Energise the ATMA initiative for strengthening food security

It is increasingly evident that India’s economy, particularly its rapidly growing manufacturing and service sectors, are seriously being affected by the ongoing global economic crisis, the severest in over six decades.

There is, however, unprecedented uncertainty about the depth and the duration of the global economic crisis, complicating the task of responding to it. The main instruments being used globally to address the crisis have been aggressive monetary and credit easing, and expansionary fiscal stimulus packages. In some cases, such responses are being accompanied by excessive economic nationalism, which is likely to significantly reduce trade opportunities and capital flows to the developing countries.

The UPA government’s irresponsible fiscal policies during the boom period have resulted in large fiscal deficits. The revised estimates for 2008-09 project that the fiscal deficit of India’s Central government alone will be 6% of GDP (the original estimate was 2.5%). The combined state and Central government deficit is expected to exceed 10% of GDP, which is unsustainable.

The casual way with which targets of the Fiscal Responsibility and Budget Management (FRBM) Act of 2003 have been set aside is  disconcerting. High fiscal deficits will severely constrain flexibility of the economy in responding to the crisis and in sustaining future growth. It has also crowded out access to credit by more productive private and public sector enterprises.

Some analysts expect that high fiscal deficits may force the Reserve Bank of India to follow more expansionary credit policies than warranted to sustain economic activities; though macroeconomic stability requires tighter monetary policies. There are also fears that such irresponsible fiscal management may lead to severe inflationary pressures, particularly in basic commodities, including food.

It is also increasingly evident that the UPA government has been less than competent in translating budgetary outlays into outcomes, resulting in microeconomic inefficiencies in the infrastructure, social services, and agricultural sectors.

Even before the crisis, the need for substantially improving the performance of the agricultural sector was evident. The crisis, however, has added to the sense of urgency in focussing on increasing the rate of growth in the agricultural sector from the annual average of 2.6% between 2000-01 and 2007-08 period to at least 4%; and narrowing the imbalance between agriculture’s share in GDP (which is less than 20%), and its share in employment (about 60%).

India’s agricultural policy has been characterised by excessive use of fertilisers, unsustainable and inefficient use of water resources due to inappropriate pricing. Reversing the degradation of the quality of land and making marginal land more productive are vital for improving agricultural livelihoods and performance.

By early February 2009, the Centre had released just 59% of the funds allocated for 2008-09 under the Rashtriya Krishi Vikas Yojana (RKVY) and 57% of the funds granted under the National Food Security Mission (NFSM). This reflects poorly on the priorities of the UPA government.

As India’s per capita incomes and population rise, demand for food particularly grain, is expected to grow rapidly. The probability of adverse climate change requires India to maintain a comfortable and prudent balance between the demand and the supply for food to prevent sudden hardships to the population.

It is in the above context that the Agricultural and Technology Management Agency (ATMA) initiative could contribute positively to managing the current crisis and strengthen India’s food security.

ATMA is a Government of India initiative designed to disseminate research and technological improvements in agriculture to farmers and stakeholders involved in agricultural activities at the district level. The coverage under ATMA has been progressively increasing. In some states, such as Gujarat and Maharashtra, by early 2009 all districts have been covered by this initiative.

Finances for this initiative, whose design requires relatively small outlays, are shared between the Centre (90%) and the states (10%). The implementation responsibility is, however, with the states.

The design of the ATMA initiative envisages public private partnerships (PPP) involving all relevant stakeholders. Thus, in Gujarat, ATMA initiatives involves partnership with state agricultural universities, seed and land development corporations, state fertiliser companies, flower grower associations, private sector agro businesses and even with agricultural media organisations. The capacity to undertake PPPs with multiple stakeholders on part of the ATMA Directorate at the state level is therefore crucial.
This is another area where there is need to build capacities of various states.

As there is provision for obtaining the services of persons with requisite skills for a specified period, this initiative enables broad-basing of skills available for improving agriculture, while minimising addition to the permanent staff of the government.

The ATMA initiative recognises one of the most important insights from the economic growth literature. It is that labour and capital as factors of production do not fully explain the resulting output. It is the application (and diffusion) of knowledge economy, usually referred to as technical progress which significantly contributes to generating output from given factors of production.

It also recognises that all aspects of agriculture from pre to post harvest must be infused with a knowledge economy perspective to improve Indian agriculture.

The ATMA initiative is particularly relevant for India as its share in arable land in the world at 11.5% is second only to the United States. India has the largest share of irrigated area in the world. It however lags considerably behind other countries in yield per hectare of different crops. Thus, in 2004, India’s yield per hectare for paddy was only 75% of the world average. The corresponding figures for wheat were 93%, maize 38%, cereals 73%, pulses 79% and soya bean 48%.

India also lags behind in processing agricultural produce; and in developing robust databases and information systems relevant for developing sound agricultural policies and practices.

In Maharashtra, the ATMA initiative has led to encouraging results in horticulture; and in introducing the cashew crop and related processing activities. This is bringing new dynamism to parts of Maharashtra which have traditionally been laggards.

It is imperative to monitor the progress of each State in implementing the ATMA initiative; and to ensure that capacities of laggard states are strengthened. Energising the ATMA initiative should be a high priority for the new government to be formed after the elections.

Mukul G Asher is a professor of public policy and Azad Bali an instructor at the Lee Kuan Yew School of Public Policy, National University of Singapore. Views are personal.