Email
Print
ShareComments in the media and by economists on the unfolding situation on the farm front betray a woeful lack of perspective, if not downright callousness. In their obsession with GDP, they overlook, or soft pedal, the scale and gravity of the human misery which the monsoon failure has brought in its wake.
Statements like these abound:
Our economy has acquired a degree of resilience to withstand the rigours of a drought so that real GDP growth will not plummet.
A growth of 6% with an upward bias is still possible during 2009-10 as service sector -- the main driver -- continues to be buoyant. If industry too recovers from recession, as recent trends suggest, a spurt of even seven per cent may be within reach.
Since agriculture accounts for less than 18% of the GDP, the setback here will not act as a drag on overall economic performance. True, the relative share of the primary sector may decline, but this is inconsequential in the overall context; in any case, this is in conformity with the past pattern.
Food stocks are ample and through judicious use of them, the crisis can be overcome; with supporting measures like anti-hoarding and imposition of stock limits as well as imports, the monster of food inflation can be tamed. Public distribution and special schemes to benefit the poor in vogue will be redoubled. So, non-inflationary growth is still possible.
Is this stance correct? The country is experiencing one of the worst monsoons in recent memory. The quantum of precipitation -- as well its timing and duration -- has been very unsatisfactory.
According to the latest count, as many as 246 districts spread across 10 states or 40% of the total, have been declared drought-hit.
Even if the weather gods relent in the coming days, the rains may be too little, too late to undo the damage to the kharif harvest which is reckoned at 20 million tonnes for paddy alone. The situation is tailor-made to stoke inflationary fires, deepen rural distress and strain Union finances by the need to spend more for calamity assistance.
Let us consider the issues that are in the public domain. Even if the real GDP is 6% or more, despite the drought havoc, what will be fallout of the drop in GDP originating from agriculture?
The cake shrinks in size for the rural masses while the ranks of the claimants are large. In effect, the per capita agricultural income, meagre as it is, will dip lower still.
The gulf between the haves and the have-nots is set to widen. Is this inclusive growth, of which we have been hearing about so often of late? Drought will worsen the skewed pattern of GDP composition so that the quality of growth will suffer.
As far as food price inflation is concerned, the record even in years of good harvest has been bad. At present, it is hovering around 8% based on the wholesale index and is double-digits according to various consumer price indices. Will not a scarcity-like situation queer the pitch for inflation rate to accelerate?
However, more than these, what makes a drought difficult to come to terms with is the pathetic conditions prevailing in rural India. It is home to almost 800 million, more than a fifth of whom live below the poverty line -- that is, a monthly per capita income of Rs 360 or less with a calorie intake less than the minimum of 2,400 calories per day -- and an unemployment rate of over 8%.
According to the latest Economic Survey, the per capita consumption expenditure of 71.9% of the rural population was less than Rs 20 per day in 2004-05. The number of small and marginal farmers as well as agricultural labour is a legion and when drought occurs, it implies both loss of jobs and incomes.
Their purchasing power is eroded while inflation spirals upward. Thus, the rural poor bear the brunt of drought; the resultant widespread distress is hardly captured by GDP numbers.
A seething mass of humanity is groaning under a crisis, which in scope and severity, is one of the worst in recent memory and the official response should be to minimise, if not mitigate, the human tragedy enacted before our eyes by timely, purposive action.
