios between Agricultural and non-agri workers going to increase further during XI Plan period which aims at inclusive growth!
The Central Government has taken credit for growth in Agricultural GDP at 4.5% during 2007-08.One swallow does not make a summer. If we take long term growth trend as revealed by the data provided by the RBI in their Annual Report 2007-08, the position that emerges is different. Average Agri GDP growth rate during the decade of 1990-91 to 1999-2000 was 3.2%; growth rates for Industrial and Service sectors were 5.7% and 7.1% respectively. During the eight year period ending 2007-08 Agri GDP growth is only 2.9%. During the same period, growth rates of Industry and Services sectors were 7.1% and 9% respectively. Agri GDP growth during X Plan period (2002-03 to 2006-07) was only 2.5%, where as the growth rates of Industrial and Service sectors were 8.0% and 9.7% respectively. The forecast made by the PMEAC for 2008-09 is a growth of only 2%.
These trends clearly show that growth in Agri GDP is stagnating and continuously lagging behind GDPs of Industrial and service sectors. But the population dependant on Agriculture at 60% is almost the same. Planning commission, in their study revealed that the gap in per -capita income ratios between agri and non-agri sector workers have widened from to 1:2.8 in the period 1978-79 to 1983-84 to a whopping 1:5.2 in 1998-99 to 2003-04.
The per capita availability of cereals and pulses has also declined. The per capita consumption of cereals declined from a peak of 468 grams per day in 1990-91 to 412 grams per day in 2005-06, while that of pulses declined from 42 grams per day to 33 grams per day during the same period. Between 1996 and 2004 there was almost zero growth in food grains.There has been stagnation in yields of cereals and pulses. Stagnation in yield emanated from limited release of new variety seeds, decline in agricultural investment and almost non-existent extension services. Furthermore, as noted by the Steering Committee on Agriculture for the Eleventh Five Year Plan, a number of factors such as land degradation, scarcity of water and slow progress in public and private investment in rural infrastructure (including irrigation) have also contributed to stagnation in the agriculture, especially since the 1990s, which coincides with starting of economic reforms. While much of agricultural growth has originated from the expansion of irrigation and increased productivity of irrigated land, rain-fed agricultural productivity has been more or less stagnant. Moreover, as noted by a recent research study conducted by the R B I, the slower growth in public expenditure in agriculture inhibited the development of adequate research and extension system for supporting farming. Productivity increase in agriculture is dependant on enhanced capital formation both from the public and private sectors. Investment in agriculture as a proportion of overall GDP remained stagnant in recent years. It is stagnating around 2% since 1990s.

All these trends and factors firmly confirm the projections made by the Centre for Development Economics that, “whereas agricultural sectoral GDP stood at nearly Rs.3,000 billion in 2002-03, it will rise to no more than a whisker under Rs.4,000 billion a decade later in 2011-12 at the agricultural growth rate forecast for the Eleventh Plan. Meanwhile, the combined manufacturing and services sectors would have soared from Rs. 9,000 billion to around Rs. 20,000 billion, widening the gap between the relatively stagnant sectors of the economy and the boom sectors from Rs.6,000 billion to Rs.16,000 billion”, are going to be a certainty. This means that the gap is going to be further widened to an intolerable extent and the objective of inclusive growth is not going to be realized during XI Five Year Plan. Now a doubt arises, WHAT FOR ARE THESE PLANS MADE AT HUGE COSTS BY THE PLANNING COMMISSION MANDARINS? Will it not be better to do away with the Planning Commission and have bottom up plans starting from the districts and the centre funding these development programmes in the ratio of population in the rural and urban areas?