By Jay Herndon
Since time immemorial, Indian farmers have suffered an uncertain living from the earth, whether due to climatic vagaries or at the hands of their colonial or local rulers. However, since we gained independence in 1947, secular democracy banished the scourge of famine and brought economic and human progress far surpassing any previous regimes. Today, accelerating growth provokes both the Left and the Right to either assail or hail India’s brave new world of free markets and reform. Both narratives ignore a pervasive state still circumscribing the freedom of 900 million rural Indians.
Many obstacles stand in the way of increasing India’s agricultural productivity: falling plot sizes inhibit mechanisation, laws impede the lease or purchase of land, wasteful flood irrigation and inefficient supply chains. In a fit of myopic populism, multiple states are advocating a waiver of farmers’ debt. However, it is hard to imagine how nationalising 2 percent of the country’s GDP would distort farms going forward, never mind the wider damage to India’s fiscal credibility. Other legislation threatens to ban the sale of cattle and oxen for slaughter in markets. Beyond the obvious communal provocation, such laws threaten the meat processing, dairy and leather industries.
Correcting inefficiencies
In 2009, an NGO named Seva Mandir opened a dal mill (a mill for lentils) in Kodra Tehsil, Rajasthan. Kodra’s population of 230,000 is almost exclusively of a ‘scheduled tribe’ named Bhil. The mill sought to empower farmers by eliminating middlemen from the supply chain. Having solicited a token donation of Rs. 100 from 86 farmers, the mill acts as an “informal cooperative” managed by a 14 member executive committee. It is essentially a small, closely held corporation where shareholders elect a board to monitor the business on behalf of owners entitled to a dividend.
Changing lives in the barren land
Ranjit Kumar owns a plot of nearby land and a piece of the mill. He migrated ten seasons in just five years for work, leasing his land to the village in his absence. Since the mill arrived, he has been spared the expense and time of renting a truck for the 35-kilometre trek to the nearest market. That said, he calls his old connection before accepting the mill’s price. Without prompting, he claims that he applies no fertiliser to his “all natural” crops. This might strain credulity for someone familiar with India’s generous system of fertiliser subsidies while Kumar cannot be blamed for saying what he thinks the customer would like to hear.
Overall, liberalisation has been a godsend for productive farms. From 2003 to 2013, no country on Earth saw faster agricultural export growth. But India’s farms still occupy 55 percent of India’s workforce while contributing only 17 percent to the GDP. Too many laws enforce this inefficient allocation of labour. Without legal ownership of their land, farmers can neither sell nor mechanise. The people of India deserve better, but to deliver results from this bureaucratic quagmire, charity should play a subordinate role to markets. Seva Mandir’s mill is a start-up where output shot from 800 to 70,000 kgs in just eight years. They still require capital to achieve the scale needed for regular profits and dividends.
Shifting focus
For hundreds of millions of men and women across South Asia, the tide has shifted in recent decades: from stagnation and survival to striving and growth, from dependence to dignity. Taking a wider view presents ample evidence for such optimism: where else does a stable representative government with a proven capacity for peaceful reform enjoy such enviable demographics and natural resources?
India’s staggering diversity prevents the sort of “developmental state” seen in Japan and South Korea, but the government still has a vital role to play, not least in establishing and protecting property rights for small land-holders. Men like Ranjit and Kordarlall have the intelligence and initiative to compete and thrive in a globalised market. We can only hope that their leaders have the courage and wisdom to let them.
Featured Image Credits: Flickr
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